Digital Business Card for the Circular Economy

Over 100 billion tons – that's how much material humanity extracts from the Earth in a single year. For the houses we build, the food we grow, the clothes we make, the cars we drive, and countless other activities. Global resource consumption has more than tripled since the 1970s. Without intervention, it could increase by another 60 percent by 2060 compared to 2020. But the planet isn't just bleeding out and heating up – it's also drowning in waste: one-third of all municipal waste is inadequately disposed of.

Environmental pollution, resource exploitation, climate change – to get this triple crisis under control, the world urgently needs to shift completely to a circular economy and, above all, increase recycling. Yet the opposite is happening. The global circularity rate of used resources keeps declining – currently at just 6.9 percent, according to the Circularity Gap Report 2025. For comparison: in 2023, the rate was 7.2 percent, while in 2018, it was as high as 9.1 percent.

The circular economy is thus trending downward and needs to be pushed much harder than before. However, there are some bright spots. The digital product passport, for instance, set to be introduced in the European Union from 2027. It's like an individual business card made of bits and bytes, containing information about products' origin, composition, sustainability, and environmental impact.

This allows each product to be tracked throughout its entire lifecycle, which could give circularity an enormous boost. The new system will be introduced gradually across different industries in the EU. Batteries will lead the way, with the virtual passport becoming mandatory from 2027.

Data Ecosystem for Chemistry

The chemical industry sees great opportunities here too. As a basic materials industry with high resource consumption and significant greenhouse gas emissions, it not only has the responsibility but also the innovative power to develop new ways in recycling and material circularity.

The industry has already embraced digitalization's potential. Several companies, including Covestro, are working on a standardizable digital product passport for the chemical industry through the Chem-X project. This initiative, funded by the Federal Ministry for Economic Affairs and Climate Action, aims to create an interoperable data ecosystem that enables the exchange of product and recycling information within the industry and horizontally with other consumer industries, including the recycling sector.

This system aims to promote open and transparent communication, supporting both legally mandatory and commercial processes. At its core is the development of open-source data models that serve as the foundation for data exchange and meet the requirements of digital product passports both in Europe and globally.

The industry hopes this will provide significant momentum. After all, the circular economy in chemicals isn't yet where it needs to be. Globally, only nine percent of annually produced plastics are recycled, while 22 percent of plastic waste is improperly disposed of.

Seizing Circular Economy Opportunities

The transition to a circular economy isn't just environmentally crucial – it also offers enormous opportunities. Studies suggest it could notably increase Europe's GDP by 2030 while creating hundreds of thousands of new jobs. For the chemical and plastics industry, circularity particularly means new business models and value creation opportunities through innovative recycling technologies and sustainable product solutions.

While the path to a circular economy may be challenging, it's non-negotiable. With innovative digital solutions, the chemical industry has important tools to shape this transition successfully. The time to act is now – so that the next Circularity Gap Report finally shows improvement.