Last updated: June 22, 2026
Frequently Asked Questions About the Circular Economy
What is the circular economy and why is it relevant for companies?
The circular economy aims to keep resources in the value chain for as long as possible — through reuse, repair, refurbishing and recycling instead of linear disposal.
How can digital technologies support the circular economy?
Digital solutions such as product passports (Digital Product Passport), IoT tracking, AI-assisted material recovery and platforms for product-as-a-service enable transparent and scalable circular models.
Which regulatory requirements apply to the circular economy in the EU?
The EU circular economy strategy and the upcoming Digital Product Passport (DPP, mandatory for textiles from 2026) require companies to be transparent about materials, repairability and recyclability.
How recycling companies prepare for the Digital Product Passport (DPP)
For the recycling and circular economy, the introduction of the Digital Product Passport (DPP) represents a fundamental transformation. Until now, recycling operations often acted in uncertainty and treated incoming material streams as a "black box" of unknown composition. The DPP ends this era of intransparency. It delivers precise, machine-readable data about the material composition, contained chemicals, repairability and the entire lifecycle of a product directly at the point of entry in the recycling facility.
This data-driven approach is the key to realizing a true circular economy. It makes it possible to turn simple downcycling into high-quality recycling, in which valuable secondary raw materials are obtained that can replace virgin material. This document serves as a strategic guide for companies in the recycling industry to understand the technical, procedural and economic aspects of DPP implementation and to prepare successfully for it.The DPP in practice: a new era for sorting and recovery
The practical implementation of the DPP will revolutionize operational processes in sorting and recycling facilities. The process, which today is still strongly characterized by manual work and rough sensory sorting, will be replaced by an automated, data-driven workflow.
The new workflow in detail:
- Capture: A product arrives on the conveyor belt of the sorting facility. An industrial camera or scanner captures the data carrier attached to the product (e.g. a QR code or a digital watermark).
- Identification: The software reads out the unique product ID and sends a request to the central EU register.
- Data retrieval: The register forwards the request to the manufacturer's decentralized data store. Via a standardized API, the data relevant to the recycler (e.g. material type, polymer type, color code, contained additives or pollutants) is retrieved in real time.
- Automated decision: The facility software analyzes the data in milliseconds and classifies the product. It issues a precise command to the sorting mechanism.
- Targeted sorting: The product is automatically fed to the correct material stream by robotic arms, air nozzles or diverters – whether for high-quality recycling, composting or the safe disposal of hazardous materials.
The Digital Product Passport (DPP): more than just a QR code
This process has already been successfully demonstrated in several pilot projects. A consortium of Henkel, R-Cycle and Korozo Group, for example, has shown how information about adhesives in flexible packaging is stored in the DPP in order to optimize recyclability [1]."The information captured in the DPP enables end-of-life companies to properly manage disposed packaging when it arrives at sorting and recycling centers, which contributes positively to the circular economy and to recycling rates," explains Philippe Blank, Head of Circular Economy at Henkel [1].
Technical infrastructure: the foundation for DPP integration
To be ready for the DPP, recycling companies must invest in a specific technical infrastructure. This can be divided into hardware, software and the underlying standards.
| Component | Technology/standard | Function in the recycling process |
| Hardware |
Industrial cameras, scanners for QR codes & digital watermarks, NFC readers |
Physical capture of the data carrier on the product at high speed. |
| Software |
DPP platform / middleware, API interfaces |
Querying the EU register, receiving and processing the DPP data, controlling the sorting facility. |
| Data carrier |
QR codes, digital watermarks (e.g. Digimarc), NFC tags |
Physical carrier of the unique product ID on the product or packaging. |
| Identity standard |
GS1 Digital Link |
Ensures that the product ID is structured as a URL and globally unique, which enables data retrieval via the web. |
| Data standard |
EPCIS 2.0, JSON-LD |
Defines a common vocabulary and format for describing supply chain events and product data in order to ensure interoperability. |
| Trust standard |
DIDs and Verifiable Credentials |
Enables the cryptographic verification of claims (e.g. "contains 50% recyclate") in order to prevent greenwashing. |
Concrete advantages and economic opportunities
Investing in DPP capability is not only a necessity for regulatory compliance, but also opens up considerable economic potential.
- Increasing recyclate quality: Through precise sorting, single-variety, high-quality secondary raw materials can be produced. These achieve significantly higher prices on the market than mixed or low-grade materials and can replace virgin plastics in demanding applications.
- Efficiency and automation: The automation of sorting lowers operating costs, reduces the error rate and increases the throughput of the facilities. Manual sorting processes, which are slow and expensive, can be reduced to a minimum.
- Improved risk management: The DPP draws attention to contained pollutants or substances of concern. These can be specifically removed, which increases occupational safety and prevents these substances from entering the recycling loop.
- Automated compliance and reporting: The data from the DPP can be used directly for creating reports under Extended Producer Responsibility (EPR). This significantly reduces the administrative effort.
- New business models: Recycling companies can position themselves as strategic partners in the circular economy. They can feed valuable data about the recyclability of their products back to manufacturers or offer certified recyclates with guaranteed origin and guaranteed quality.
Strategic roadmap for preparation
The transition to DPP-compliant processes should take place gradually and strategically. The Ecodesign for Sustainable Products Regulation (ESPR) came into force on July 18, 2024; the first delegated acts for specific product groups are expected for 2026, with a transition period of 18 months [3].
Phase 1: Short-term preparation (2024-2025)
- Knowledge building & analysis: Form an internal team that familiarizes itself with the requirements of the ESPR and the upcoming delegated acts. Analyze which of the prioritized product groups (e.g. textiles, electronics, packaging) are relevant for your company.
- Infrastructure audit: Assess your existing IT and facility technology. Which scanners are available? Are your software systems able to communicate with external APIs?
- Market observation & networking: Take part in industry events, webinars and pilot projects. Network with DPP software providers and standardization bodies such as the GS1 Circularity Group.
Phase 2: Medium-term implementation (2025-2026)
- Technology selection: Choose the appropriate hardware (scanners) and software platform for your requirements. Conduct initial tests in a pilot line.
- Process integration: Develop the processes for integrating the DPP data into your sorting logic. Train your employees in handling the new systems.
- Build partnerships: Establish closer collaboration with manufacturers and waste producers in order to optimize the data flow and define common standards.
Phase 3: Long-term optimization (from 2027)
- Scaling: Roll out DPP-supported sorting to all relevant product streams and facilities.
- Data analysis & business models: Use the data obtained to continuously optimize your processes. Develop new services, such as detailed recycling reports for your customers or the sale of certified premium recyclates.
- Continuous adaptation: Stay flexible in order to be able to respond to new delegated acts and technological developments.
Start pragmatically
The Digital Product Passport is far more than a new regulation for the recycling industry. It is the decisive catalyst that enables the shift from a linear waste economy to a data-driven, profitable circular economy. Companies that now proactively prepare for this change, invest in the right technology and adapt their processes will not only ensure their compliance, but also secure a decisive competitive advantage in the circular economy of tomorrow.Sources
[1] PlasticsToday (February 2025). Digital Product Passport Optimizes Recycling, Traceability. Available at: https://www.plasticstoday.com/packaging/digital-product-passport-optimizes-recycling-traceability
[2] Digimarc (June 2024). Piloting Digital Product Passport for Plastic Recycling. Available at: https://www.digimarc.com/blog/piloting-digital-product-passport-plastic-recycling
[3] Tributech (December 2024). Preparing for the ESPR's Digital Product Passport. Available at: https://www.tributech.io/blog/preparing-for-digital-product-passports
Further resources
- Reference: va-Q-tec – Sustainable high-performance logistics digital
- Reference: ETO – Industrial digitalization
- Reference: Nicotra Gebhardt – Mechanical engineering 4.0
- Whitepaper: E-commerce automation in manufacturing
- Digital operating system – Circular economy & digital processes
