Legislation plays an important role in the transition to a circular economy. European and national frameworks, think of the Green Deal and the Paris Climate Accord, set the tone: circularity is no longer a non-committal aspiration, but a necessary route towards 2050. Yet practice is recalcitrant. For example, research shows that almost half of Dutch companies feel that legislation hinders circularity. Meanwhile, almost as many companies actually find these stricter rules indispensable. How is it possible that the same legislation is simultaneously perceived as both a brake and an accelerator?
Why legislation both helps and hinders circularity
In practice, companies regularly encounter laws and regulations that do not match their reality. A frequently mentioned obstacle is that regulations are sometimes contradictory or unclear. An example is the regulation concerning worm compost. Compost worms are legally considered livestock in the Netherlands, so their excrement falls under the strict Fertilizer Act. These rules were once drafted to ensure food safety and health in the bio-industry, but have the unintended consequence of making small-scale circular initiatives almost impossible. Where pioneers contribute precisely to waste reduction and soil quality, they encounter walls of bureaucracy.
On the other hand, there are rules that actually provide acceleration. The Corporate Sustainability Reporting Directive (CSRD) is an example. This European directive requires companies to provide insight into their sustainability policy, objectives and results. For many organizations, this means a substantial expansion of reporting obligations. It takes a lot of time, knowledge and resources to comply, but at the same time it encourages companies to take circularity more seriously. Directives such as the ban on single-use plastic (SUP Directive) and new ecodesign requirements (ESPR) have also shown in recent years that clear frameworks get companies moving.
Not less, but clearer
So what do companies expect from the government? Remarkably, they are not asking for fewer rules, but rather for clearer and more consistent rules. They need predictability, so they know what they can build on in the coming years. After all, investments in circular business models require longevity and certainty.
In addition, financial incentives can play a decisive role. Subsidies, tax breaks or investment deductions are often important conditions for taking steps. Cost savings remain the main driver for the majority of organizations to do circular business. A smart financial incentive can reinforce and accelerate that effect. In addition, the survey found that a quarter of companies believe that organizations that do not invest in sustainability in the near future will disappear.
Clarity = activity
That clear frameworks actually help, we already see in Belgium. In Flanders, the Materials Information System (MATIS) has been in place since 2024, requiring collectors and processors to record waste streams in detail. This makes the chain more transparent and creates better control. The introduction of Vlarema 9, with stricter rules for waste separation and raw material declarations, also provides companies with guidance. The result: more clarity and more circular activity.
Cooperation remains the key
While clear laws and regulations can help, organizations should not start waiting for perfect policies. The government should provide direction, but taking the first circular steps is and will remain the responsibility of organizations themselves. Companies simply cannot afford to sit back until all the rules are perfectly thought out and communicated. When government and business find each other in this, the acceleration needed to achieve the circular goals is created.
Important here is also the role of chain cooperation. After all, circularity does not stop at an organization's front door. Suppliers, producers, customers, processors ... they are all part of the same chain. Only by taking joint responsibility can cycles actually be closed. Clear rules of the game make that process easier, but the will to cooperate remains decisive.
From ambiguous to goal-oriented
The tension surrounding legislation shows how complex the road to circularity is. Rules can frustrate, but they can also provide direction and structure. The key lies in clarity, consistency and cooperation. For companies, this means that waiting is not an option, even if the frameworks are sometimes unclear or still being developed. Every step toward circularity is one that counts.
Start by formulating clear goals, measuring results and working together within the chain. The government can make a difference by providing stimulating and predictable ground rules, but the engine of the transition remains the business community itself. Ultimately, every initiative, no matter how big or small, is a step toward a circular economy.
This post was previously posted on Sustainable Business.
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