Article

Circular sourcing means substituting virgin raw materials with secondary materials - recycled, reused or derived from industrial by-products - as part of a strategy for security of supply and industrial sovereignty.

In response to the structural risks identified by the Circular Industry Coalition led by Circul'R and CEA ISEC (geopolitical tensions, price volatility, critical materials and regulatory instability), 4 levers can turn these dependencies into competitive advantages:

• Map and secure sources of secondary materials
• Make traceability operational
• Make eco-design an internal standard
• Activate cross-sector cooperation

Why linear sourcing has become a first-order strategic risk

The linear model that has dominated for two centuries - extract, produce, consume, discard - was long a driver of growth. It is now a source of systemic vulnerability. That is the unequivocal conclusion drawn by nine major French manufacturers - Alstom, Equans, Forvia, Legrand, RTE, Rexel, Safran, Groupe Seb, Thales - in a report published in February 2026 by Circul'R and CEA ISEC, with the support of the French Directorate General for Enterprise (DGE).

Their work identifies 4 structural, interdependent risks that weaken any supply chain still operating on linear logic:

• Geopolitical tensions heighten the fragility of supply chains. Trade sanctions, regional conflicts, protectionist policies: each such episode triggers logistical disruption, greater price volatility and increased dependence on third countries for access to critical resources.
• Volatility in raw material and energy prices disrupts forecasting, weakens margins and jeopardises long-term investment.
• Material criticality, amplified by the geographical concentration of strategic resources - rare earths, copper, silicon - and by competition for use between sectors. By way of example, European lithium requirements will be 12 times higher by 2030 and 21 times higher by 2050. Demand for rare earths will multiply fivefold by 2030. In Europe, less than 1% of rare earths are currently recycled. The overall rate of secondary material use in the EU rose only from 11.2% to 12.2% between 2015 and 2024, far short of the 23% target set for 2030.
• Regulatory instability, finally, creates a lack of visibility and rising compliance costs, while weakening competitiveness against foreign rivals operating under fewer constraints.

These four risks are not independent. They reinforce one another: geopolitical tensions heighten material criticality, price volatility undermines sustainable investment, regulatory instability complicates operations. Together, they threaten the sovereignty, competitiveness and innovation capacity of European industry.

The answer to these vulnerabilities has a name: circular sourcing. Not as a CSR exercise. As a strategy for industrial sovereignty and competitiveness.

Executive teams are starting to see it. According to a Bain & Company / World Economic Forum survey of 420 industrial leaders worldwide, more than 70% believe circular models will help grow their revenue by 2027 and 65% see them as a key lever for building resilience. The signal is all the stronger given that, according to McKinsey, value chain disruptions cost companies the equivalent of 45% of a year's profits over a decade on average. The cost of inaction has become measurable.

What the figures reveal: a gap between ambition and reality

Only 6.9% of the global economy is circular today (Circle Economy, 2025). In France, data from the Institut national de l'économie circulaire (INEC) makes for sobering reading:

• Only 22% of companies have worked on strategies to relocate their value chains
• Just 17% distribute their industrial activities close to their customers
• 10% have set up reverse logistics loops

These figures reveal not a lack of ambition, but a series of concrete barriers that the Circular Industry Coalition has mapped precisely. They appear at every stage of the industrial life cycle: in design, in repairability, in the technical limits of material recovery, in the availability of secondary materials and in the absence of common standards.

Understanding these barriers means understanding where to start.

The 4 levers of robust circular sourcing

Lever 1: Map and secure sources of secondary materials

Before looking for suppliers of secondary materials, you need to know where the material is. Obvious as that sounds, it is often overlooked: some procurement departments seek out new suppliers without first mapping the secondary resources available in their own region.

A strategic assessment of available sources - at regional, national or continental scale depending on the material - is the starting point for any circular sourcing decision. The circular economy is grounded in the physical reality of available resources: it operates within a local, immediate geography and calls for economic trade-offs across both space and time.

The question of critical materials.

For critical materials - rare earths, copper, silicon, electronic components - risk mapping must be carried out along two axes: the probability of a disruption and the severity of its impact on the business.

Circul'R carried out this exercise for a major distributor of building materials, analysing 18 materials along these two dimensions. The deliverable was an operational decision matrix, used to steer investment and identify priority substitution strategies.

Securing volumes, not just access.

The Circular Industry Coalition proposes creating a shared cross-sector purchasing body, driven by volunteer companies, to aggregate volumes and reduce the risks linked to market fluctuations. The mechanism also aims to harmonise material specifications across sectors and value chains, and to support the competitiveness of French secondary materials by providing price visibility and stability.

What this means for your organisation

The procurement function needs to move beyond a top-down logic - finding the lowest price for a standard material - towards a systemic view of resources. Procurement becomes a pivotal function in transforming the business model. That is a change of posture, not just of process, and it means training procurement teams.

The Norsk Hydro example: when circular sourcing becomes a profit centre.

The Norwegian aluminium giant has made recycling the heart of its sourcing strategy. Recycling aluminium requires only 5% of the energy needed to produce primary aluminium. Thanks to its proprietary HySort technology (advanced sorting of post-consumer scrap), Hydro produces bespoke alloys for customers such as Porsche and Mercedes-Benz. The target: processing up to 1,200 kilotonnes of post-consumer scrap a year by 2030, for an estimated additional EBITDA potential of $750 million (Bain & Company / WEF study, 2025). Demand for recycled aluminium is growing at 5.4% a year: twice the rate of virgin aluminium.

Lever 2: Make traceability genuinely operational

Without robust traceability, circular sourcing remains an intention rather than an industrial asset.

The Circular Industry Coalition is unambiguous on this point: without reliable visibility of material flows, stocks and environmental performance, it is impossible to coordinate efforts effectively, identify circularity opportunities or measure the impact of actions taken. Collecting, structuring and sharing data within a secure framework are the foundations of credible industrial circularity.

The current problem is structural.

Most companies still manage their flows through ERP systems designed for the linear economy, where the central concept is the transaction, not the material loop. These systems run into numerous data interoperability difficulties within a circular value chain. A recycled material has a history - origin, treatment, composition, potential contamination - that standard tools cannot capture.

Regulatory pressures make this urgent.

CSRD, in force since 2024, requires large companies to publish detailed information on their environmental impacts, including resource and material management. The ESPR regulation (Ecodesign for Sustainable Products Regulation, 2024) paves the way for the digital product passport, which will come into force progressively from 2026 for certain categories and will make detailed material traceability mandatory across the life cycle.

The regulatory obstacle of "waste status" remains a major barrier.

Manufacturers involved in circular chains for electronic and energy equipment come up against concrete blockers: the impossibility of classifying refurbished parts as products, administrative burdens on cross-border movements, and the obligation to treat certain flows as waste, which limits reuse. The Coalition proposes drawing on the France Expérimentation scheme to test controlled derogations and trial alternative classification protocols.

Virginie Gatin, CSR Director at Legrand: "the refurbishment of electrical and electronic equipment will only take off if it rests on economically viable models. Standardising processes, tracing equipment and securing outlets are key conditions for making these models profitable and attractive at scale for all industrial players."

Lever 3: Make eco-design an operational standard

Eco-design is a powerful lever for circular sourcing. More often than not, it is the last one activated, because it touches product design.

Yet this is the stage where everything is determined. A poorly designed product is structurally dependent on virgin materials. If a plastic resin requires a purity that recycling channels cannot guarantee, if materials are assembled in a way that makes disassembly impossible, if critical components are not designed to be recovered at end of life: no purchasing policy can make up for those design choices.

The Coalition's report is blunt about the current state of play: eco-design is still only partially embedded, for want of common frameworks, shared tools and dedicated skills within R&D and procurement teams. By rethinking products to reduce dependence on critical materials, make maintenance easier and guarantee material quality at end of life, eco-design becomes a direct factor of resilience and competitiveness.

Ingrid Tams, Head of New Circular Solutions at Groupe Seb, puts it clearly: "developing circular business models means transforming internal practices in depth, from R&D through to marketing and sales teams, taking in procurement and industrial teams along the way. Circularity becomes a lever of value creation when it is fully and concretely embedded in the company's business model."

What that means in practice:

• Roll out eco-design training modules for R&D and procurement functions so that circularity is built in from the design stage and into economic decision criteria.
• Develop eco-design criteria harmonised across technical, commercial and operational functions.
• Anticipate the requirements of the ESPR regulation, which will progressively impose rising standards of durability, repairability and recycled content for products placed on the European market.

The Fairphone example: when eco-design frees up sourcing.

The Dutch smartphone maker designed its products to be repairable and easy to disassemble, which allows it to use 100% recycled plastics and 100% recycled aluminium in its devices, with fairtrade gold in its supply chain (figures verifiable in its public Impact Report). By designing for circularity, Fairphone turned a sourcing constraint (access to critical materials for electronics) into a brand argument and a proof of industrial feasibility.

Lever 4: Activate cross-sector cooperation to unlock access to materials

The three previous levers - mapping, traceability, eco-design - are necessary but not sufficient. The final barrier is access: access to volumes of secondary materials, access to shared quality standards, access to sorting and remanufacturing infrastructure. And that barrier does not lift by itself. No single player can transform its value chains alone: that is the operational conclusion of the members of the Circular Industry Coalition.

The circular economy only takes hold fully when it rests on collective momentum capable of breaking out of silos. Sharing data, building common frameworks and co-designing solutions help remove technical, logistical and organisational obstacles that no company, acting alone, can overcome.

Cécile Texier, Chief Sustainability Officer at Equans, describes the model: "scaling the circular economy rests on close cooperation between all players. Optimised resource management and the emergence of viable circular business models both require complementary skills and shared infrastructure, in order to serve customers sustainably and share the value created fairly."

What cooperation unlocks in practice:

• Aggregating purchase volumes of secondary materials (a shared purchasing body)
• Developing shared material quality standards across value chains
• Pooling sorting and remanufacturing infrastructure
• Building robust circular value chains at regional and European scale

The example of the Circular Industry Coalition:

By bringing nine manufacturers together around the shared conviction that only a collective approach can address systemic vulnerabilities, the Coalition made it possible, in its very first year, to align how value chains are read, to share complex technical findings and to converge on common priorities serving three goals: pooling costs, sharing risks and making recommendations to public authorities.

In 2026, the Coalition's work continues with 12 manufacturers, including Nexans, Equans, VINCI, Eiffage and EDF, and aims to address a central question: how can circular solutions be put in place and their impact on industrial resilience and sovereignty measured?

A regulatory framework that is accelerating circular sourcing

Circular sourcing is no longer simply a strategic choice: it is a trajectory that legislators are in the process of making mandatory.

Three key pieces of legislation must be tracked closely:

• The Critical Raw Materials Act (CRM Act, 2024) from the European Commission sets precise targets for 2030: extracting 10% of European needs from local mines, refining 40% of metals on the continent and incorporating a minimum of 15% recycled metals in products. Its list now covers 34 critical raw materials. Its aim: to reduce dependence on imports and lead manufacturers to build secondary substitution channels.
• CSRD (in force since 2024) requires large companies and listed SMEs to publish detailed information on their environmental impacts. Recycled content rates, circularity rates and resource management become publicly reported indicators.
• The ESPR regulation (adopted in 2024) and the digital product passport (DPP) provide for documented eco-design and detailed material traceability across the life cycle. The delegated regulations defining requirements by product category are being drawn up and will come into force progressively from 2027-2028 (batteries are already covered). Companies that have not started their transition risk non-compliance on their flagship ranges in the short term.
• The AGEC law (2020) remains the French reference text: an end to single-use plastics, action against planned obsolescence through the repairability index, and producer accountability through EPR schemes. It constrains product policies and, by extension, sourcing policies.

Where to start with your circular sourcing strategy

Having supported major manufacturers through their circular transition for several years, we have identified three pillars that frame the journey.

1- Map before you buy.

Run a diagnosis of your current inbound flows: which materials, in what volumes, with what level of geopolitical criticality? Cross-reference that map with the secondary material channels available in your region and across Europe.

2- Choose two or three concrete pilots.

Do not try to transform everything at once. Identify a substitutable material, a qualified supplier, a product or a production line, and measure the real impact (total cost, quality, traceability, CO₂ avoided). The pilot serves as much to learn as to convince people internally.

3- Align design and procurement.

The procurement function cannot pivot to circularity on its own. This has to become a cross-cutting subject, steered by the executive team, with circularity criteria built into R&D decisions from the design stage.

Conclusion

Circular sourcing is not merely a regulatory constraint. It is the rational response to four structural vulnerabilities that threaten the competitiveness and industrial sovereignty of any company still operating on linear logic. And the economic returns are documented: according to the Ellen MacArthur Foundation, adopting circular principles could generate a net benefit of €1,800 billion for Europe by 2030, or €900 billion more than the current linear trajectory.

The manufacturers who took part in the Circular Industry Coalition are unanimous: the transformation now required is no longer about reducing impacts, but about redefining how value is created, used, measured and preserved.

The levers identified - mapping sources, operational traceability, eco-design as standard, cross-sector cooperation - cannot be activated in isolation. They form a system.

The ambition is clear: to turn experimentation into an industrial standard, and make France one of Europe's leaders in a strong, robust and sovereign circular economy.