Artificial Intelligence, the Internet of Things, and Digital Product Passports will revolutionise circular business models. This is the conclusion of the study Digitalisation of Circular Business Models – digital solutions enabling the transition towards circular economy, developed by researchers from UNEP, the One Planet Network, and the Wuppertal Institute.

The study is based on ten case studies across different regions and sectors, ranging from digital waste management to product traceability platforms. These examples demonstrate how digital solutions play a key role in ensuring transparency throughout the entire supply chain, closing material loops, and enabling new, more sustainable business models.

The study’s main conclusions are:

• Digitalisation reduces environmental impact at scale. Technological solutions can reduce greenhouse gas emissions by 20%, water consumption by 30%, and solid waste by 20%.

• Digitalising the circular economy is particularly important for complex products and value chains, making them more sustainable and helping to secure supply. Digital solutions must be interoperable—that is, they must enable information sharing between different IT systems—and operate at a global scale.

• Circular business models are gaining momentum. In 2024, 27 million refurbished mobile phones were sold in Europe, demonstrating that consumers are increasingly accepting reused and refurbished products. Digital platforms that enable servitisation or product exchange help extend product lifecycles, reduce idle capacity, and promote more efficient resource use.

• The regulatory context can create the conditions to accelerate the circular transition. The Digital Product Passports (DPPs) required under the new Ecodesign Regulation are a clear example of the shift towards a data-driven approach, fostering transparency, traceability, and informed decision-making across the entire value chain.

In any case, while digital technologies are not an end in themselves, it is clear that they are tools that “not only improve transparency and operational efficiency, but also open the door to scalable solutions across different sectors and regions,” according to the authors. For this reason, “the integration of circular economy principles with digital innovation represents a key opportunity for sustainable growth.”