The Future of the Economy: From Linear to Circular Value Creation
Our economy, and indeed our entire world, stands at a crucial turning point. For decades, global industrial production followed a linear pattern: raw materials were extracted, processed, used, and ultimately discarded. This model is increasingly reaching its limits. The growing scarcity of resources, climate change, escalating environmental pollution, and geopolitical uncertainties make it clear that a shift in thinking is necessary. At the same time, regulatory pressure to implement more sustainable economic models is increasing. The circular economy, which focuses on reuse, upcycling, recycling, and more efficient resource utilization through extended product life cycles, offers a promising response to these challenges. However, it not only provides solutions for ecological and social challenges but also opens up new economic opportunities. Companies that transition to circular models early can reduce costs, tap into new business fields, and strengthen their resilience against global crises.
Regulatory Requirements and Political Developments as Drivers
International and national legislators are increasingly advocating for circular approaches. The EU has set clear guidelines with the Green Deal and the Circular Economy Action Plan to reduce resource consumption and CO₂ emissions. The introduction of PPWR and the (still partially) mandatory DPP expands these requirements. It is expected that further regulations will follow, making it essential to engage with them at an early stage. Companies must adapt to these changes to remain competitive in the long term, comply with regulations, contribute to climate and resource protection, and leverage economic opportunities for sustainable growth.
Resource Scarcity and Climate Protection: A Paradigm Shift is Essential
The availability of many essential raw materials is rapidly declining. It is, therefore, increasingly important to consider recovering valuable raw materials from "end-of-life" products and reintroducing them into use. We are currently witnessing a dramatic struggle for valuable resources such as rare earth elements. At the same time, climate change and growing environmental pollution are increasing the pressure on businesses and societies to establish more sustainable production and recycling methods. A consistent circular economy can help reduce CO₂ emissions while simultaneously minimizing geopolitical risks by reducing dependence on scarce resources.
Cross-Industry Collaboration as the Key to Success
A functioning circular system can only emerge through collaboration. A holistic approach to resource extraction, use, and recycling must be pursued—from the beginning of the resource's value creation to the product's end-of-life and beyond, into the recovery and reuse process. The tracking of material flows plays a crucial role. Companies from different industries must jointly develop new standards and solutions. Digital platform technologies and blockchain-based solutions that connect data on product life cycles and material compositions are essential to enabling effective circular processes across corporate and industry boundaries. A fundamental prerequisite for this is clear and durable direct marking of resources and products throughout their entire cycle.
GS1 makes a significant contribution to the structured tracking and identification of products and materials in support of the circular economy by providing globally consistent standards. This includes standardized identifiers (such as GTIN, GRAI, or Digital Link), interoperable interfaces for data exchange across supply chains, and mechanisms to ensure data consistency throughout the entire product lifecycle. These standards make it possible to share information about materials and products reliably and consistently – even across different companies, systems, and countries. As a result, traceability, reuse, and recycling become much easier to implement.
Digitalization and Labeling Technologies as Enablers of the Circular Economy
A successful circular economy requires precise traceability and transparency across the entire material flow. Digital technologies for data collection, storage, analysis, and tracking play a crucial role. Additionally, direct Productmarking technologies such as laser systems, printing or etching methods (depending on the product), and RFID chips are fundamental and enable the precise identification and tracking of materials throughout their life cycle. This ensures that valuable raw materials are effectively reused instead of ending up as waste. Digitalization and the advancement of existing marking systems, as well as the integration of both technologies throughout the entire value chain, can thus be seen as enablers for the development of new circular approaches.
Economic Opportunities through Circular Business Models
Beyond ecological and political reasons, the circular economy offers immense economic advantages. Companies can unlock new revenue streams through innovative business models, reduce costs through more efficient resource utilization, and position themselves as pioneers in a sustainable economy. Rental and leasing models, product-as-a-service concepts, and innovative recycling and upcycling approaches open entirely new market potentials. Even existing linear systems can be transformed into new circular models through appropriate combinations, ensuring the security of future production. Considerations about new product designs must also be integrated into this approach. Product development must focus on the most efficient possible recycling methods.
Application Examples for Product Marking Systems and Digitalization
The combination of direct product marking and digitalization is a central building block of the circular economy. To achieve a comprehensive circular economy, cross-industry and cross-sector solutions must be developed.
Serialization and Aggregation
By individually labeling products, their entire life cycle can be digitally recorded. This facilitates the recycling of valuable materials such as rare earth elements or metals from electronic waste, particularly in the electronics sector. Moreover, multiple material streams that merge during the recovery process can always be tracked and verified. Additionally, comprehensive data collection and analysis are ensured. A durable marking, such as multifunctional 2D codes, is crucial. A current operational example is Coca-Cola LATAM, where our Lasermarking technology has established both a circular system for refillable PET bottles as well as the first Deposit system in LATAM.
Smart Packaging with Digital Watermarks
Packaging with invisible digital watermarks enables more precise sorting in the recycling process. Scanners in sorting plants can read these watermarks and automatically assign packaging materials to the correct recycling category.
RFID Chips for Tracking Reusable Packaging
In logistics and retail, RFID chips allow the tracking of reusable containers, enabling companies to efficiently manage packaging cycles and reduce losses.
Blockchain for Authenticating Recycled Materials
A blockchain-based platform can document the origin, quality, and processing of recycled materials, ensuring that companies use truly sustainable raw materials and that certifications are tamper-proof.
Digital Twins for Durable Consumer Goods
Digital twins—virtual representations of physical products—allow seamless tracking of materials and components throughout their life cycle. This facilitates repairs, upcycling, and resource-efficient recycling.