Carbon neutrality, the European ecodesign regulation, managing environmental transparency, the role of large companies as regards sustainable transformation, greenwashing, the price of carbon as transition risk, innovation and technological improvements – particularly in sectors considered to be high material and energy consumers, driving a circular economy that is resilient to the lack of critical raw materials, expansion of producer responsibility and promoting secondary raw materials, and dissemination related to European taxonomy are the challenges identified by the third Strategic Environmental Monitoring Report on the Circular Economy, published today by the Basque Ecodesign Center.

The Basque Ecodesign Center has published its third Strategic Environmental Monitoring Report on the Circular Economy for 2025

This report compiles the latest market and regulatory developments that are driving the transition towards a more circular and decarbonised economy; it also identifies new standards and recognised methodologies that can generate opportunities and risks for the value chains of the partners of the Basque Ecodesign Center, around 19,000 thousand companies.

The analysis covers six themes that address the main areas of action of the European Green Deal and which are of interest for the business fabric; they are transparency and positioning, ecodesign for a circular economy, secondary raw materials and waste management, decarbonisation from a life-cycle approach, zero pollution, and sustainable finances.

It analyses the key points and challenges for Basque companies to be competitive in the European regulatory or market environment where sustainability has become a clear factor for competitiveness. Specifically, it summarises the legislative and regulatory framework for 2024-2030, which will pave the way for companies to achieve economic competitiveness and environmental sustainability.

Addressing those challenges is testing for Basque companies, particularly SMEs, which need to improve their systems providing environmental information to the value chain and to adapt to new regulatory framework. However, it is also an opportunity for them to bolster their competitiveness by means of innovation and compliance with more demanding environmental standards, as the Basque Ecodesign Center report points out.

Over 300 companies have regulatory requirements regarding managing environmental information, such as sustainability reports and digital product passports

Advances in the Basque Country

The data set out in the report reflect important advances achieved by the Basque companies in their transition towards a circular company, along with meeting challenges that they are facing to remain competitive in an ever more demanding market and regulatory context.

The report points out that the Basque Country has managed to cut its GHG emissions by 33% since 2005 and is in a strong position to achieve the climate neutral goals set for 2050 by the Basque Energy Transition and Climate Change Act 1/2024, of 8 February

Basque companies have also begun to adopt ecodesign policies driven by European Regulation 2024/1781 with an increasing focus on product circularity. Over 300 Basque companies have or will have regulatory obligations regarding the dissemination of advanced environmental information management systems, such as sustainability reports and adopting product digital passports; over 250 industrial facilities in the Basque Country will be affected by the Industrial Emissions Directive 2024/1785 and have adopted best available techniques to foster decarbonisation, the circular economy and technological innovation.

Over 250 industrial facilities in the Basque Country are affected by the Industrial Emissions Directive, as regards adopting best available techniques to drive decarbonisation, the circular economy and technological innovation

The report stresses that many Basque companies will have to meet new regulatory requirements related to managing environmental information, being more transparent, developing and monitoring decarbonisation plans in line with the goal to limit global warming 1.5 ºC; avoiding greenwashing; adopting best available techniques for decarbonisation and the circular economy (over 250 industrial facilities), complying with the carbon border adjustment mechanism (CBAM) that eliminates products from other countries with lower environmental restrictions (12 companies); investing in R&D to reduce dependency on critical materials such as aluminium and cooper; managing the end of life of products, mainly in the textile and automotive sectors; and, finally, fostering sustainable finances.

According to this Basque Ecodesign Center (BEC) report, the Basque Country is favourably positioned in relation to other European regions thanks to its early adoption of key measures of the green transition, global competition and European regulatory pressure, even though they will require ongoing investment in technology, private-public partnership and business training to maintain its competitive leadership in the circular economy.