Sustainable Digital Market Design

European Strategic Autonomy series - Digital & Technology

Policy Study

28/06/2022

A data-based approach to the circular economy

Markets must be designed properly to serve the common good. This is particularly evident in the digital economy, where platform companies have deeply restructured value chains over the last 20 years. But while the EU has taken many initiatives that improve the functioning of digital platform markets – from the Digital Markets and Services Acts to the Data Governance and Data Acts – they neglect one of the most important challenges of our time: the enforcement of sustainability goals.

This policy study argues that the design of digital markets holds great potential for an ecological transformation of the economy. Especially the creation of new market rules for generating, storing, accessing, and using product-related information can help to connect stakeholders and create new models of collaborative business models. Therefore, the development of data infrastructures is essential to close and slow down product and material flows, increase the availability of spare parts or improve the recycling of materials.

The study lays out a policy framework that includes the specific selection criteria needed to identify relevant data. To this end, it maps each phase of the circular economy model to a step in the data value chain. The result is a Circular Data Action Matrix that describes what data needs to be provided and by whom to transform production and consumption systems toward an economic activity that respects planetary boundaries. Rather than a data economy that focuses exclusively on tracking human behaviour, more product transparency and a systematic digital tracking of goods and materials are needed. To this end, the study formulates policy recommendations around the central claim that mandatory data sharing obligations for suppliers, producers, and operators can lay the foundation for ecologically oriented innovation and circular value ecosystems. This can be achieved through coordinated development of the European Digital Product Passport and further data regulation efforts for standardized collection and provision of product-related environmental data.

This publication was launched during the second event of the FEPS #DataTalks series: Sustainability and data-sharing among businesses, which counted on the participation of the authors. You can find here the conversation around the results and policy recommendations included in this policy study.

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