The circular economy is often narrated as a contest between virtuous repair and wasteful replacement. That framing is morally appealing and politically useful, but it misses the institution that makes repeated use commercially routine. Goods do not circulate merely because law permits repair or because consumers say they prefer durable products. They circulate when sellers, buyers, insurers, repairers, recyclers and regulators can all trust what they are looking at. In circular markets, waste is often a symptom of missing memory.
That missing memory is not abstract. It appears whenever a refurbished heat pump cannot command a fair price because nobody can verify service history; when a reused battery module carries uncertain liability because past operating conditions are opaque; when a spare part fits physically but not administratively because software locks, warranty ambiguities or undocumented modifications shadow the device. The hard problem is not persuading people to value durability, but enabling institutions to price it.
Why repair rights are necessary but insufficient
Europe has moved further than most jurisdictions in building a legal architecture for longevity. The Ecodesign for Sustainable Products Regulation and related repairability measures have made durability, spare parts, information and digital product passports central to industrial policy. France’s repairability and durability signals, and the European Commission’s repair scoreboard work, have also helped shift debate from end-of-pipe recycling towards use extension.
Yet these advances reveal a more awkward truth. A right to repair does not by itself produce a functioning secondary market. It may open access to manuals, tools and parts, but it does not automatically answer the questions on which resale value depends: what exactly is this item, what has been done to it, who did it, using which component, under what standards, and with what residual risk. A repaired product without a trusted history is still a risky asset.
The economics of second lives
Primary markets enjoy a hidden privilege: manufacturers know more about a product than anybody else. They know the bill of materials, tolerances, firmware versions, known faults and approved substitutes. Secondary markets inherit the object but not always the knowledge. That asymmetry depresses value. It raises inspection costs, increases adverse selection and pushes many goods towards premature shredding or downcycling even when their physical utility remains high.
Economists have long understood that markets can fail when quality is hard to observe. Circularity intensifies this problem because products do not merely move from one owner to another; they move through episodes of maintenance, cannibalisation, upgrade and recombination. Each episode can preserve value, but only if the record survives with the artefact. Without that continuity, every transfer becomes a negotiation under uncertainty, and uncertainty is expensive.
A repaired product without a trusted history is still a risky asset.
What a product history actually does
In circular markets, waste is often a symptom of missing memory.
The current enthusiasm for digital product passports sometimes implies that a passport is a consumer-facing label. That understates the issue. The economically important function is not display but coordination. A robust product history can align several layers of decision-making at once: repair diagnosis, safety assurance, residual valuation, warranty allocation, recall management, materials recovery and regulatory compliance.
For high-volume goods, such records need not be maximalist to be useful. The practical minimum is often modest: identity, composition, maintenance events, part replacements, software state where relevant, and provenance of critical components. The point is not to surveil users or to create a perfect twin of every object. It is to preserve enough shared memory that an object can move through different hands without becoming institutionally illegible.
The circular economy is becoming a documentation economy
This is why the next bottleneck in circular policy is likely to be record governance rather than public awareness. The European Commission’s work on product passports is a recognition that circularity requires interoperable information infrastructure. But interoperability is only one piece. The more difficult questions concern who may write to the record, who verifies entries, how errors are corrected, how confidentiality is protected, and how liability is apportioned when data are incomplete or wrong.
These are not technical footnotes. They define whether product histories become trusted commercial instruments or remain aspirational databases. If every manufacturer keeps records in different formats, every repairer logs interventions idiosyncratically, and every resale platform applies its own condition taxonomy, the result will be data abundance without market confidence. Standards matter here not because they are glamorous, but because they lower the transaction costs of trust.
From ownership to stewardship
There is a deeper political economy point. Linear systems are comfortable with abrupt transfers of responsibility. A product is sold, a warranty expires, and the seller exits the relationship. Circular systems are harder because they distribute stewardship across time. Designers influence reparability long after sale; independent workshops affect safety and value; software support decisions can determine whether hardware remains usable; recyclers depend on information generated years earlier by firms they may never meet.
That temporal interdependence requires institutions that carry obligations forward. In effect, circularity asks economies to treat products less like disposable commodities and more like managed assets. That does not mean abolishing ownership. It means recognising that useful life increasingly depends on chains of care, documentation and accountability that no single sale can capture.
Why small operators have the most to gain
The common fear is that richer documentation will favour large incumbents with the resources to build compliance systems. That risk is real. But the absence of trusted records often disadvantages smaller actors even more. Independent repairers, local refurbishers and community remanufacturers typically lack brand-based signalling power. They need portable evidence of work quality to compete against the default suspicion attached to used goods.
A repaired product without a trusted history is still a risky asset.
Well-designed records can therefore act as market access infrastructure. A small workshop that can document diagnostics, replacement parts and test outcomes in a recognised format is easier for an insurer to underwrite and for a buyer to trust. The same applies to municipal reuse networks and social enterprises handling furniture, appliances or electronics. Their bottleneck is rarely only technical skill; it is the inability to convert good practice into legible credibility at scale.
The software problem inside the materials problem
Circular-economy debate still treats software as a niche issue, relevant mainly to phones or smart home devices. By 2026 that is plainly too narrow. More and more products that look mechanical from the outside are governed by firmware, connectivity and digital access controls. NIST’s work on IoT cybersecurity underlines why updates and lifecycle security matter, but from a circular perspective software has another consequence: it can silently redefine whether an object is repairable, compatible or lawful to resell.
A machine may be materially sound and mechanically serviceable, yet commercially stranded because software support lapses, pairing restrictions block replacement parts, or security updates are unavailable. In these cases the relevant history is not only physical maintenance but digital state. If circular governance ignores this layer, it will mismeasure useful life. Material recovery then becomes a compensation mechanism for informational and software failure upstream.
The hard problem is not persuading people to value durability, but enabling institutions to price it.
Liability is the quiet brake on reuse
Many circular strategies assume that once technical capability exists, reuse will follow. What frequently intervenes is liability anxiety. Who is responsible when a refurbished component fails in a safety-critical application: the original manufacturer, the remanufacturer, the installer, or the owner who approved a non-original substitute. Without clearer rules and better records, prudent actors often choose disposal over dispute.
This matters especially in sectors where reuse could deliver substantial material savings but where tolerances are strict: industrial machinery, building systems, vehicles, medical devices and energy equipment. The economic potential of secondary use depends less on abstract commitment to circular principles than on whether liability can be partitioned with sufficient confidence. Product histories are valuable precisely because they narrow the zone of ambiguity.
Commons governance, not just corporate data strategy
Because product records create value across many firms, there is a temptation to treat them as proprietary assets. But if every crucial datum is enclosed, circularity fragments. The challenge resembles other forms of commons governance: participants need shared rules for access, contribution, verification and fair use. Some data will appropriately remain confidential, yet too much enclosure reproduces linear economics by making downstream actors dependent on upstream gatekeepers.
The hard problem is not persuading people to value durability, but enabling institutions to price it.
The institutional question, then, is not whether all information should be open, but which layers should be common. Safety-relevant specifications, service events, material composition and end-of-life handling instructions have a strong claim to portability. Competitive differentiation can still exist in design, service quality and analytics. What circular markets require is a baseline informational commons sufficient to keep goods intelligible after first sale.
Regenerative finance needs better collateral
Advocates of regenerative finance often focus on directing capital towards lower-impact activities. That is necessary but incomplete. Finance also needs asset classes it can understand. A bank, lessor or public funder can support refurbishment, reuse and remanufacturing more confidently when residual values are evidenced rather than guessed. Better records can turn durability from an ethical aspiration into a financeable property.
This may sound dry, but it changes incentives materially. If lenders recognise that documented maintenance preserves collateral value, borrowers gain reasons to maintain and repair. If insurers can differentiate between well-documented refurbished goods and opaque ones, premiums can reward stewardship. If public procurement can compare lifetime performance on the basis of verifiable histories, circular suppliers need not compete only on upfront price. The ledger, in other words, is where restorative economics becomes bankable.
What success would look like by the end of the decade
The test for circular policy over the next few years is not simply whether more products are labelled repairable or whether recycling targets rise. It is whether economies build mundane but durable systems of memory. Success would mean that a refurbished appliance, machine or component arrives with a recognised record that different actors can read; that authorised and independent repairers can contribute to it under common rules; that buyers can distinguish a carefully maintained item from a merely cleaned one; and that regulators can trace failures without forcing every actor into proprietary silos.
None of this eliminates conflict. Standards will be contested, data rights litigated and compliance costs debated. But the direction is clear. Circularity is moving from a rhetoric of good intentions to an infrastructure of verifiable histories. Once products can carry trusted biographies rather than anonymous bodies, reuse becomes easier to insure, easier to finance and easier to normalise.
The overlooked thesis of zero waste
Zero-waste economics is often described as a matter of closing loops. That image is useful, but incomplete. Loops do not close by geometry alone; they close through institutions that preserve identity, responsibility and value over time. In that sense the most important circular innovation of the late 2020s may not be a new material at all. It may be the emergence of public-interest governance for product memory.
If that sounds unromantic, it is because much of the circular economy’s future lies in clerkship rather than spectacle: standards committees, procurement templates, liability rules, audit trails and interoperable records. Yet these are precisely the tools that allow restorative outcomes to scale beyond boutique niches. The repair economy’s missing institution is not a market waiting to be unleashed, but a ledger capable of making second, third and fourth lives count as economically first-class.
