The Credibility Gap: Closing the Evidence Gap in Circular Economy Claims

Quick Read

Companies making circular economy claims face accelerating regulatory enforcement across the EU, UK, US, and Australia, yet most lack the evidence—chain of custody documentation, standardised measurement, and independent assurance—required to substantiate those claims. The credibility gap between aspirational commitments and verified progress has become both a regulatory liability and a commercial opportunity for companies that can demonstrate evidenced claims. Closing this gap requires moving beyond assertions and supplier declarations to a standard of proof that independent assurance can validate.

Executive Summary

The circular economy has developed a credibility problem. Sustainability commitments are easy to make; they require no measurement, no verification, and no accountability for delivery. The result is a market in which companies making genuine, verified progress toward circular economy goals are indistinguishable — from the outside — from companies making aspirational statements with no evidence behind them. This is the credibility gap.

It has consequences. Regulators are closing in. Investors are demanding proof. Customers — particularly B2B procurement functions — are requiring evidenced claims rather than assertions. And the legal exposure for making sustainability claims that cannot be independently verified is growing significantly in multiple major markets simultaneously.

This paper is written for four audiences, each facing a different dimension of the credibility gap:

The paper makes five core arguments:

• The claims environment has become the problem. The proliferation of circular economy and sustainability claims — most of them vague, unmeasured, and unverifiable — has eroded the credibility of the entire category. This creates a commercial advantage for companies that can demonstrate evidence-based claims.

• Enforcement is no longer theoretical. Regulatory action against unverified sustainability claims is accelerating in the EU, UK, US, and Australia. The legal and reputational cost of non-compliance is real, growing, and applies to circular economy claims specifically.

• Credibility requires a different standard of evidence. Assertions, supplier declarations, and sustainability report narratives are not sufficient. Credible circular economy claims require chain of custody documentation, standardised measurement, and independent assurance.

• The standards exist — and they are converging. The Global Circularity Protocol, ISO 59020, the Global Recycled Standard, and ESRS E5 provide the standardised frameworks for measuring and disclosing circular economy performance credibly. Companies that align to these frameworks are ahead of the regulatory curve.

• Credibility is a commercial asset, not just a compliance requirement. Verified, independently assured circular economy performance is increasingly a prerequisite for investor confidence, premium customer relationships, access to green finance, and regulatory compliance simultaneously.

Section 1: The Claims Landscape — What Is Being Said and Why It Is Not Enough

The vocabulary of circular economy has spread rapidly through corporate communications. "Circular," "recycled content," "sustainably sourced," "closed-loop," "eco-designed" — these terms appear in annual reports, product packaging, supplier questionnaires, and investor presentations across virtually every sector. They are used to signal commitment, attract customers, satisfy investor ESG requirements, and preempt regulatory pressure.

The problem is that, in most cases, they are not accompanied by the specific, measurable, verifiable evidence that would make them credible. And the gap between what is claimed and what can be evidenced is widening — because the incentives to make claims have grown faster than the systems required to support them.

1.1 The Anatomy of a Circular Economy Claim

Circular economy claims fall into several categories of decreasing evidenceability:

The commitment claim: "We are committed to achieving 30% recycled content across our product range by 2030." This is a statement of intention with no current evidence. It is almost impossible to challenge on accuracy grounds — because it makes no claim about the present — but it creates future liability if the commitment is not met and was not backed by a credible plan.

The percentage claim: "Our packaging contains 25% recycled content." This is a specific, measurable claim. It can be verified or falsified. In most cases, the evidence base behind it is a supplier declaration — not a measurement, not a chain of custody document, not an independently verified quantity. If the claim is wrong, the legal and reputational exposure is significant.

The certified claim: "Our products contain recycled content certified to the Global Recycled Standard." This is the strongest category — a claim backed by a recognised certification standard and third-party audit. It is also the least common.

Most companies' circular economy communications are in the first two categories. Regulators are requiring movement toward the third.

1.2 Why the Gap Has Grown

The credibility gap has grown for structural reasons, not because companies are systematically dishonest. Several dynamics have pushed claims ahead of evidence:

• ESG reporting frameworks have created demand for circular economy commitments without specifying the evidence standards required to support them — creating an environment where ambitious commitments were rewarded without scrutiny of their evidential foundation.

• The circular economy has been treated primarily as a sustainability communications topic rather than an operational and measurement discipline — meaning the systems, data, and processes required to evidence claims were never built alongside the claims themselves.

• Supply chain opacity makes it genuinely difficult to know, at the level of specificity required for a credible claim, what recycled content a product actually contains and where it came from.

• The standards for what constitutes a credible circular economy claim have only recently begun to converge — meaning companies operating in the earlier period of circular economy commitments had limited guidance on what "good" looked like.

Section 2: The Enforcement Reality — What Regulators Are Actually Doing

For several years, greenwashing enforcement was discussed as a risk without materialising as a significant one. That period is over. Regulatory bodies in multiple major markets are now actively investigating and penalising sustainability claims — including circular economy and recycled content claims specifically — that cannot be adequately evidenced.

2.1 The European Union: The Green Claims Directive

The EU Green Claims Directive, provisionally agreed in 2024 and currently in implementation, prohibits businesses from making environmental claims — including claims about recycled content, circular economy performance, and sustainability commitments — unless those claims are substantiated by recognised scientific evidence, specific to the product or company in question, verifiable, and independently verified.

The Directive explicitly prohibits: vague environmental claims without clear substantiation; claims based on emissions offsetting schemes rather than operational improvements; future commitments without credible delivery plans; and generic claims about sustainability that apply to the entire product category (not the specific company's performance above the norm). Penalties for non-compliance include fines, market access restrictions, and reputational enforcement action.

For circular economy specifically, the Directive's requirements mean that claims like "circular," "recyclable," "made with recycled materials," and "eco-designed" must all be backed by verifiable evidence at the product or company level. Aspirational statements are not compliant.

2.2 The United Kingdom: Competition and Markets Authority

The UK Competition and Markets Authority published its Green Claims Code in 2021 and has been enforcing it progressively since. Its 2022 review of fashion sector sustainability claims found that 40% of green claims reviewed could be misleading under consumer protection law. The CMA has signalled that circular economy claims — including recycled content, closed-loop, and sustainability commitments — are within its enforcement scope.

The UK also passed the Digital Markets, Competition and Consumers Act in 2024, which significantly strengthens the CMA's enforcement powers, including the ability to impose fines of up to 10% of global turnover for consumer law violations — which encompasses misleading sustainability claims.

2.3 The United States: Federal Trade Commission

The FTC's Green Guides — last revised in 2012 — are currently under review, with a revised version expected in 2026 that will provide more specific guidance on recycled content and circular economy claims. The existing Green Guides already prohibit general recycling claims (such as recyclable) unless a significant portion of consumers have access to recycling facilities for the material. The revised Green Guides are expected to address the full range of circular economy claims more specifically.

In the United States, the federal picture has shifted. The SEC's climate disclosure rules, finalised in March 2024, were rescinded in 2025. The federal regulatory floor for sustainability disclosure in the US has effectively been removed. However, the vacuum is being filled at the state level — and the reach of state legislation is broader than it might appear.

California's SB 253 (Climate Corporate Data Accountability Act) requires companies with annual revenues exceeding $1 billion doing business in California to disclose Scope 1, 2, and 3 GHG emissions from 2026. SB 261 requires companies with revenues above $500 million to report climate-related financial risks. Because of the scale of the California market, these obligations effectively apply to most large multinationals operating in the US. Oregon, New York, and other states are advancing similar legislation. Companies that assumed federal rule withdrawal removes US disclosure exposure are reading the landscape incorrectly.

2.4 Financial Regulators: ESG Claims in Capital Markets

Financial regulators in the EU (ESMA) and UK (FCA) are actively increasing scrutiny of ESG claims made by companies in capital market contexts — including sustainability-linked bonds, green bonds, and ESG fund disclosures. Circular economy performance, recycled content, and circular business model claims that appear in prospectuses, bond documentation, and ESG fund criteria are subject to the same accuracy standards as financial information. The reputational and legal consequences of inaccurate claims in these contexts are significant and growing as mandatory disclosure frameworks in Europe create the evidentiary baseline against which claims are measured.

Section 3: What Credible Evidence Actually Requires

Understanding what credible circular economy evidence requires is the foundation of closing the credibility gap. The answer is more specific — and more demanding — than most companies' current practice.

3.1 The Four Elements of Evidenceable Claims

Specificity: A credible claim is specific — it refers to a particular product, product line, or clearly defined business unit, not the company as a whole. "Product X contains 28% post-consumer recycled polymer by weight" is a specific claim. "We are committed to circular economy principles" is not. The move from general to specific is the first and most important shift in building evidenceable claims.

Measurability: The claim must be expressed in terms that can be measured and tracked over time. Percentage recycled content, percentage circularity, tonnes of recycled material used, and percentage reduction in virgin material use are all measurable. "Sustainability leadership" and "circular commitment" are not. Measurement is the foundation; without it, no amount of assurance can make a claim credible.

Traceability: The recycled content or circular economy performance behind the claim must be traceable — meaning there must be a verifiable chain of evidence from the claim back to the underlying reality. For recycled content, this means chain of custody documentation from the recycling processor through the supply chain to the product. For circularity performance metrics, it means the data methodology, sources, and calculations must be transparent and reproducible.

Independent assurance: The claim must be verified by an independent party — an organisation with no commercial interest in the claim's outcome, operating against a defined and recognised standard. This is the element most companies are missing, and the one that regulators, investors, and sophisticated customers are most actively requiring.

3.2 The Chain of Custody Imperative

Chain of custody is the most consistently underestimated requirement for credible recycled content claims. A chain of custody is a documented trail that traces recovered material from its source — the collection point, the recycling facility, or the waste processor — through the supply chain to the final product, with evidence at each stage confirming the material's origin, quantity, and quality.

Without chain of custody, a recycled content claim is, at best, an estimate based on supplier declarations. Declarations are not evidence. They may be accurate; they may not be. They cannot be independently verified. And in the context of regulatory enforcement, "our supplier told us" is not a defence.

Chain of custody can take two forms. Physical separation maintains recovered materials separately from virgin materials throughout the supply chain, providing the strongest traceability. Mass balance accounting allocates certified recycled inputs to outputs proportionally, accommodating supply chains where physical separation is impractical — but requires robust methodology and independent verification to be credible.

3.3 Measurement Standards

The measurement question — how to quantify circular economy performance in a standardised, comparable way — is being answered by a converging set of standards that companies should be aligning to now, before regulatory requirements mandate specific frameworks.

ISO 59020: The international standard for measuring and quantifying circularity, providing a common methodology for calculating the circularity of products, components, and materials. ISO 59020 provides the measurement foundation that makes circular economy claims technically comparable across organisations.

Global Circularity Protocol (GCP): The GCP, launched in 2025 by WBCSD and the UN One Planet Network, provides a comprehensive framework for measuring, managing, and disclosing circular economy performance — structured around four indicator modules (Close the Loop, Narrow and Slow the Loop, Value the Loop, and Impact of the Loop). Its core circularity indicators — percentage circular inflow, percentage material circularity — provide the standardised vocabulary for circular claims that regulators and investors are beginning to recognise.

Global Recycled Standard (GRS) and Recycled Claim Standard (RCS): Industry-established certification standards for recycled content claims, with third-party audit and chain of custody requirements built in. Companies that certify to GRS or RCS have a significantly stronger evidentiary foundation for recycled content claims than those relying on supplier declarations.

ESRS E5 (Resource Use and Circular Economy): For companies in scope for CSRD reporting, ESRS E5 requires disclosure of material-level data on resource use, recycled content, and circular economy performance. Companies that have built GCP-aligned measurement systems are substantially better positioned to meet ESRS E5 requirements than those without structured measurement.

Section 4: The Investor and Customer Demand for Proof

The regulatory pressure for evidenceable circular economy claims is being reinforced — in many cases preceded — by commercial pressure from investors and customers. Understanding what these audiences are specifically requiring helps organisations prioritise where to invest in building circular economy evidence.

4.1 Institutional Investors

Institutional investors have moved from requesting sustainability data to requiring specific, evidenceable circular economy data in ways that were not true three years ago. Several dynamics are driving this:

• ESG ratings agencies — including MSCI, Sustainalytics, CDP, and S&P — are incorporating circular economy performance metrics into their scoring methodologies. Companies with verified, quantified circular economy data score better than those with narrative commitments only.

• Sustainability-linked bonds and green bonds require specific environmental key performance indicators — increasingly including circular economy metrics like recycled content percentage and material circularity — that must be independently verified as a condition of the financial instrument.

• SFDR (EU Sustainable Finance Disclosure Regulation) and equivalent frameworks require that funds making sustainability claims about their portfolio companies can substantiate those claims. Fund managers are therefore increasingly demanding evidenceable data from portfolio companies — and excluding companies that cannot provide it.

• The ISSB's IFRS S1 and S2 standards, now adopted as the basis for sustainability reporting in multiple jurisdictions, create mandatory sustainability disclosure requirements for listed companies that will extend to circular economy and resource use topics as implementation expands.

4.2 B2B Procurement

Procurement functions at large corporations are increasingly applying sustainability criteria to supplier selection and retention — and the sophistication of those criteria is increasing. What began as questionnaires asking whether suppliers had sustainability policies has evolved, in the most advanced procurement functions, into requirements for:

• Verified recycled content percentages by material type, supported by chain of custody documentation or certification

• Circular economy performance data aligned to recognised frameworks (GCP, ISO 59020), not self-reported narratives

• Evidence of third-party assurance for circular economy claims — many large buyers are no longer accepting unassured supplier data

• Supplier-level circular economy roadmaps with measurable milestones and progress reporting

For suppliers who cannot provide evidenced data at this level, the consequence is increasingly contract risk — either direct exclusion from supplier panels or adverse scoring in competitive procurement decisions.

4.3 Consumer-Facing Markets

Consumer attitudes to sustainability claims have evolved significantly. Research consistently shows that consumers are sceptical of sustainability claims — and that this scepticism intensifies when claims are vague, generic, or obviously aspirational rather than specific and evidenced.

The commercial consequence is a paradox: companies that make ambitious circular economy claims without evidence are not gaining the consumer confidence those claims are designed to generate — and are simultaneously accumulating the regulatory and reputational risk of enforcement action. Companies with modest but evidenced circular economy claims, by contrast, are building the trust that translates into customer preference and loyalty.

The lesson is not that less ambitious claims are better. It is that claims must be proportionate to evidence — and that building the evidence base to support ambitious claims is a commercial investment, not just a compliance cost.

"In the market for circular economy credentials, verified claims command a premium. Unverified claims are free — but they carry growing regulatory and reputational risk as the enforcement environment tightens."

Section 5: Building an Assurance-Ready Circular Economy Programme

The path from the current claims environment to a genuinely evidenceable circular economy programme is well-defined. It requires investment in measurement systems, supply chain data infrastructure, and independent assurance — but it is a manageable programme when approached systematically.

5.1 Start with Measurement

Before any claim can be evidenced, it must be measured. This sounds obvious — but in most organisations, circular economy performance is tracked anecdotally (through supplier commitments and sustainability report narratives) rather than systematically (through structured data collection, defined methodologies, and quantified metrics).

The starting point is to define what you are measuring. For most manufacturing organisations, this means:

• Percentage of key material inputs that are sourced from recycled or recovered sources — the GCP's percentage circular inflow metric

• Percentage of end-of-life products recovered and reintroduced into the supply chain — the GCP's percentage actual recovery metric

• Recycled content percentage by product line and material type — the specific claim that most regulatory frameworks require you to substantiate

• Total material consumption and the proportion derived from circular versus virgin sources — the dematerialisation and circular material productivity metrics that GCP's broader indicator framework captures

These metrics should be measured at product level, not company level — because product-level claims are what regulators scrutinise and customers require.

5.2 Build the Data Infrastructure

Measurement requires data — and in most organisations, the data required for credible circular economy measurement does not currently exist in one place, in a structured form, with the granularity required. Building it requires:

• A product material composition database — a structured record of the materials present in each product, by type, weight, and recycled content, updated with each product revision or material change

• Supplier data collection processes — systematic engagement with direct suppliers to collect recycled content, substance hazard, and provenance data, with defined data formats and verification requirements

• Chain of custody documentation — the audit trail that links recycled content claims back to verified recycling sources, whether through GRS certification, mass balance accounting, or physical separation

• A data management system that maintains, updates, and makes accessible the circular economy performance data that measurement and reporting require

5.3 Align to Recognised Standards

The measurement and data infrastructure must be aligned to recognised standards — because it is against those standards that claims will be evaluated by regulators, investors, and customers. The relevant standards vary by context:

For recycled content claims: GRS or RCS certification provides the strongest foundation. Where certification is not yet in place, alignment to GCP measurement methodology and ESRS E5 data requirements provides a credible framework that is recognised by regulators and investors.

For circular economy performance reporting: The GCP provides the most comprehensive and internationally recognised framework. Its five-stage structure (Frame, Prepare, Measure, Manage, Communicate) maps to the full implementation journey. Its progressive levels — Initiation, Expansion, Consolidation — allow companies to start where they are and grow systematically.

For sustainability disclosure: ESRS E5 provides the specific reporting standard for companies in CSRD scope. IFRS S1/S2 applies to companies in jurisdictions that have adopted ISSB standards as mandatory disclosure requirements. GCP alignment supports compliance with both.

5.4 Commission Independent Assurance

Independent assurance is the element that closes the credibility gap — transforming a well-measured internal programme into an externally evidenced claim. Assurance involves an independent party — an assurance provider operating against a defined standard — reviewing the evidence base for a claim and confirming whether that evidence supports the claim as stated.

The Global Circularity Protocol explicitly recommends third-party assurance as the mechanism for building stakeholder trust in circular economy disclosures. The EU Green Claims Directive requires independent verification for any environmental claim made to consumers or in B2B contexts. ESRS requires limited or reasonable assurance of sustainability disclosures. In each case, the direction is the same: self-reported data, however carefully collected, is not sufficient.

The practical questions for organisations designing assurance programmes are: what level of assurance is required (limited or reasonable), against what standard (GCP, ISO 59020, ISAE 3000), for which claims and which product lines, and by which type of assurance provider. These questions have specific answers that depend on the regulatory context, the nature of the claims, and the audiences for whom assurance is being provided.

Section 6: The Board and Director Exposure

The credibility gap is not only a marketing and sustainability communications problem. It is a board governance issue — with director liability implications that are only now becoming fully apparent.

6.1 The Director's Duty of Care

Directors have a duty of care that extends to ensuring that material statements made by the company — including sustainability statements that could affect investor decisions, consumer behaviour, or regulatory relationships — are accurate and supportable. The "knew or should have known" standard applies: a director who approved a circular economy commitment or claim without satisfying themselves that the evidence base existed may be found to have failed their duty of care if that claim subsequently proves inaccurate.

This creates a direct governance obligation for boards to understand what circular economy claims the company is making, on what evidence those claims are based, whether that evidence would survive independent scrutiny, and what processes exist to maintain accuracy as circumstances change.

6.2 Securities Law Disclosure

For publicly listed companies, sustainability claims that appear in investor-facing communications — annual reports, sustainability reports, prospectuses, ESG investor presentations — are subject to securities law accuracy requirements. Inaccurate or materially misleading sustainability disclosures in these contexts create regulatory exposure and, in some jurisdictions, the basis for investor litigation.

The development of mandatory sustainability disclosure requirements — CSRD in the EU, ISSB-aligned frameworks in multiple jurisdictions, and state-level legislation in the United States (California SB 253 and SB 261) — is bringing circular economy disclosure explicitly within the accuracy standards that govern material corporate statements. The withdrawal of federal SEC climate rules in the US does not remove this obligation: California's legislation reaches any company with over $1 billion in revenue doing business in the state, which includes the vast majority of global multinationals. Companies that have previously treated sustainability reporting as a voluntary communications exercise are finding it governed by the same accuracy expectations as financial reporting — with corresponding liability exposure when claims cannot be substantiated.

6.3 Questions the Board Should Ask

1. What circular economy and sustainability claims is the company currently making to consumers, investors, regulators, and procurement functions? Has the board reviewed and approved these claims?

2. What is the evidence base for each material claim? Is it specific, measurable, traceable, and independently verified?

3. Has the company aligned its circular economy measurement to recognised frameworks (GCP, ISO 59020, ESRS E5)? If not, why not?

4. Are circular economy claims independently assured, or based on internal data collection? What process exists for verifying accuracy?

5. Does the legal and compliance function monitor the regulatory landscape for sustainability claims enforcement — including the Green Claims Directive, CMA Green Claims Code, and FTC Green Guides?

6. What is the company's exposure if a material circular economy claim is found to be inaccurate or unsubstantiated?

"The board that can answer these questions confidently has governed the credibility gap. The one that cannot has accepted undisclosed liability."

Section 7: A Practical Roadmap for Closing the Credibility Gap

The credibility gap is closable. The following is a practical sequence — not a multi-year transformation programme, but a structured set of actions that organisations can begin immediately and build systematically.

7.1 Immediate Actions (0–3 Months)

1. Conduct a claims audit — identify every circular economy and sustainability claim currently in market across product labels, marketing materials, investor communications, and sustainability reports.

2. Assess each claim against four criteria: Is it specific? Is it measurable? Is it traceable? Is it independently verified? Flag every claim that fails any criterion as a priority for remediation.

3. Brief the board and legal team on the enforcement environment — the Green Claims Directive, CMA Code, FTC Green Guides — and establish board-level awareness of the company's current exposure.

4. Identify which circular economy measurement framework the company will align to (GCP is the recommended primary standard for organisations seeking broad regulatory and investor recognition).

7.2 Programme Actions (3–12 Months)

1. Build the product-level measurement infrastructure — material composition databases, supplier data collection processes, and chain of custody documentation for recycled content claims.

2. Align measurement methodology to GCP indicators and ESRS E5 requirements — establishing the quantitative foundation for credible circular economy reporting.

3. Engage suppliers in structured data collection — requiring chain of custody documentation, GRS or RCS certification (where applicable), and regular data refresh cycles.

4. Commission independent assurance for priority circular economy claims — beginning with the highest-risk claims (those with the greatest regulatory exposure or commercial significance) and extending progressively.

7.3 Sustaining Actions (Ongoing)

1. Establish an annual assurance cycle for circular economy disclosures — aligned to the sustainability reporting calendar, with regular interim data quality reviews.

2. Monitor the regulatory and enforcement landscape continuously — particularly as the Green Claims Directive is implemented in member states and enforcement bodies publish guidance on specific claim types.

3. Report progress against circular economy metrics to the board quarterly — establishing governance accountability for circular economy performance alongside financial performance.

4. Extend credibility standards progressively — from the highest-priority claims to the full portfolio, and from limited to reasonable assurance as data quality and systems mature.

Conclusion: The Evidence Base Is the Strategy

The circular economy credibility gap is real, growing, and consequential. Companies that have made circular economy commitments they cannot evidence are carrying regulatory, reputational, and in some cases legal risk that is not reflected in their current governance or risk frameworks.

But the gap is closable — and the organisations that close it will find the investment worthwhile on multiple dimensions. Verified, independently assured circular economy performance is a commercial asset: it commands investor confidence, enables green finance access, satisfies sophisticated procurement criteria, and supports premium market positioning. It is also a regulatory asset: it positions companies ahead of an enforcement environment that is moving against unverified claims in every major market.

The evidence base is not a cost. It is the strategy. Companies that build genuine circular economy measurement, align to recognised standards, and invest in independent assurance are not just managing risk — they are creating the competitive differentiation that will matter as circular economy performance becomes a market norm rather than a market exception.

The credibility gap closes one verified claim at a time. The companies that start closing it now will have built the evidence base that the market will require — not as a future obligation, but as a present competitive advantage.

"The circular economy market is sorting itself into two groups: companies with evidenced claims, and companies with claims. Over time, the market will reward only one of them."

Speeki

Speeki is a technology and assurance business that builds the trust companies need to demonstrate their circular economy commitments are real, verifiable, and independently evidenced. Our platform and assurance services support organisations in measuring circular performance against recognised standards, documenting chain of custody for recycled content claims, and obtaining the independent verification that regulators, investors, and customers are requiring with increasing specificity.

As the enforcement environment for sustainability claims tightens globally and the standards for evidenceable circular economy performance become more precisely defined, Speeki provides the technology infrastructure and assurance framework that enables companies to demonstrate what they claim — not just assert it.

To learn how Speeki can support your circular economy assurance and verification programme, visit speeki.com or contact info@speeki.com

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