We are consuming and depleting the planet’s resources at an ever-increasing pace . To address this problem, the need to abandon the traditional linear model based on producing, using, and throwing away has emerged in recent years, replacing it with a new production model: the circular economy, based on reducing the amount of resources used and reusing them. But what role does digitalization play in this paradigm shift?

Recent research analyzes how digital technologies can help European countries move toward a more sustainable model. The results are revealing: countries with greater digital development tend to improve their circular performance . In other words, digitalization and circularity go hand in hand.

The challenge: using resources without depleting them

The problem of overproduction requires an urgent solution. Global demand for natural resources is growing relentlessly, and a large portion of them are not regenerated. By 2030, more than 9 billion people are expected to share a planet with very clear physical boundaries.

In this context, the circular economy proposes an economic model that reduces waste, extends product life , and reincorporates materials into the production cycle. In contrast to the wastefulness of the traditional model, it focuses on efficiency, sustainability, and regeneration.

Consequently, initiatives such as the European Green Deal and the EU Circular Economy Action Plan have gained prominence. But, beyond policies, it is necessary to understand what factors facilitate—or hinder—the transition to this new model.

Can technology help us?

Although it might seem that sustainability and technology are antagonistic concepts, the reality is quite different. Digitalization —understood as the integration of digital technologies into social and economic processes—can be a powerful ally for the circular economy. From sensors that track materials to reuse platforms, including artificial intelligence systems that optimize production and consumption processes , digital applications open up new avenues for closing production cycles and reducing waste.

But how does this relationship play out in practice? Are the most digitalized countries really closer to achieving a circular economy?

Four types of countries, four levels of circularity

To answer these questions, the study analyzed the 27 countries of the European Union, grouping them based on their performance in the following key areas for the circular economy: production and consumption, waste management, use of secondary raw materials, and innovation. Based on this classification, four groups of countries were identified:

• Generators : These are economies with a low level of circularity and little investment in recycling or innovation . This group includes a large portion of southern and eastern European countries (such as Greece, Romania, and Bulgaria).
• Recyclers : They have good recycling rates and are somewhat more innovative. Countries like Spain , Austria, and the Nordic countries are among the top performers.
• Producers : They are particularly notable for their use of recycled raw materials. This is the case in Belgium and the Netherlands.
• Innovators : They lead in all areas, especially innovation. France, Germany, and Italy make up this group.

What role does digitalization play?

The researchers then analyzed each country’s degree of digitalization, using indicators such as digital human capital, technology integration in companies, digital public services, and connectivity. The results show a clear relationship between the circular economy and digitalization. Specifically, three digital factors made the difference:

• Human capital : Countries with more people trained in digital skills have a greater capacity to implement circular strategies.
• Technological integration : Companies that use technologies such as big data or e-commerce tend to operate more efficiently and circularly.
• Digital public services : The digitalization of governments facilitates processes such as waste management and material traceability.

Interestingly, connectivity —such as internet access—did not make any significant difference. This is likely because, within the EU, such access is quite widespread and is no longer a differentiating factor.

There is no circular economy without digitalization

Although no direct causal relationship is established, the data show a strong association: countries with higher levels of digitalization tend to perform better in the circular economy. Digitalization offers tools, skills, and platforms that enable governments, businesses, and society to move toward more sustainable models . In fact, advancing the circular economy without investing in digitalization could leave many countries behind.

And now what?

To accelerate the transition to a circular economy, public policies should take this connection into account. Promoting digital training, supporting technological innovation in companies , and digitalizing public services not only improves competitiveness: it is also an investment in sustainability.

Furthermore, companies that integrate circular principles into their strategy—supported by digital tools —can reduce costs, attract talent, and differentiate themselves in a market increasingly aware of their importance.

In short, digitalization is not just a complement to the circular economy: it’s one of its fundamental conditions. Moving toward a sustainable future requires understanding that digitalization is not optional, but an essential part of change.

Author Bios: Mercedes Gil-Lamata is Assistant Professor of Business and Management at the University of La Rioja, Lucio Fuentelsaz is Professor of Business Organization and Mª Pilar Latorre Martínez is Professor of Business Management and Organization both at the University of Zaragoza