Deep dive: Circularity metrics, LCA & reporting — the fastest-moving subsegments to watch

The global market for life cycle assessment software reached $1.4 billion in 2025, growing at 28% year-over-year as regulatory mandates in the EU, US, and Asia forced companies to quantify material flows with unprecedented precision (Grand View Research, 2025). Behind that topline number, specific subsegments within circularity metrics, LCA, and reporting are accelerating far faster than others. Digital product passports, automated LCA platforms, and material flow analytics are reshaping how organizations measure, report, and optimize circular performance. For sustainability professionals, investors, and policymakers, understanding which subsegments carry genuine momentum and which remain stuck in pilot mode is essential for allocating attention and capital effectively.

Why It Matters

Circularity measurement has shifted from a voluntary exercise to a regulatory requirement across major economies. The EU's Corporate Sustainability Reporting Directive (CSRD), which took full effect in January 2025, requires approximately 50,000 companies to report on circular economy metrics under the European Sustainability Reporting Standards (ESRS) E5 resource use and circular economy disclosure. The EU's Ecodesign for Sustainable Products Regulation (ESPR), adopted in 2024, mandates digital product passports (DPPs) for categories covering an estimated 70% of EU goods by 2030 (European Commission, 2024).

In the US, California's SB 253 and SB 261 climate disclosure laws, effective from 2026, require Scope 3 emissions reporting that inherently demands lifecycle-level material and energy flow data. The SEC's climate disclosure rule, though narrower in scope, has pushed hundreds of publicly traded companies to invest in LCA infrastructure to prepare for potential future requirements. Japan's Green Transformation (GX) strategy and South Korea's ESG disclosure mandates are driving parallel demand across Asia-Pacific markets.

The result is a measurement and reporting ecosystem under rapid transformation, where the tools, standards, and data infrastructure of even two years ago are already being superseded. Organizations that track where the subsegments are moving fastest can build capability ahead of regulatory deadlines rather than scrambling to comply after the fact.

Key Concepts

Life cycle assessment quantifies environmental impacts across a product's entire life, from raw material extraction through manufacturing, use, and end-of-life. Traditional LCA has been a labor-intensive process requiring specialized consultants, months of data collection, and deep expertise in impact assessment methodologies such as ReCiPe, TRACI, or Environmental Footprint (EF) 3.1. The fastest-moving subsegments are those that reduce this friction through automation, standardization, and integration into existing business workflows.

Circularity metrics extend beyond environmental impact to capture material efficiency, resource productivity, and end-of-life outcomes. The Ellen MacArthur Foundation's Circulytics framework, the World Business Council for Sustainable Development's Circular Transition Indicators (CTI), and ISO 59020 (published in 2024) provide competing but increasingly convergent measurement approaches. The subsegments gaining the most traction are those that bridge these frameworks into operational dashboards that procurement, design, and finance teams can actually use.

Subsegment 1: Automated LCA Platforms

The fastest-growing subsegment by revenue and venture funding is automated LCA software that replaces manual, consultant-driven assessments with AI-powered, database-linked platforms. Makersite raised $18 million in Series B funding in 2024 to scale its product-level LCA engine that generates environmental footprints from bill-of-materials data in minutes rather than months. Sphera, acquired by Blackstone for $1.4 billion in 2023, has integrated automated LCA modules into its enterprise sustainability platform serving over 4,500 corporate clients.

The key technical breakthrough enabling automation is the maturation of background LCA databases. Ecoinvent v3.10, released in late 2024, contains over 21,000 validated process datasets covering 95% of industrial activities in OECD economies. GaBi databases (now managed by Sphera) provide comparable coverage with regional granularity for 40 countries. These databases allow software platforms to automatically match bill-of-materials line items to lifecycle inventory data without requiring users to build process models from scratch.

Watershed, which raised $100 million at a $1.8 billion valuation in 2024, exemplifies the integration trend: its platform combines carbon accounting, LCA, and regulatory reporting into a single workflow, allowing procurement teams to compare supplier-specific footprints against industry benchmarks in real time. Carbonfact, focused specifically on fashion and textiles, has automated product-level LCA for over 200 brands, processing more than 5 million SKU-level assessments annually.

Market data suggests automated LCA platforms are growing at 35 to 45% annually, compared to 8 to 12% growth for traditional consulting-led LCA services (Verdantix, 2025). The shift is driven by regulatory volume: when a company must report lifecycle data on thousands of products rather than conducting occasional LCAs for marketing claims, automation becomes the only economically viable approach.

Subsegment 2: Digital Product Passports

Digital product passports represent the subsegment with the strongest regulatory tailwind and the greatest infrastructure buildout underway. The EU's ESPR requires DPPs for batteries (effective February 2027), textiles (2027), electronics (2028), and construction materials (2029), with additional product categories to follow through 2030. Each DPP must contain lifecycle environmental data, material composition, recycled content percentages, repairability scores, and end-of-life handling instructions, all accessible via a standardized data carrier (QR code, RFID, or NFC tag).

The DPP subsegment is moving fast because it sits at the intersection of multiple regulatory requirements. A single DPP infrastructure investment satisfies obligations under ESPR, CSRD E5 disclosures, the EU Battery Regulation, and upcoming Extended Producer Responsibility reporting requirements. Circulor, which provides supply chain traceability and DPP infrastructure, secured $20 million in Series B funding in 2024 and now serves clients including Volvo, Jaguar Land Rover, and Polestar. Circularise, a blockchain-based DPP platform focused on chemicals and plastics, has deployed its system across the Plastics Europe value chain pilot covering 14 major producers.

The technical challenge driving current momentum is interoperability. The EU's DPP standardization work, led by the European Committee for Standardization (CEN) and CENELEC, has produced draft standards for data formats, access protocols, and unique product identifiers. CATENA-X, the automotive industry data ecosystem, has implemented DPP specifications for battery passports across 150 member companies. These standards enable the network effects that transform DPPs from compliance cost centers into sources of operational value: when downstream recyclers can access material composition data digitally, sorting efficiency improves by 20 to 40% and material recovery rates increase correspondingly (Fraunhofer IML, 2025).

Subsegment 3: Material Flow Analytics and Circular KPI Dashboards

A third subsegment gaining rapid traction is material flow analytics: platforms that track physical material flows through organizations, supply chains, and economies to generate circularity KPIs in near real time. This subsegment addresses a fundamental gap: most companies can report their carbon emissions but cannot answer basic questions about how much of their input materials come from recycled sources, what percentage of their products are recovered at end of life, or where their largest material losses occur.

SAP's Responsible Design and Production module, launched in 2024, integrates material flow tracking into the ERP systems that already manage procurement and manufacturing data for over 400,000 enterprises globally. The module calculates Material Circularity Indicator (MCI) scores, recycled content percentages, and waste-to-landfill metrics directly from transactional data without requiring separate data collection. Early adopters including Henkel and BASF have reported 60 to 80% reductions in circularity data collection time compared to previous manual survey-based approaches.

Interzero, Europe's largest circular economy service provider, has deployed its "Made for Recycling" analytics platform across consumer goods companies in 18 countries, providing packaging-level recyclability scoring based on 27 material and design parameters. The platform has assessed over 120,000 packaging designs since 2023, generating a proprietary benchmark database that allows brands to compare their packaging recyclability against industry averages by material type and product category.

The ISO 59020 standard for measuring and assessing circularity, published in June 2024, is accelerating adoption by providing a common measurement framework. Unlike previous circularity metrics that focused on individual products or materials, ISO 59020 operates at organizational, product, and regional scales, enabling comparisons across sectors and geographies. Early indicators suggest that companies implementing ISO 59020-aligned measurement systems are achieving 15 to 25% improvements in material efficiency within the first year, primarily because measurement itself reveals optimization opportunities that were previously invisible (ISO, 2024).

What's Working

Automated LCA platforms are delivering on their core promise of speed and scalability. Companies that previously conducted 5 to 10 LCAs per year are now running thousands of product-level assessments annually at a fraction of the cost per assessment. The accuracy gap between automated and manual LCA is narrowing: validation studies by the European Platform on LCA (EPLCA) found that automated assessments using high-quality background databases produce results within 10 to 15% of expert-led assessments for most product categories (EPLCA, 2025).

DPP pilot programs are demonstrating tangible value beyond compliance. The Global Battery Alliance's Battery Passport pilot, covering lithium-ion batteries from mine to recycler, showed that digital material composition data increased recycling facility throughput by 18% and reduced hazardous sorting errors by 35% in a 2024 trial across three European recycling facilities (GBA, 2024).

Standardization is converging rather than fragmenting. The alignment between ISO 59020, the WBCSD Circular Transition Indicators, and the ESRS E5 reporting requirements means that companies investing in circularity measurement infrastructure can serve multiple reporting obligations with a single data architecture. This convergence was not assured as recently as 2023, when competing frameworks threatened to create a compliance maze analogous to the early days of carbon accounting.

What's Not Working

Data quality at the supply chain level remains the binding constraint across all three subsegments. Automated LCA platforms produce accurate results only when fed accurate input data, and primary supply chain data is available for only 15 to 30% of material inputs for most manufacturers. The remaining 70 to 85% relies on industry-average proxy data that can introduce errors of 50 to 200% for specific materials and processes (Ecoinvent, 2025). Until supplier-specific data collection improves, automated LCA will produce precise but not necessarily accurate results.

DPP implementation costs are proving higher than initial EU impact assessments projected. A 2025 survey by the European Circular Economy Stakeholder Platform found that mid-sized manufacturers estimate DPP compliance costs of EUR 200,000 to EUR 500,000 per product category, with ongoing data maintenance costs of EUR 50,000 to EUR 150,000 annually. Small and medium enterprises face disproportionate burdens, as the fixed costs of DPP infrastructure scale poorly for companies with limited product portfolios.

Circularity metrics still struggle with the "denominator problem": measuring the circular fraction of material flows requires knowing total material flows, and most companies lack complete material balance data. Even companies with mature environmental management systems typically track waste outputs but not material inputs at the granularity needed for circularity calculations. SAP's integration approach addresses this for companies already on SAP ERP, but the majority of global enterprises use fragmented systems that make material flow reconciliation a manual, error-prone process.

Key Players

Established Companies

• Sphera: Enterprise LCA and sustainability platform serving 4,500+ clients, owned by Blackstone since 2023 acquisition
• SAP: Integrated circularity metrics into ERP platform reaching 400,000+ enterprises globally
• Siemens (Xcelerator): Digital twin and lifecycle management platform with embedded LCA capabilities for manufacturing
• PRe Sustainability (SimaPro): LCA software used by 10,000+ practitioners in 80 countries

Startups

• Makersite: Automated product-level LCA from bill-of-materials data, raised $18M Series B in 2024
• Carbonfact: Fashion-focused automated LCA platform, 5M+ SKU assessments annually for 200+ brands
• Circulor: Supply chain traceability and DPP platform for automotive and mining sectors
• Circularise: Blockchain-based DPP infrastructure for chemicals and plastics value chains

Investors and Funders

• Blackstone: Acquired Sphera for $1.4B, signaling conviction in enterprise sustainability software
• Breakthrough Energy Ventures: Invested in multiple circularity data and analytics startups
• European Investment Bank: Providing DPP infrastructure funding through InvestEU green transition facility
• Circularity Capital: Dedicated circular economy fund backing measurement and reporting technology

Subsegment Momentum Summary

Subsegment	Growth Rate (2024-2025)	Regulatory Driver	Maturity Level	Investment Signal
Automated LCA Platforms	35-45% annually	CSRD, ESPR, SEC	Scaling	Strong VC and PE activity
Digital Product Passports	50-70% annually	ESPR, Battery Regulation	Early deployment	Government grants + Series B rounds
Material Flow Analytics	25-35% annually	ISO 59020, CSRD E5	Growth	Enterprise software integration
Recycled Content Verification	20-30% annually	ESPR, EU Packaging Regulation	Pilot to scale	Strategic corporate investment
Circularity Reporting Frameworks	15-20% annually	ESRS E5, GRI 306	Maturing	Standards body-driven

Action Checklist

• Assess current LCA capability and evaluate automated platforms against manual processes for cost, speed, and accuracy tradeoffs
• Map product categories against EU DPP timelines (batteries 2027, textiles 2027, electronics 2028) and begin data architecture planning for affected categories
• Implement ISO 59020-aligned circularity measurement as the baseline framework to future-proof against evolving regulatory requirements
• Audit supplier data quality for top 20 materials by volume and initiate primary data collection programs to replace industry-average proxy data
• Integrate circularity KPIs into existing ERP and procurement systems rather than building standalone reporting tools
• Establish material flow balances at the facility level, tracking inputs, products, waste, and emissions to create the denominator data needed for circularity calculations
• Engage with industry DPP consortia (CATENA-X for automotive, Plastics Europe for chemicals) to align data formats and reduce implementation costs through shared infrastructure

FAQ

Q: Which circularity metric framework should my organization adopt? A: ISO 59020, published in June 2024, is emerging as the common reference standard because it is framework-agnostic and scalable across product, organization, and regional levels. For practical implementation, pair ISO 59020 with the WBCSD Circular Transition Indicators for corporate-level benchmarking and the Ellen MacArthur Foundation's Circulytics for strategic assessment. If reporting under CSRD, align directly with ESRS E5 disclosure requirements, which reference ISO 59020 concepts. Avoid investing heavily in proprietary metrics that may not map cleanly to regulatory requirements.

Q: How accurate are automated LCA platforms compared to traditional consultant-led assessments? A: Validation studies show automated platforms using high-quality background databases (Ecoinvent v3.10, GaBi) produce results within 10 to 15% of expert-led assessments for product categories with mature lifecycle inventory data, such as packaging, electronics, and construction materials. Accuracy degrades for novel materials, complex multi-component products, and geographies with sparse database coverage. The key variable is input data quality: automated platforms with supplier-specific primary data produce results comparable to expert assessments, while those relying entirely on proxy data may diverge by 30 to 50% for individual impact categories.

Q: What is the realistic cost of implementing digital product passports? A: Costs vary significantly by product complexity and existing data infrastructure. For companies with mature PLM and ERP systems, DPP implementation for a single product category typically costs EUR 150,000 to EUR 300,000 for initial setup plus EUR 30,000 to EUR 80,000 annually for data maintenance. Companies starting from minimal digital infrastructure face costs of EUR 300,000 to EUR 600,000 per category. The cost per product decreases rapidly with scale: a company implementing DPPs across 10,000 SKUs will spend 70 to 80% less per SKU than one covering 100 SKUs, making early investment in scalable architecture critical.

Q: How do I prioritize which subsegment to invest in first? A: Prioritize based on regulatory exposure and existing capability gaps. Companies selling products into the EU should prioritize DPP readiness for their first affected product category. Companies facing CSRD reporting obligations should invest in automated LCA to scale product-level assessments. Companies with mature environmental reporting but weak material flow data should focus on circularity KPI dashboards that leverage existing ERP data. In all cases, begin with data infrastructure: clean, structured material and supplier data is the foundation that all three subsegments require.

Sources

• Grand View Research. (2025). Life Cycle Assessment Software Market Size, Share & Trends Analysis Report, 2025-2030. San Francisco, CA: Grand View Research.
• European Commission. (2024). Ecodesign for Sustainable Products Regulation: Implementation Roadmap and Product Category Priorities. Brussels: European Commission.
• Verdantix. (2025). Market Overview: Sustainability and ESG Software Platforms 2025. London: Verdantix.
• Fraunhofer IML. (2025). Digital Product Passports and Recycling Efficiency: Results from the CATENA-X Battery Passport Pilot. Dortmund: Fraunhofer Institute for Material Flow and Logistics.
• EPLCA. (2025). Validation of Automated Life Cycle Assessment Tools: Accuracy Benchmarking Against Expert-Led Studies. Brussels: European Platform on LCA, Joint Research Centre.
• Global Battery Alliance. (2024). Battery Passport Pilot Program: Operational Results and Value Chain Impact Assessment. Geneva: GBA.
• ISO. (2024). ISO 59020:2024 Circular Economy: Measuring and Assessing Circularity. Geneva: International Organization for Standardization.
• Ecoinvent. (2025). Ecoinvent Database v3.10: Coverage, Quality, and Uncertainty Assessment. Zurich: Ecoinvent Association.
• European Circular Economy Stakeholder Platform. (2025). Digital Product Passport Implementation Survey: Cost and Readiness Assessment Across EU Manufacturing. Brussels: ECESP.