There was a period, not long ago, when a well-constructed carbon offset programme was enough to satisfy most sustainability reporting requirements. Buy the credits, publish the number, build the narrative around the offset rather than the operation. The approach served a purpose in the early years of corporate climate commitments, and most stakeholders accepted it. What most organisations underestimated was how quickly the terms would shift.
They have shifted considerably. Regulators across the EU and UK, along with a growing number of markets beyond them, have moved toward disclosure frameworks that require verifiable data rather than estimated reductions. Enterprise customers are requesting supply chain emissions data at a level of granularity that an offset certificate cannot satisfy. The result is that organisations are finding the gap between their narrative and their supply chain increasingly difficult to manage.
What is taking the place is something considerably more structural: a redesign of how supply chains move product, with particular attention to what happens to that product at the end of its useful life.
The Gap Between the Sustainability Narrative and the Supply Chain
The offset model created a particular kind of problem. It allowed organisations to present a sustainability story without changing the underlying infrastructure. The supply chain could operate in a linear direction while the emissions associated with that operation were addressed on paper rather than in practice.
Regulators have noticed this, and the legislative response has been systematic. The EU’s Corporate Sustainability Reporting Directive, the UK’s evolving mandatory climate disclosure requirements, and the increasing integration of Scope 3 emissions into investor due diligence are all pushing in the same direction.
For supply chain leaders, this presents an operational challenge. The questions now being asked require data that sits in the supply chain itself. Organisations that do not have that data cannot yet answer those questions credibly, and the window for building the infrastructure to generate it is narrowing.
Circular Logistics Is a Network Redesign, not a Returns Programme
The distinction between adding a returns lane and redesigning for circularity is worth exploring. The two things can look similar from a distance while producing very different results in practice.
A conventional, linear supply chain is directional by design. Raw materials come in, finished goods go out, and what happens after the product reaches the customer is, in most cases, outside the network’s scope. Circular logistics changes that architecture entirely. It means building reverse flows, repair pathways, and material recovery processes into the network from the beginning.
The National Retail Federation’s Vice President of Corporate Social Responsibility described reverse logistics as having become the centre of the sustainability community and the backbone of the circular economy. That framing reflects something real. The organisations making meaningful progress on circularity have asked what the network would need to look like to move product in both directions with comparable efficiency. They have begun the work of building toward that answer. That is a fundamentally different starting point, and it changes what the concept looks like.
Reverse Logistics Is Growing Faster Than Most Networks Were Designed to Handle
The global reverse logistics market was estimated at around $936 billion in 2026 and is projected to reach $1.75 trillion by 2035, at a CAGR of approximately 7.3%. That growth outpaces the overall logistics market by a meaningful margin, and it reflects both the scale and pressure to handle those volumes more intelligently.
The infrastructure built over decades to move product efficiently was not designed with the return journey in mind. Most reverse logistics operations remain slower, more expensive per unit, and considerably less visible than their outbound counterparts. Few organisations have a coherent reverse logistics strategy. The function rarely appears with much prominence in corporate financial statements or organisational structures. That invisibility is part of the problem.
The commercial opportunity in closing that gap is becoming harder to ignore. Refurbishment can offer a cost reduction of 40% to 60% compared to manufacturing new units. Recovery values across inspection, refurbishment, and recommerce channels can reach comparable proportions of original retail price. UPS has already integrated AI-driven disposition logic into its Returns Manager platform, automatically routing returned goods toward their highest-value outcome. That kind of intelligence at the point of intake is what separates a returns operation from a genuine value recovery function.
The Commercial Case Is Stronger Than the Cost Assumption Suggests
One of the more persistent assumptions about circular supply chain models is that they carry a significant cost premium. That assumption is being revised in several sectors as the full picture becomes clearer.
When the overall costs are factored in alongside the direct cost of reverse logistics operations, the business case looks considerably more attractive. Extended producer responsibility legislation in the EU and UK is accelerating this shift by moving the financial liability for end-of-life product handling onto manufacturers, which changes the calculation materially. Investment in reverse logistics infrastructure starts to look less like a sustainability overhead and more like a cost avoidance strategy.
The secondary markets supporting this case are also maturing. The global second-hand apparel market is projected to reach $3 billion by 2029, growing at roughly twice the pace of the overall apparel market. That second-hand consumption dynamic is extending into other categories that would have been unlikely candidates a few years ago. Organisations that have built the infrastructure to capture that value are finding it increasingly relevant to their overall margin picture.
Despite a pronounced anti-ESG political current in certain markets, estimates suggest more than 85% of companies intend to invest more in sustainability initiatives in 2026 than they did in 2025. That figure says something useful about where the commercial and regulatory logic is pointing, independent of the political conversation around it.
Digital Product Passports Are Making Traceability an Operational Requirement
For circular logistics to function at any meaningful scale, the physical movement of goods needs to be accompanied by a reliable data trail. You cannot route a returned product to the right reprocessing facility without knowing what it contains. You cannot verify a closed-loop claim without an auditable record of where the material went. And as disclosure frameworks tighten, you cannot satisfy reporting requirements with estimates built on manual sampling.
The EU’s Eco-Design for Sustainable Products Regulation is introducing Digital Product Passports across an expanding range of product categories, beginning with batteries and textiles and extending further in the years ahead. A Digital Product Passport is a verifiable, scannable record of a product’s materials, manufacturing origin, repair history, and end-of-life handling requirements, accessible at any point in its lifecycle by any authorised party in the chain.
For logistics providers, this creates a meaningful shift in their role. Every handoff in the supply chain becomes a data event. The providers that can showcase this data reliably are becoming genuinely integral to the sustainability infrastructure of their customers.
What the Asia Pacific Growth Trajectory Signals
Asia Pacific is anticipated to account for approximately 50% of global reverse logistics market share by 2035. That is a substantial shift in where the volume, the infrastructure investment, and the capability development will be concentrated over the next decade.
The drivers are not complicated to identify. E-commerce penetration across the region is generating returns volumes at a pace that is faster than the existing logistics infrastructure. Sustainability requirements are tightening in step with rising consumer and regulatory expectations across the region. And the manufacturing depth concentrated in Asia means that reverse flows carry considerable practical and financial value.
For organisations sourcing products from Asian manufacturers the reverse flow question is increasingly part of the logistics brief rather than an afterthought. Building a supply chain capable of handling outbound volume efficiently while also managing returns, repair, and materials recovery across those same corridors is a different kind of operational challenge.
The Providers Defining What Good Looks Like
Best practice in reverse network design, AI-driven disposition, Digital Product Passport integration, and closed-loop fulfilment is still being actively developed. The early movers are writing the operational playbook, and the standards that emerge are likely to become the baseline.
DB Schenker’s dedicated circular economy returns hub in the Netherlands, designed to process more than two million units annually in support of EU WEEE compliance targets. A purpose-built facility of that kind signals a commitment that goes beyond treating reverse logistics as an operational add-on. It signals a provider that has decided to build for this as a core capability, and the difference in what that produces for the brands using it is meaningful.
The providers making those commitments now are the ones that will be best positioned when regulatory timelines tighten further. For supply chain leaders assessing long-term logistics relationships, that trajectory is worth factoring into the evaluation alongside the more immediate criteria of rate and transit performance.
Getting the Sequencing Right
The organisations making real progress on circular supply chains started by redesigning the network rather than redesigning the programme. That distinction carries into any practical conversation about where to begin, because the risk with circular logistics initiatives is the same as the risk with sustainability programmes more broadly: investing in the narrative before the infrastructure is in place to support it.
Near-term entry points tend to be in returns management and disposition logic. The medium-term question is more structural: what would the network need to look like to genuinely close the loop across the geographies, product categories, and regulatory environments that are relevant to your business? That question does not have a universal answer. It depends on product complexity, geography, supplier relationships, regulatory exposure, and customer expectations. But it is the right question to be asking now, while the standards are still being established.