Embracing Circular Economy: Opportunities for SMEs in Denmark
Innovation, transparency and trust enables circular partnerships
The circular economy and recycling inherently involve collaboration along the value chain. Denmark has an advanced circular economy ecosystem characterised by high levels of trust and collaboration. This ecosystem offers multiple opportunities to partner with public and private stakeholders to support and scale innovations.
A key factor in scaling circularity through partnerships is the strong support of leading clusters and research institutions, which help transform business ideas into circular products. Denmark also offers advanced facilities for circular material streams.
When combined with ambitious and proactive government policies, investments in sustainable infrastructure, access to funding for circular technologies and business models, and a growing demand for sustainable solutions, the fundamentals for scaling circular products are firmly in place.
In Denmark, we are “closing the loops”
One of the Danish cluster organisations heavily promoting innovation driven industrial circular projects is the Lifestyle & Design Cluster. Here, companies can engage in projects focused on testing and implementing new circular business models with international research institutions, or find partners for vale chain collaboration.
Together with the Food & Bio Cluster, the Lifestyle & Design Cluster is a partner in a major circular programme called Closing Loops.
At the forefront of the circular economy transition, the Closing Loops programme engages hundreds of SMEs in sustainable practices. Halfway through, the programme is already demonstrating significant impact: 60% of participating companies have enhanced their circularity, and 75% anticipate increased revenue.
Through value chain collaborations, knowledge development, and concrete testing processes, companies receive support to mature circular solutions and bring them to market.
“In Closing Loops, collaboration takes place within value chains. The collective interaction across companies increases the dynamics of development processes, as more find incentives to develop and implement new, more sustainable solutions. Circular transition is complex, and many face the same challenges. In Closing Loops, they are not alone in finding the way forward,”
ABout Closing Loops
Closing Loops aims to help SMEs implement and scale circular technologies and business models through collaboration across value chains between companies.
- Target: Reduce 235,000 tons of CO2e and 42,000 tons of waste over three years.
- Focus sectors: Construction, textiles and furniture, food, and environmental technology.
EU regulations on waste materials aligns with Denmark’s circular and market-driven transformation
Across Europe, large corporates and SMEs face growing pressure from regulation and buyers to move towards circular models. The EU Green Deal, the Corporate Sustainability Reporting Directive (CSRD), and extended producer responsibility (EPR) laws all create obligations for suppliers, even if they are not directly targeted. The forthcoming EU Circular Economy Act, expected in 2026, will transform how industries use resources, design products, and handle waste. It will affect packaging, textiles, chemicals, and manufacturing. Incentives for secondary material use, mandatory design rules, and bans on non-recyclable packaging will generate strong demand for innovative suppliers.
Denmark’s proactive policies and infrastructure make it easier to align with the Act than in many other EU markets.
Furthermore, large corporates now expect their suppliers to provide verified data on material flows, recycling content, and environmental impact, resulting in new value streams. In manufacturing, opportunities are strongest in design for reuse and substituting virgin inputs with high-quality secondary materials. In textiles, demand is accelerating for recycled fibres, sorting technologies, and resale platforms that extend product lifecycles.
Gain first-mover access
Buyer pain points remain. Many SMEs struggle to source consistent-quality secondary inputs, and lack testbeds to validate new products. This slows scaling and increases costs. Denmark’s waste infrastructure solves part of this challenge.
Despite having one of Europe’s highest municipal waste levels (around 800 kg per capita annually), Denmark turns this into an advantage through well-structured collection, sorting, and recycling systems. For SMEs, this means predictable feedstock streams for circular business models.
Timing is critical. EU packaging and textile regulations mandate reusability and recyclability by 2030. Companies positioning themselves in Denmark now will gain first-mover access to a market designed for circular growth.
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For SMEs, the path into Denmark is clear and actionable.
First 120 days:
Invest in Denmark assists SMEs in finding Danish partners within relevant clusters, mapping potential customers to launch pilot projects with one to two customers, and identifying available funding schemes.
First 12 months:
Invest in Denmark remains your trusted partner throughout the establishment phase of the Danish entity, securing service providers and supporting the site selection process.
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