IFAT and Circular Economy as SME Must‑Do: What the Clean Industrial Deal Means for Manufacturers from 2027
7 Min. read time
IFAT 2026 in Munich is more than a trade fair for water and waste management. It signals what producing companies can expect regulatory-wise from 2027 onward: The EU Commission’s Clean Industrial Deal makes the circular economy mandatory, not optional. Those in the Mittelstand (SMEs) who still rely on voluntary CSR measures underestimate the binding nature of upcoming requirements.
TL;DR – Key Takeaways
- Clean Industrial Deal makes circular economy mandatory. From 2027, EU requirements for product passports, extended producer responsibility, and eco-design will apply to most product categories in the B2B sector.
- IFAT 2026 as an early indicator. The exhibition shows which technologies for circular processes will be available in 2026 – and what investment logic companies need to be compliant from 2027 onward.
- SME mandatory task. Companies with more than 250 employees or more than 40 million EUR turnover fall into the primary scope of application. However, supply chain effects also affect smaller businesses.
- Three concrete action areas by end of 2026. Build product-material inventories, prepare ERP systems for take-back tracking, extend supplier audits to include recyclate content.
Related: CSRD Omnibus 2026: Reporting Obligation, ESRS-VSME and Mittelstand
What is the Clean Industrial Deal and who does it affect?
What is the Clean Industrial Deal? The Clean Industrial Deal is the EU Commission’s economic policy framework for decarbonized industry, presented in late 2025 as the successor to the Green Deal for the industrial sector. It includes binding requirements for circular economy, product passports (Digital Product Passports), extended producer responsibility, and minimum quotas for secondary materials – with implementation deadlines starting from 2027.
The crucial difference from the CSRD: While the CSRD primarily regulates reporting obligations, the Clean Industrial Deal establishes production and product requirements. It’s no longer just about reporting on sustainability – but about how products are designed, which materials are used, and how they are taken back at the end of their life cycle.
Initially affected are companies in the regulated product categories: electronics, textiles, packaging, batteries, vehicles – and increasingly – capital goods from the manufacturing industry. For machine builders, plant manufacturers, and component suppliers, the adjustment pressure begins in 2027.
Regulatory Timeline for Manufacturing Companies
2025
CSRD reporting requirements start for large companies (250+ employees)
2027
Clean Industrial Deal: Product passport requirements for first categories, EPR expansion
2028+
Secondary material quotas, full product passport requirements for broad categories
IFAT 2026 as a strategic early indicator
IFAT will take place from May 26-29, 2026 at the Munich Trade Fair Center and, with over 3,000 exhibitors, is the world’s leading trade fair for water, wastewater, waste, and raw materials management. For SMEs in the manufacturing industry, it’s not an obvious must-attend event – but it should be.
The logic: Circular economy as a production strategy requires functioning return infrastructure. What is presented at IFAT as available technology – sorting facilities, recycling systems, material recovery – determines which circular processes manufacturing companies can realistically establish by 2027/2028.
Three areas of IFAT are particularly relevant for manufacturing companies: material recovery from production waste, water recycling in manufacturing, and digitalization of material flow tracking for the Digital Product Passport.
Three Action Areas for SMEs by End of 2026
Preparation for the regulatory requirements from 2027 can be divided into three operational tasks that need to be addressed by the end of 2026:
Step 1: Build Product Material Inventory
For each product type, a material inventory must be created: Which raw materials, which plastic types, which composite materials are used? This is the data basis for the Digital Product Passport. Companies that have not started data collection in 2024/2025 will not be compliant in 2027.
Step 2: Prepare ERP for Takeback Tracking
Extended Producer Responsibility (EPR) means: documenting takebacks, measuring recyclate content, delivering reports. Most ERP systems are not prepared for this data flow. SAP S/4HANA has corresponding modules, but the configuration takes time and usually requires external expertise.
Step 3: Extend Supplier Audits to Include Recyclate Content
Secondary material quotas only work if the supply chain demonstrably provides recyclate material. This means: supplementing supplier contracts with recyclate content requirements, demanding certifications, and planning independent audits. This process requires 12-18 months of lead time.
What SMEs Should Check Now
Already Well Positioned
- CSRD reporting already running
- Material inventories in PLM/ERP available
- ISO 14001 certified
- Supply chain audits established
Immediate Need: Close Gaps
- No data on material composition
- ERP system without EPR module
- Suppliers without recyclate certification
- No Digital Product Passport strategy
IFAT 2026 also offers a concrete opportunity to identify technology partners for building circular processes – from recycling system providers and material analysis service providers to software companies offering Digital Product Passport solutions. Companies that strategically plan their trade fair visit can use it as a scouting event for their 2027 compliance agenda.
Source: European Commission Clean Industrial Deal, IFAT 2026 Exhibitor Statistics, ESRS-VSME Guidance.
Frequently Asked Questions
When does the Clean Industrial Deal become specifically applicable to manufacturing companies?
The first binding requirements of the Clean Industrial Deal will take effect from 2027. Implementation deadlines vary by product category: batteries and electronics are earlier, investment goods and machinery follow. For DACH SMEs, the realistic planning horizon is end of 2026 to be systematically prepared in time.
What is the Digital Product Passport and what data must it contain?
The Digital Product Passport (DPP) is a digital information set assigned to a product and contains data on material composition, reparability, recycled content, and supply chain information. The exact data requirements will be specified in delegated legal acts for the Ecodesign Regulation by product category. The basic structure can be derived from the EU data infrastructure Catena-X and GS1 standards.
How does the Clean Industrial Deal relate to the CSRD reporting requirement?
CSRD and Clean Industrial Deal complement each other, but address different levels. CSRD regulates the reporting requirement: companies must transparently report on their sustainability measures. The Clean Industrial Deal sets operational requirements: how products must be built. Companies that already collect CSRD data have a better basis for filling the DPP, but CSRD compliance does not replace Clean Industrial Deal compliance.
Does the extended producer responsibility (EPR) also apply to B2B investment goods?
The current EPR legislation focuses on B2C product categories (electrical appliances, packaging, batteries). For B2B investment goods such as machinery and equipment, there is currently no direct EPR obligation at EU level. However, the Clean Industrial Deal and Ecodesign Regulation contain requirements for reparability and recycled content that have de facto EPR-like effects and will take effect from 2027.
Which SAP modules are relevant for Clean Industrial Deal compliance?
For technical implementation, primarily three areas in the SAP ecosystem are relevant: SAP Product Carbon Footprint Analytics for product-level CO2 footprints, SAP Responsible Design and Production for EPR reporting and fee management, and SAP Sustainability Control Tower as a central reporting layer. For the Digital Product Passport, there are first connector solutions based on SAP Business Network and Integration Suite.
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Eva Mickler writes for MyBusinessFuture about sustainability regulation, SME strategy, and the transformation of the manufacturing industry.
Source title image: Pexels / EqualStock IN (px:31047158)
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