Doing Business in Japan 2026: How to Comply with New Circular Economy Rules

Introduction 

Japan is moving into a new phase of economic strategy where sustainability is directly linked to industrial competitiveness and resource security. In 2026, this transition is no longer theoretical. It is being implemented through concrete policies, regulatory changes, and corporate investment. One clear signal is the recent move by Itochu to establish an electronics recycling venture in Japan, reflecting a broader push to recover valuable materials from e-waste and strengthen domestic resource systems.  

At the center of this shift is the circular economy, which focuses on keeping materials in use through recycling, reuse, and lifecycle management. 

Circular Economy as Economic Strategy 

Japan’s circular economy policies are now closely tied to three national priorities: 

• Resource security 
• Decarbonization 
• Supply chain resilience 

Japan is preparing a national strategy for recycled critical minerals by 2026 to reduce dependence on imported resources, especially in sectors such as electronics and electric vehicles.  This shows that circular economy is no longer limited to environmental goals. It is part of Japan’s long term economic positioning. 

Key Policy Developments in 2026 

Mandatory Recycling Responsibility for Businesses 

A major shift in 2026 is the introduction of stronger Extended Producer Responsibility requirements. Companies that manufacture or import products such as batteries and small electronic devices are required to collect and recycle them. This moves responsibility from consumers to businesses and directly affects both domestic and foreign companies operating in Japan. 

Expansion of Battery and E Waste Regulation 

From April 2026, businesses must collect and recycle products including mobile batteries and electronic devices under revised regulations. This policy is driven by two factors: Increasing safety risks from lithium batteries and rising demand for critical minerals 

Focus on Critical Materials Recovery 

Japan is accelerating recovery of materials such as lithium and rare earth elements through recycling systems. This is a direct response to global supply risks and the dominance of external suppliers in critical mineral markets. Urban mining is becoming a strategic industry rather than a niche activity. 

Stronger Requirements for Resource Utilization 

Revisions to existing laws require companies to increase the use of recycled materials and report their progress. This means sustainability is now integrated into production planning, not only waste management.  

Economic Implications for Foreign Companies 

Japan’s circular economy policies are reshaping market entry and operations. 

Compliance Becomes a Market Entry Condition 

Foreign companies must comply with:  

• Product collection systems 
• Recycling obligations 
• Reporting requirements 

Without alignment, market access becomes difficult. 

Growth of New Industrial Segments 

Policy changes are driving growth across several key areas, including e-waste recycling, battery recovery, IT asset disposal, and environmental compliance services. For example, Japan’s recycling rate for electronics remains at around 20 percent, highlighting significant room for expansion and strong growth potential in these sectors. 

Increased Importance of Local Partnerships 

Japan’s recycling system depends on licensed operators and structured networks. As seen in recent corporate activity, foreign companies typically enter through partnerships rather than standalone operations.  

ESG and Investment Alignment 

Circular economy policies are reinforcing ESG as a core business factor, with investment decisions increasingly shaped by considerations such as resource efficiency, carbon reduction, and supply chain stability, creating growing opportunities for foreign investors aligned with sustainability goals. 

Execution Challenges in Japan 

Despite clear opportunities, execution in Japan remains complex due to detailed and continuously evolving regulatory frameworks, high operational standards, relationship-driven decision-making processes, and longer market entry timelines. In practice, success depends less on speed and more on achieving strong alignment with local expectations and building long-term trust. 

How KizunaX Supports Market Entry and Execution 

As Japan’s circular economy ecosystem develops, the challenge is no longer identifying opportunities but executing effectively within the system. KizunaX supports foreign companies through three key areas. 

Strategic Business Matching 

Connecting companies with relevant Japanese partners, industry stakeholders, and decision makers. 

Market Navigation and Alignment 

Supporting companies in understanding regulatory frameworks and aligning business models with local expectations. 

Facilitating Trust and Communication 

Ensuring consistent communication and long-term relationship building, which are essential for progress in Japan. 

Conclusion 

Japan’s circular economy policies in 2026 reflect a structural transformation of its economy. Sustainability is no longer separate from business strategy. It is embedded in how industries operate, how supply chains are structured, and how partnerships are formed. For foreign companies, this creates both requirements and opportunities. Success will depend on the ability to align with policy direction, integrate into local ecosystems, and build trusted partnerships. 

Against this backdrop, the role of KizunaX becomes increasingly relevant. By facilitating strategic connections, supporting market navigation, and bridging communication between foreign companies and Japanese stakeholders, KizunaX helps translate market potential into practical execution. 

Entering Japan’s circular economy is not only about compliance. It is about participating in a market that is being reshaped by resource security, sustainability, and long-term strategic alignment. 

Reference 

https://www.reuters.com/sustainability/land-use-biodiversity/itochu-us-firm-set-up-japan-jv-electronics-recycling-2026-03-24/  

https://inforich.net/en/9064/consideration-of-mobile-battery-sharing-included-in-the-basic-policy-under-japans-green-purchasing-act