Circular Economy Practices and Barriers within European SMEs in the Construction Sector

Abstract

Despite growing policy ambition under the European Green Deal and Circular Economy Action Plan, circular economy (CE) adoption among resource-intensive sectors, such as the construction sector, remains limited. This study provides the first large-scale quantitative assessment of the difficulties experienced within the European SMEs in the construction sector during transitioning to environmentally sustainable CE implementation. Analyzing data from 2,242 SMEs in the 2024 Flash Eurobarometer 549 survey, the study used logistic regression to test four hypotheses on cost, administrative, expertise, and market-related barriers across nine CE practices. The findings reveal that while operational CE actions, such as resource efficiency in water, energy, and materials, are relatively widespread, more systemic strategies like circular design and switching to greener suppliers of materials are underutilized. Not surprisingly, cost is the most commonly reported difficulty by SMEs in the construction sector. Technical, administrative and market-related difficulties are not often considered significant barriers. Challenges linked to environmental reporting arise in a couple of models, indicating a moderate concern rather than a widespread barrier. Finally, firm size tends to boost the likelihood of undertaking CE actions, pointing to the importance of organizational resources, whereas turnover and company age show no significant results. These results emphasize the need for targeted policy measures that build internal capabilities, stimulate market demand, and accelerate more advanced CE transitions within the construction sector.

Keywords: Circular Economy (CE) adoption, Construction SMEs, Sustainability Barriers, Resource Efficiency, Flash Eurobarometer