Europe’s push towards a more sustainable economic model is entering a decisive phase.

Two new assessments from the European Environment Agency (EEA) argue that achieving a functioning European circular economy will depend less on ambition alone and more on how well policies work for people, from entrepreneurs to workers and consumers.

Leena Ylä-Mononen, EEA Executive Director, explained: “People must be at the heart of Europe’s circular economy ambitions.

“This move to circularity will add to our prosperity, and emerging circular businesses need a fair playing field, while workers must benefit from decent jobs, skills development and opportunities.

“A circular economy is as much about social fairness as it is about economic policy, and  a tool to protect our environment and climate.”

A system that works for people

The reports underline a central issue: circularity cannot scale unless it is practical, accessible and fair.

Businesses that embed circular principles, such as reducing waste, extending product lifecycles, or rethinking ownership models, often struggle to grow beyond niche markets.

This creates a disconnect between policy goals and on-the-ground reality. While the European Union has laid out a strong framework, including the forthcoming Circular Economy Act, implementation gaps remain.

Entrepreneurs face regulatory friction, limited financing options and insufficient market incentives. At the same time, the workforce dimension is becoming increasingly important. The transition must deliver not just jobs, but quality jobs that are stable, fairly paid and accessible across skill levels.

Scaling circular business models remains a bottleneck

A key finding is that scaling circular businesses is still the exception rather than the norm. The EEA identifies three distinct ways this scaling must happen:

• Scaling out: Expanding customer reach and entering new markets
• Scaling up: Reshaping the broader systems in which businesses operate
• Scaling deep: Influencing cultural norms and consumer behaviour

All three are essential if the European circular economy is to move beyond isolated success stories.

Currently, many circular models are concentrated in waste management and end-of-life processing. While important, this narrow focus limits impact.

The reports call for stronger support for models that extend product lifespans or promote reuse through renting, leasing and sharing systems – approaches with greater long-term environmental benefits.

Policy and market barriers still hold back growth

For circular businesses to thrive, the EEA points to several structural issues that need addressing.

Regulation must evolve to create a level playing field, ensuring circular models are not disadvantaged compared to traditional linear ones.

Access to finance is another major constraint. Investors and insurers often perceive circular ventures as higher risk, which restricts capital flow. Encouraging innovation that reduces operational costs, alongside targeted financial tools, could unlock growth.

There is also a social dimension. Grassroots initiatives and community-led projects can play a critical role in shifting consumer behaviour, but they require policy backing and visibility.

Jobs growth, with caveats

The transition is already reshaping Europe’s labour market. Between 2014 and 2023, circular economy jobs in the EU-27 grew by 10%, reaching around 4.4 million roles.

Looking ahead, the potential is even greater. Under the Clean Industrial Deal, Europe’s remanufacturing sector alone could generate up to 500,000 additional jobs by 2030.

However, the quality of these jobs varies. Some roles are low-paid or insecure, while higher-skilled opportunities tend to benefit those already in advantaged positions. Without intervention, this risk widens existing inequalities.

A just transition is critical

A second EEA briefing focuses specifically on fairness within the European circular economy.

The conclusion is clear: policies are more effective when they integrate inclusion, equity and participation from the outset.

Improving job quality, expanding access to training and ensuring broader participation in circular sectors will be essential. These steps not only support workers but also strengthen public trust, which is a crucial factor for long-term policy success.

The road ahead for Europe’s circular economy

The EEA’s findings arrive at a pivotal moment, as the EU prepares its Circular Economy Act.

The message is pragmatic rather than aspirational: Europe already has many of the tools it needs, but they must be aligned with real-world conditions.

If policymakers can remove barriers, support innovation and prioritise fairness, the European circular economy has the potential to deliver environmental gains alongside economic resilience.

Without that alignment, however, progress risks stalling, leaving ambition unfulfilled and opportunity unrealised.