Shallow Circularity? Circular Economy Practice Profiles of EU SMEs and Their Implications for Sustainable Production, 2015–2024

Small and medium-sized enterprises (SMEs) are central to the sustainability transition of European production, yet it is unclear whether their resource-efficiency activities retain materials in use or mainly save energy and water. This study harmonises all six waves (2012–2024) of the Flash Eurobarometer survey on SMEs, resource efficiency and green markets and estimates a latent class model for 49,353 EU27 SMEs from the four waves with comparable items (2015–2024), relating class membership to firm and country characteristics with bias-adjusted three-step estimators. Four profiles of reported practices emerge: Low-adoption (29%), Efficiency-oriented (20%), Material-oriented (26%) and Comprehensive (26%). The two intermediate profiles report a similar number of practices but differ in composition, and firms in the Material-oriented and Comprehensive profiles use recycled materials in their products about three times as often as other firms (76–77% versus 18–25%). Firm size and sector are the strongest and most robust correlates. SMEs in Central and Eastern Europe report fewer material-retention practices and are less likely to be Comprehensive once income and governance are held constant, but the unconditional regional gap in the Comprehensive share depends on the measurement model. National circular economy strategies show no detectable contemporaneous association with the profiles, and associations with the reach of public funding are weak and not specific to efficiency practices. Monitoring SMEs’ contribution to sustainable production should track the composition of practices and secondary-material use, not counts of actions.