Abstract Today's business environment is challenged by demands from many quarters to become more environmentally sustainable. One solution could be the circular economy, which has the potential to bring economic activities closer to net‐zero targets. However, transitioning towards a circular economy requires companies to develop new capabilities and rethink old practices. Using empirical data from 20 interviews, the present study investigates the capabilities that the Finnish building construction sector is displaying for net‐zero realization by circular economy‐based business practices. The findings show that the industry remains at the level of sensing and seizing, with some reconfiguring and regenerative elements. In addition, many firms lack dynamic capabilities, and the sector's current circular economy capabilities are limited to closing and narrowing loops. Moreover, normative market aspects hinder the move to a circular economy. To facilitate a more significant transition, firms need to elevate their ambitions to support circularity in a broader sense and engage in collaboration and piloting circular solutions.
Sarja et al. (2026) studied this question.