The Environmental Policy and the Circular Economy Adoption: An Empirical Study of Manufacturing Companies

ABSTRACT This study investigates the relationship between the environmental policy and manufacturing companies' adoption of a circular economy ( CE ). By examining environmental policy through the lens of CE strategies and environmental management systems (EMSs), the research highlights their correlation with the intensity of realised CE practices, positioning them as key antecedents of the circular transition. Based on a representative sample of 1200 manufacturing firms in Poland's Malopolska region, the analysis uses measures of association strength, significance testing, residual analysis and variable aggregation. Our findings reveal that possessing a strategy and EMS correlates with a higher number of CE practices. EMS is also related to the minimisation of industrial waste and energy‐savings. This paper provides novel insights into the role of environmental policies in enabling the successful adoption of CE principles among small‐ and medium‐sized enterprises (SMEs), addressing critical gaps in the literature, driving sustainable industrial transformation and offering actionable insights for practitioners.