Digital and Circular Transition Pathways in European Manufacturing: A PRISMA-based Review

Abstract The shift towards sustainability in European manufacturing has garnered heightened interest due to urgent environmental issues and the changing regulatory landscape established by the European Union. This systematic literature review, based on the PRISMA 2020 framework, examines the strategies employed by European manufacturing industries as they pursue digital and circular transformation pathways to enhance sustainability. By examining peer-reviewed articles published between 2013 and 2024, this research consolidates evidence from specific sources found in Scopus and Web of Science, enhanced by a compilation of 50 rigorous academic studies. Important themes highlight the fusion of Industry 4.0 and 5.0 technologies, the adoption of circular economy concepts, the facilitation of green finance, incentives shaped by policy, and the distinct challenges encountered in sectors like textiles, food supply, automotive, and urban smart manufacturing. The analysis shows that even though digital and circular strategies hold great promise for enhancing sustainability, their practical application is restricted by technological, financial, and organisational issues. The study argues that sustainability transitions are socio-technical processes requiring coherent policy mixes and capacity-building. In its conclusion, the paper offers recommendations for both research and policy, emphasising the crucial need for cohesive transition models, collaborative networks, urban production paradigms, and infrastructures that support small and medium-sized enterprises (SMEs).