Embedding Circular Economy in the Construction Sector Policy Framework: Experiences from EU, U.S., and Japan for Better Future Cities

Highlights

What are the main findings?

• Varied integration of Circular Economy in construction sector policies in the EU, U.S., and Japan.
• Limited acknowledgment of digital technologies in CE Policies, despite their potential.

What are the implications of the main finding?

• Need for Policy Harmonization and Cross-Sectoral Collaboration.
• Policymakers should integrate digital tools more systematically into CE strategies, leveraging research-driven insights to enhance urban resilience, optimize resource use, and support a more efficient and inclusive built environment.

Abstract

The transition towards a Circular Economy (CE) in the construction sector is essential to achieving sustainable, inclusive smart cities. This study examines the integration of CE principles into construction policies across four key global contexts: the European Union (focusing on Italy and Germany), the United States, and Japan. Through a comparative policy analysis, the research identifies best practices, implementation barriers, and the role of digitalization in advancing CE strategies. In Europe, CE is embedded in policy frameworks such as the Green Deal and the New Circular Economy Action Plan, driving the shift toward sustainable urban development. The United States, while in the early stages of CE adoption, is fostering circular initiatives at local levels, particularly in waste management and building deconstruction. Japan’s policy landscape integrates CE within a broader strategy for resource efficiency, emphasizing technological innovation. The findings highlight the necessity of a research-driven approach to inform policies that leverage digital tools, such as Building Information Modeling and Digital Product Passports, to enhance material traceability and urban circularity. This study contributes to the global effort of designing smart cities that are not only technologically advanced but also environmentally and socially sustainable through the adoption of CE principles in the built environment.

1. Introduction

Urban policies and strategies changed over time, influenced by the global challenges that cities are asked to tackle in order to improve inhabitants’ quality of life. Resource scarcity and climate change mitigation and adaptation are some of the most contemporary examples. Thus, contemporary cities are increasingly subject to transformations, embracing visions that reflect and react to the various stimuli coming from the global environment. Over time, this influence has been translated by planners and city leaders into the definition of urban paradigms. Most notably, the sustainable development theories and interpretations led to the conceptualization of new development pathways that “meet the needs of the present without compromising the ability of future generations to meet their own needs” [1]. The Brundtland Report and the Earth Summit (United Nations Conference on Environment and Development) of Rio de Janeiro in 1992 contributed to the wide diffusion of the concept that has been introduced in the common lexicon, also shaping urban strategies and policies, pursuing environmental, social, and economic sustainability. These priorities are still key urgencies for many city governments who, fifteen years after the Rio de Janeiro conference, are still enacting policies and setting ambitious targets to meet the sustainable goals of the Agenda 2030.

Since the 2000s, digitalization has been shaping citizens’ habits and needs, clearly highlighting that the traditional way of approaching cities would not fit with the new needs of the population, thus contributing to the rise in the smart cities’ paradigm [2]. However, the ecological and sustainability ideals have not been concurrent with the rising debate of the smart city. Rather, urban trajectories have expanded to envelop the smart concept around sustainable discourse, and it can be assumed that smart cities are also sustainable [3]. The so-called “smart eco-city” has been interpreted as a way of achieving environmental goals through and with smart urban strategies [4]. Therefore, the notions of sustainable development, ecological modernization, and regenerative development are influencing the different urban paradigms, creating a certain degree of overlapping and cross-cutting exchange [5].

Despite worldwide policies acknowledging the importance of pursuing social, economic, and environmental sustainability, the dichotomy between the achievement of economic growth and the overconsumption of natural resources is difficult to overcome [6,7]. In the last decade, the Circular Economy (CE) began to emerge as one of the most holistic models to achieve that paradigm shift, having the potential to reverse the consumption of natural resources while ensuring economic growth [8,9,10,11]. Even in their diversity, the numerous CE definitions share the idea of a model of production and consumption that is based on the creation of values and economic growth without consuming virgin materials and natural resources, which could lead to environmental degradation [12]. Embracing the Ellen MacArthur Foundation’s vision, CE is conceived as overcoming the linear economic model based on the take/make/dispose approach, thus eliminating the concept of “waste”. The Ellen MacArthur Foundation, together with the McKinsey Institute, also conceptualized the ReSOLVE framework, which is often used to understand which actions lead to circularity principles, namely: Regenerating, Sharing, Optimizing, Looping, Virtualizing, and Exchanging resources [11,13].

As argued by [3], there is a correlation between smartness and circularity in cities, especially revealing a close interconnection between technology and environmental sustainability. For example, the role of digital technologies is embedded in many of the proposed RESOLVE actions and is considered an essential enabler of CE in many industries [14]. Moreover, in the academic debate, the concept of the “Smart Circular Economy” paradigm began to emerge [15], even though previous studies failed to approach the integration of digitalization practices into the CE discourse in a systematic way, mostly focusing on specialized sectors [16]. Research is even more scarce if applied to smart urban circularity [17]. In particular, the built environment is the city’s most investigated domain, where digital transformation has been slower but with significant improvements in the last decades [14]. In fact, the construction sector is the largest emitter of greenhouse gas (GHG) emissions, being responsible for at least 37% of emissions globally. As a result, numerous initiatives attempt to improve the performance of existing buildings and set priorities for the construction of new ones [18]. The United Nations has identified three urgent pathways to reduce GHG emissions and decarbonize the sector by design: avoiding the extraction and production of raw materials, shifting to regenerative material practices, and improving methods to decarbonize conventional materials like cement, steel, and aluminum. For those targets to be achieved, building designers need to adopt resource-efficient, data-driven optimization processes, fostering the reuse and recycling of materials [18]. Key CE design strategies include using computer-aided design optimization for reduced material usage, selecting materials that reduce non-renewable material extraction, designing for material and component reuse, and extending the life of buildings and/or materials through proper maintenance [18].

However, although the literature acknowledges the importance of CE for the construction industry, the integration of CE strategies and the industry’s digital transformation remains a critical knowledge gap [19]. Moreover, given the rising attention attributed to CE and digital technologies as a means to achieve sustainability in the construction sector, policymakers are currently facing the challenge of designing and implementing strategies and actions to promote circularity. Hence, the integration of CE principles into policies, though understudied, can play a vital role in enabling CE as a driver for sustainable smart urban transition [19].

Based on these considerations, the present contribution aims to analyze to what extent CE is embedded into the current policy framework targeting the construction sector. Europe, the U.S., and Japan were the regions selected in the grant-in-aid for Scientific Research called “Development, Empirical Research and Dissemination of New Theories and System Techniques for Circular Economy (CE) to Meet SDGs Goal 12; Producer and Consumer Responsibility” coordinated by Aoyama Gakuin University. Italy and Germany are the first two best performers in CE practices among the five main European Countries [20]. Based on that, four countries were included in the scope of this research: Italy, Germany, Japan, and the United States (U.S.).

The policy framework analysis in the four countries will focus on understanding to what extent existing policies facilitate the adoption of CE practices in the construction sector. Through a content analysis, this paper provides (i) an overview of the state-of-the-art and adopted approaches to CE-related policies in different countries around the world; (ii) the identification of the most common strategies adopted by national and local governments in the identified countries to achieve a circular built environment; and (iii) the main barriers for the further development of CE practices in the construction sector, also considering whether the policies acknowledge the role of digital technologies.

Following this introduction, Section 2 proposes a background of policies in the analyzed countries. Section 3 reviews the policy sector in each investigated country and the methodology adopted to analyze the most relevant policy documents. Section 4 presents the results, followed by Section 5 and Section 6, in which discussion and conclusions are presented.

2. Background

2.1. Circular Economy Policies for the Construction Sector in the EU

According to the European Union, the construction sector in the EU accounts for: 40% of gross final energy consumption; 35% of greenhouse gas emissions; 50% of extracted material resources; 30% of water consumption; and 35% of waste production [21]. In particular, the building sector plays an important role in Germany’s energy transition, accounting for 30% of Germany’s greenhouse gas emissions. Residential buildings alone are responsible for 26% of Germany’s final energy consumption due to electricity usage and heating. Meanwhile, non-residential buildings are responsible for 47% of Germany’s greenhouse gas emissions, despite comprising only 13% of the building volume [22]. As for the Italian scenario, the building sector is the largest contributor to energy demand, responsible for 44% of the energy consumption. Residential buildings are the main energy consumers, accounting for 57%, with lower levels of energy performance compared to the European benchmark [23].

Even though the policy framework analysis is performed at a national level for each country, it is worth mentioning that Italy and Germany belong to the European Union and are therefore influenced by the policies enacted at the European level. The reference policy document for CE in Europe is the New Circular Economy Action Plan [24], which was adopted by the commission in March 2020 as one of the main pillars of the European Green Deal, the EU agenda for sustainable growth [25]. However, as its name predicts, the New Circular Economy Action Plan is rooted in previous initiatives promoted by the European Commission, starting from 2015 when the first Circular Economy Action Plan was adopted [26]. This initial plan included measures stimulating Europe’s transition towards a CE while fostering sustainable economic growth and the generation of new jobs. The plan included 54 actions, and after three years of implementation, all of them have been achieved, even if, for some actions, the work continues beyond 2019. Actions were related to the whole life cycle, going into detail of different phases of the production and consumption process. The actions were divided according to the topic they mainly refer to: production, consumption, waste management, the market for secondary raw materials, and sectorial actions concerning some strategic sectors (e.g., plastic, food waste, critical raw materials, construction and demolition, biomass and bio-based materials, innovation and investments, monitoring).

Thanks to the implementation of the 54 actions, the EU is recognized as a global leader in CE policymaking, and the action plan encouraged at least 14 Member States, 8 regions, and 11 cities to put forward CE strategies [27]. All the 54 actions included in the first CE action plan were completed within 2019 and, in December of the same year, the European Commission adopted the European Green Deal, which consists of a package of policy initiatives set up to pave the road for a green transition, with the ultimate goal of reaching climate neutrality in Europe by 2050. The depicted vision for Europe enables the imagination of a continent that will rely on renewable energy, curbing emissions throughout all sectors but with a strong commitment to the energy sector. Target values are proposed in transport, job creation, energy consumption and production, and building renovation. It is foreseen that at least 3% of the total floor area of public buildings should be renovated annually, with a target of 49% renewable energy in buildings by 2030. Europe also requires Member States to increase the use of renewable energy for heating and cooling by 1.1% each year until 2030. As one of the main pillars of the European Green Deal, in March 2020, the European Commission adopted the New CE Action Plan [26]. The new action plan comprises 35 actions to be implemented in 2020–2023, focusing on different areas when compared to the previous action plan. The key actions are listed under seven macro-areas that correspond to as many overall goals and targets:

• A sustainable product policy framework;
• Key product value chains;
• Less waste, more value;
• Making the CE work for people, regions, and cities;
• Crosscutting actions;
• Leading efforts at the global level;
• Monitoring the progress.

The construction and building category is included within the key product value chains. In the Action Plan, the Commission proposes to launch a new comprehensive strategy for a Sustainable Built Environment to coordinate and ensure coherence in climate goals, energy and resource efficiency, construction and demolition (C&D) waste, accessibility, digitalization, and necessary skills. Specifically, the strategy promotes circularity principles through the revision of the construction product regulation, promoting the adaptability of the built environment, using the Level(s) framework [28] to integrate life-cycle assessment in public procurement, revise the legislation for C&D waste, and promote initiatives to reduce soil sealing, fostering the reuse of abandoned sites and contaminated brownfields. The strategy for a Sustainable Built Environment has still not been published, even though it was expected in 2021, but some of the actions have been addressed in the “Renovation Wave for Europe”, a document that pays particular attention to green buildings [29].

Recently, in July 2024, the new Ecodesign for Sustainable Products Regulation (ESPR) [30] entered into force as a cornerstone of the Commission’s approach to more environmentally sustainable and circular products. It replaces the Ecodesign Directive 2009/125/EC, which was more related only to energy-related products [31]. The ESPR extends the scope to cover virtual and physical products and reinforces the range of ecodesign requirements that can be set for products, which can comprise requirements relating to durability, circularity, and the overall reduction of the environmental and climate footprint of products, amongst many others. The ESPR includes a set of other measures, such as the Digital Product Passport (DPP), which might impact the construction sector. DPP is a digital identity card for products, components, and materials that will store relevant information to support products’ sustainability, promote their circularity, and strengthen legal compliance.

Regarding the EU’s construction sector, the following tools and regulations to foster circularity and sustainability assessment are also worth noting [32]:

• Transversal regulations on Building Sustainability Assessment by CEN TC 350;
• Cradle-to-Cradle certification scheme;
• Environmental Assessment Methodology (BREEAM) circular framework;
• Leadership in Energy and Environmental Design (LEED) certification.

In this paper, the authors selected Italy and Germany to perform a policy framework analysis at a national level. According to the Circular Economy Network, they are the first two best performers in CE practices among the five main European countries included in the analysis [20].

2.2. Circular Economy Policies for the Construction Sector in the U.S.

In the U.S. construction sector, residential and commercial buildings are responsible for 31% of GHG emissions when considering electricity end-use [33]. CE implementation in the U.S. is still in its infancy. While the U.S. administration from 2020 to 2024 supported a transition towards a CE, the federal support came in the form of funding, targets, and action plans. Even at a local level (i.e., cities), there are few CE legislation in effect. Perhaps as a result, CE strategies that preserve the value of the materials over their life cycle are still rare in the U.S. construction industry. Three strategies dominate the end-of-life of construction materials in the country: recycling (usually of metals with high market value like steel, copper, and aluminum), downcycling—mostly concrete and brick—into coarse aggregates, and disposal in landfills. For example, according to the U.S. Environmental Protection Agency (EPA), 76% of C&D waste was diverted from landfills in 2018 [34]. Of the 76%, 52% represented materials downcycled as aggregates [34]. EPA’s Sustainable Materials Management plan aims to increase the safe reuse and recycling of C&D materials and improve the tracking of C&D data [34]. Efforts like the Inflation Reduction Act and the Bipartisan Infrastructure Law provided unprecedented funding to support state and local waste management infrastructure, including recycling programs through the National Recycling Strategy [35]. Although those efforts focused more heavily on municipal solid waste management, critical materials, and electric vehicle batteries, C&D stakeholders have actively participated in the workshops and taskforces to promote CE education, strengthen secondary materials markets, and measure progress toward CE [36]. In the building sector, the Executive Order on Catalyzing Clean Energy Industry Jobs Through Federal Sustainability, mandated by the U.S. Federal Government in 2021, establishes legally binding targets for federal buildings and operations. The Order promotes using construction materials with lower embodied emissions and includes an ambitious target for a net-zero emissions building portfolio by 2045. However, at the time of writing this paper, the new U.S. administration has paused funding disbursement related to the Inflation Reduction Act and Bipartisan Infrastructure Law, which can significantly affect recycling programs and CE incentives. At the same time, the withdrawal of the U.S. from the Paris Agreement, the administration’s explicit support for fossil fuel expansion, and the recent rollbacks in renewable energy policies strongly indicate a shift away from sustainable economic models [37]. These actions suggest that federal support for CE initiatives will likely diminish, potentially stalling progress in waste reduction, material recovery, and climate-conscious industrial practices.

However, although their authority is shaped by federal constraints and state pre-emption laws, states and municipalities in the U.S. have relative autonomy in policymaking. In fact, despite the changes at a federal level, some municipal governments had taken proactive steps to advance CE principles, driven by the past administration’s strong emphasis on sustainability. As a result, in this paper, U.S. policy frameworks are analyzed at a local level (i.e., cities).

2.3. Circular Economy Policies for the Construction Sector in Japan

In Japan, the total GHG emissions for fiscal year 2022 amounted to 1.135 billion tons of CO₂ equivalent, with CO₂ accounting for 91.1% of the total. Of these CO₂ emissions, the manufacturing and construction sectors contributed 22.7%, while the residential sector accounted for 4.8% [38]. In terms of final energy consumption, the agriculture, forestry, fisheries, mining, and construction sectors combined (excluding energy consumption related to transportation) accounted for 2.9%, whereas the residential sector contributed 15.0%. Regarding industrial waste, the construction industry generated 21.5% of total industrial waste in fiscal year 2021 [39].

Japan’s CE policies are fundamentally framed by the Basic Environment Law and the Fifth Basic Environment Plan (2018) [40,41], which provides a comprehensive and long-term outline for environmental conservation policies. In accordance with the Basic Environment Law, Japan has enacted the Basic Act on Establishing a Sound Material-Cycle Society (2000) [42,43], which lays out the foundational principles and planning framework for CE. Additionally, the Fundamental Plan for Establishing a Sound Material-Cycle Society specifies concrete measures and targets. In August 2024, the Cabinet approved the Fifth Fundamental Plan for Establishing a Sound Material-Cycle Society [44,45,46]. Against the backdrop of finite resource availability and increasing environmental burdens, CE has become an essential component for achieving a sustainable society. Japan’s policies have progressed incrementally based on these laws and plans.

The Fifth Fundamental Plan for Establishing a Sound Material-Cycle Society positions the transition to a CE as a central focus [44]. In addition to addressing environmental issues such as climate change and biodiversity conservation, it aims to contribute to economic security, industrial competitiveness, regional revitalization, and the realization of a high-quality life. These objectives are outlined as a national strategy to secure a sustainable future for the coming generations. The plan highlights the following five priority areas:

• Building sustainable communities and societies through the transition to a CE;
• Comprehensive resource circulation across the entire lifecycle through enhanced collaboration among businesses;
• Establishing diverse regional circular systems to achieve regional revitalization;
• Strengthening the foundations for resource circulation and waste management to ensure proper waste treatment and environmental restoration;
• Promoting the development of an international resource circulation framework and expanding Japan’s circular industries globally.

As part of the comprehensive resource circulation across the entire lifecycle through enhanced collaboration among businesses, the Fifth Fundamental Plan sets specific targets for various materials and products to be achieved by 2030 [44]. Key material categories include plastics and waste oil, biomass and food waste, metals such as base and rare metals, and soil, stone, and construction materials. The plan emphasizes the promotion of an environmentally conscious design for construction materials, the extension of building lifespans, and the expanded use of blended cement to enhance the value of resources. Key product categories include buildings, automobiles, small household appliances and electronics, textile products, and materials or products newly required for climate change mitigation. The plan outlines measures for buildings to form and maintain high-quality social infrastructure, reduce waste generation through extended building lifespans, promote the reuse of construction materials, and facilitate recycling construction-related plastic waste. Besides this, it aims to minimize waste generation during disasters.

The progress of these policies is evaluated approximately every two years by Japan’s Ministry of the Environment in the form of a Progress Report on the Basic Plan for Establishing a Sound Material-Cycle Society. In addition to monitoring material flow indicators such as resource productivity, the circular use rate, and the final disposal volume, the CE Roadmap is utilized to track the progress of key initiatives [47,48]. The 2022 progress report shows the following developments and challenges in the construction sector:

• For soil, stone, and construction materials, the representative indicators show steady progress in the desired direction;
• Although the proportion of certified long-life quality housing in newly constructed homes is increasing, achieving the target remains challenging, indicating the need for further promotion.

Furthermore, following the revision of the Act on the Rational Use of Energy [49], Compliance with Energy Efficiency Standards for Newly Constructed Buildings [50] has been made mandatory. This has led to steady progress in reducing energy consumption in buildings. Such achievements play a crucial role in accelerating the construction sector’s transition to a CE. Japan’s CE policies also recognize challenges such as advancing recycling technologies, addressing regional disparities in recycling infrastructure, and supporting small and medium-sized enterprises in transitioning to a CE. To tackle these issues, efforts are being made to improve resource management efficiency through the active use of digital technologies and to promote the adoption of circular business models.

3. Materials and Methods

As recalled in the background, the policy scan has been conducted for three regions only, namely the EU, the U.S., and Japan. These three geographic areas have been selected as reference contexts for the grant-in-aid for Scientific Research called “Development, Empirical Research and Dissemination of New Theories and System Techniques for Circular Economy (CE) to Meet SDGs Goal 12; Producer and Consumer Responsibility”, being key players in CE adoption and representing the strongest economies worldwide. Moreover, the diverse regions have different regulatory frameworks and strategic approaches to implementing policies, thus offering opportunities to identify the challenges and the best practices that might support the CE transition in the construction sector. In the EU, Italy and Germany have been selected for a more detailed analysis since they represent the first two best performers in CE practices among the five main European countries [20]. In the U.S., CE initiatives at the city scale are also investigated.

To conduct the policies’ content analysis and identify the most common CE strategies adopted in the different countries, two reference frameworks must be established. On one hand, defining the various phases of the construction value chain is necessary. On the other hand, given the blurriness of the CE concept and the numerous interpretations and operationalization methods developed over time, the most suitable framework for identifying the CE actions tailored to the construction sector had to be identified.

Similar to what has been adopted by [51], the phases of the construction value chain are the following:

• Planning and design;
• Manufacturing;
• Construction;
• Use and maintenance;
• End-of-life.

The proposed framework for CE has been adapted, enriching the CE criteria used by [52] to include the ReSOLVE criteria. Indeed, the former study has a strong focus on waste management and waste prevention in the construction sector, while the ReSOLVE framework encompasses more clearly the role of digital technologies throughout the phases of the construction value chain (e.g., the emphasis on the role of digital technologies in fostering CE as expressed in [53]). The chosen CE criteria are summarized and represented in

Table 1. CE criteria coupled with enabling digital technologies.

CE Criteria	Examples of CE-Related Actions	Enabling Technology
(a) Reducing the use of resources through reuse and adaptation	a.1 Sharing of facilities/adaptive use of facilities prevents the need for additional buildings; a.2 Increasing the utilization rate of buildings to prevent the need for additional buildings; a.3 Choice of material or product for options requiring less material for the same performance; a.4 Saving of materials in production, optimizing cut-offs; a.5 Reducing material consumption at the construction site by using products pre-cut to size.	Advanced materials for the shift to renewable energy. Techs for traceability (Internet of Things (IoT), blockchain) for shared spaces and by selecting flexible construction solutions; for reusing components.
(b) Waste prevention	b.1 Extending life span by renovating old buildings instead of building new ones; b.2 Preventing premature demolition by changing the use of a building; b.3 Repair and maintenance to prevent premature demolition; b.4 Use of demountable construction components enabling the reuse of construction components and reconstruction of buildings.	Advanced materials for prioritizing renovation with respect to demolition and new construction.
(c) Increasing recycling rates;	c.1 Sorting, separating, and recycling activities; c.2 Enabling recycling through selective demolition; c.3 Use of waste-derived/recycled materials in new products; c.4 Use of waste-derived materials in construction.	Advanced materials; automated manufacturing systems.
(d) Use of biobased/renewable materials	d.1 Biobased construction materials or products, such as wood, cellulose, cotton.	Advanced materials.
(e) Use of recyclable materials;	e.1 Using materials that are recyclable at end-of-life; e.2 Enabling clean dismantling and recycling at end-of-life by not mixing materials at the installation phase.	Advanced manufacturing systems; advanced materials and IoT.
(f) Virtualized processes;	f.1 Digitalization of building information and design to share information and optimize each phase; f.2 Use sensors and machine learning to collect data for monitoring and optimization activities.	IoT, Artificial Intelligence (AI), automated manufacturing systems.

.

In order to conduct the policy analysis, the following information has been requested:

• Policy name;
• Promoter;
• Timeframe of implementation;
• Impacted phase of the construction value chain [from (1) to (5) according to the above-mentioned phases];
• CE focus [from (a) to (f), according to Table 1];
• Binding tool [Yes/No];
• CE relevance [High, Medium, Low]. It expresses if the policies are directly related to CE, or might only have indirect connections.

4. Results

This section provides a detailed analysis of the relevant policies in the four countries selected in this study, following the above-mentioned methodology. Detailed results are presented in Appendix A.

4.1. Italian Circular Economy Policies Scan

As a Member State of the EU, Italy has ratified all the European Directives to establish binding targets for specific sectors. For example, waste and energy management are regulated by specific directives at the European level, and therefore, targets have been transposed into Italian legislation. Five policies have been analyzed, directly and indirectly, targeting CE and the construction sector.

Italy has also adopted the National strategy for sustainable development, outlining the pathway to achieve the Agenda 2030 goals [54]. It indirectly addresses CE since the topic is included in the strategy; an explicit link is made in the section dedicated to “Prosperity”, in which the document directly mentions the necessity of creating a new CE model aiming at a more sustainable and efficient use of resources, minimizing the negative impacts on the environment, thus fostering the progress of humankind. In this respect, the circular material use is calculated among the core indicators, intended as the percentage of secondary raw material used in production processes as well as the recycling rate. Other strategies decrease emissions and increase the efficiency of water management systems. Moreover, urban renovation is fostered, thus aiming at prolonging the lifetime of buildings. However, the regional governments are in charge of the application, and the CE is mentioned only when it comes to waste management in the regional strategies of sustainable development annexed to the document, thus confirming the sectorial (and limited) application of the concept currently adopted.

Specifically targeting the construction sector, a new decree specifies the end of waste criteria for C&D waste. It specifies to what extent C&D waste can re-enter the construction process. Moreover, the national legislative decree n.o. 152/2006 promotes waste prevention through a sustainable design, waste recovery, and recycling, as well as a technological system able to track the waste streams [55].

In terms of CE policies, Italy is one of the EU countries that has a national strategy for the CE transition [56], as foreseen in the mission 2 component 1—Sustainable Agriculture and CE—of the National Resilience and Recovery Plan (PNRR) [57]. The roots of the CE Italian national strategy can be traced back to 2017 when, after public consultation, the document “Towards a circular economy model in Italy. Document of framework and strategic positioning” was published. The document aimed to provide an overview of CE and the Italian positioning on the topic, ensuring coherence with the goals of the Paris Agreement, the SDGs, and the European Union target. Among the objectives, the strategy is identifying new administrative tools to strengthen the market of secondary raw materials, making them competitive if compared to virgin raw materials (e.g., through public procurement and Minimum Environmental Criteria, end of waste, extended producer responsibility, fostering the product as a service, and sharing practices). Chapter 8 identifies the macro-objectives and specific objectives of the strategy together with a list of actions to be undertaken by 2035, divided into specific sectors, among which urban areas and territories are listed.

Italy also enacted the National Green Public Procurement Action Plan (2023) [58] in which it is stated that all public procurement must comply with minimum environmental criteria (CAM). The CAM requirements are defined for the various phases of the public administration’s purchasing process with the purpose of identifying the best design solution, products, and services from an environmental point of view. Their systematic and homogeneous application makes it possible to prefer environmentally preferable products and produces a leverage effect on the market, inducing less virtuous economic operators to adapt to the new requests of the public administration. In Italy, the effectiveness of the CAM has been ensured by the transposition of the Action Plan in law (Legislative Decree 36/2023 article 57), which made the CAM application mandatory [59]. The objective is to reduce the environmental impacts and promote a more sustainable and circular production and consumption model. At present, CAM have been adopted in 21 categories of supplies and assignments, among which the construction sector is included. The application of the CAM considers and supports the existing regulations, such as the directive related to the energy performance of buildings (2010/31/EU and subsequent modifications [60]), the EU regulation about construction products (305/2011/EU and subsequent modifications [61]), and the waste management directive (2008/98/CE and subsequent modifications [62]). Concerning the integration of CE principles, a paragraph is dedicated to disassembly and end-of-life: it is stated that the project relating to new buildings, including demolition works and building reconstruction or renovation, requires at least 70% in weight of the building components subject to disassembly or deconstruction or other recovery operations. The threshold has to be demonstrated through a disassembly and selective demolition plan drafted by the applicant to the tender. Another requirement is related to the use of construction materials (e.g., iron, bricks, wood, concrete, insulation) produced with at least a pre-defined percentage of recycled materials. In addition to the minimum requirements, in the law, there are some additional criteria that, if guaranteed by the applicant to the tender, allow the collection of extra scores for the evaluation process. As an example, a premium score is attributed to the economic operator who decides to undertake a Life Cycle Assessment (LCA) and Life Cycle Cost (LCC) study to assess the environmental and economic sustainability of the project as well as the use of Building Information Modeling (BIM) for the different phases of the construction.

Another document in force that indirectly targets CE is the National Plan for the Ecological Transition [63]. The Plan was approved in 2022 by the Ministry of the Ecological Transition, and its general aim is to reach climate neutrality by 2050 and reduce intermediate target GHG emissions by 55% by 2030. Regarding CE implications for the construction sector, the Plan fosters the substitution of materials with bio-based ones (e.g., promoting the use of wood in construction). In terms of energy efficiency, the Plan promotes the design of Net Zero Energy Buildings and the integration of renewable energies in the energy demand of residential buildings. Strategy no. 8 is about the promotion of CE, and it includes a focus on the construction sector in which the strong relation between the CE and the energy efficiency is acknowledged. Secondary raw materials, eco-design, light and durable materials, recyclable materials, and design for disassembly are all crucial elements of the strategy. The target for building renovation is set at 2%/year, and another important aspect highlighted is the need to introduce renewable energies. Figure 1 synthesizes the phases of the construction value chains that are mostly impacted by Italian policies and the CE criteria that are considered. End-of-life is the main life cycle stage addressed, while increasing recycling rates is the dominant CE strategy.

4.2. Germany Circular Economy Policies Scan

Six policies have been analyzed in detail, two of those highly relevant for CE transition and of a binding nature: the new German Closed Cycle Management Act (Kreislaufwirtschaftsgesetz, KrWG) [64] and the New Buildings Energy Act (Gebäudeenergiegesetz, GEG) [65]. Both impact all the construction value chain phases and address almost the totality of CE actions, except for “virtualize” processes. The waste management aspect, based on the closed-loop concept and disposal responsibilities, is not new in Germany. The relevant policy has been adopted for more than 20 years. In 2013, there were 339.1 million tons of waste produced in Germany with a total recycling rate of 79%, of which 202.7 million tons are C&D waste. The new German Closed Cycle Management Act aiming at transforming waste management in Germany into resource management came into force on 1 June 2012, which has raised public awareness of closed-cycle waste management even more [66].

The New Buildings Energy Act [65] came into force on 1 November 2020, which replaces and unifies the German Energy Saving Act (Energieeinsparungsgesetz, EnEG) [67], the German Energy Saving Ordinance (Energieeinsparverordnung, EnEV) [68], and the German Renewable Energies Heat Act (Erneuerbare-Energien-Wärmegesetz, EEWärmeG) [69]. The new law will also be supported by other existing laws and standards [70].

The other binding tool that is relevant for the CE transition, even though not directly, is the Germany Federal Climate Change Act [71]. All the phases of the construction value chain are impacted by promoting the reduction of resource use, waste prevention, and the use of renewable materials. The same CE actions are fostered by the other two non-binding documents. The Germany Climate Action Plan 2050 [72] and the Germany Energy Concept [73] indirectly foster CE transition of the built environment since the first one aims to cut up to 67% emissions by 2030 compared to 1990 [74], while the second one promoted the reduction of 80–95% of the primary energy demand compared to 2008 [75]. Furthermore, several voluntary certification frameworks have already been established globally to quantify the environmental impact of specific buildings and reduce it over time. These frameworks include world-renowned LEED and BREEAM certification frameworks, and the system particularly made for the German market, the DGNB (Deutsche Gesellschaft für Nachhaltiges Bauen) certification system.

Other incentives in Germany that are worth mentioning include but are not limited to subsidies provided at the federal and state level, such as the following [76]:

• Subsidies provided by the German Credit Institute for Reconstruction with the KfW 55 loan for passive houses;
• Several states have set up/planned a subsidy per ton of biogenic carbon used (e.g., North Rhine-Westphalia, Berlin, Bavaria, Baden-Württemberg).

In Figure 2, it is shown that the most diffused CE practices are the reduction of the use of resources, being implemented in all the analyzed documents, together with the promotion of the use of renewable/renewable materials. Virtualization practices are not fostered by any policy. When it comes to the construction value chain, there is a holistic thinking of the transition, since 5 out of 6 policy documents are considering all the phases of the value chain.

4.3. U.S. Circular Economy Policies Scan

As mentioned in the background, CE is still in its infancy in the U.S., and federal policy has been largely impacted by the current administration. However, given the relative autonomy of U.S. states and cities and the vast geographical territory of the country (which results in a variation of local infrastructure and different levels of CE implementation), in this paper, we analyze strategies at a city scale. Several U.S. cities have created action plans and targets to foster a CE and decarbonize their industry sectors, including construction. For example, the City of Charlotte, in North Carolina, developed the Sustainable and Resilient Charlotte by 2050 Resolution, which strives to source all the energy use in the local building sector from zero-carbon sources by 2030 [77]. In addition, in 2018, the “Circular Charlotte” report explored how Charlotte could start implementing a strategy to become the first circular city in the U.S. Similarly, the City of Phoenix, in Arizona, created the Phoenix’s Zero Waste and Circular Economy roadmap, seeking 50% waste diversion by 2030 and zero waste by 2050 through increasing the reuse and recycling rate of materials [78]. The City of Austin, in Texas, developed the Austin Resource Recovery plan with the goal of reaching zero waste by 2040. The plan includes the Circular City Program, which aims to change citywide policies, create CE pilot projects, and implement zero waste goals for city facilities [79]. San Francisco, in California, highlighted CE strategies for building material management in its San Francisco Climate Action Plan. The Plan includes green building requirements for City facilities, such as a waste limit per square foot of building area, the use of Environmental Product Declarations, and the requirement of whole building life cycle assessments [80].

C&D waste is the largest single waste stream ending up in landfills in many U.S. cities. C&D waste can be prevented through circular building strategies such as design for disassembly and material reuse. Designing for disassembly means planning for future deconstruction and material reuse from early design phases. Existing buildings that were not designed that way can still be deconstructed, but a much higher rate of material reuse and recycling can be achieved through design for disassembly [81]. Although very few buildings in the U.S. (and worldwide) have been intentionally designed for disassembly, some U.S. cities have been implementing deconstruction ordinances as part of their CE policies. San Francisco and Los Angeles are part of the Clean Construction Declaration shared by the C40 cities, a group of large cities worldwide that share a commitment to acting on climate change. The commitments include requiring the deconstruction of buildings by 2025 and advancing design for disassembly and Building as Material Banks by 2030 [82].

Portland, in Oregon, pioneered deconstruction regulations by requiring certain buildings to be fully deconstructed [83]. The policy started in 2016 and is limited to single-family residential units built in 1940 or earlier. In Milwaukee (Wisconsin), a deconstruction ordinance dating from 2018 mandates deconstruction for historic buildings or structures built in 1929 or earlier [84]. The City of San Antonio (Texas) adopted a similar ordinance in 2022, requiring all small-scale residential units built prior to 1920 to be deconstructed [85]. The City of Palo Alto (California) went one step further and started requiring the deconstruction of all residential and commercial buildings in 2020 [86].

The results show that all eight city-level policies included in the analysis address waste prevention and recycling rates, while none directly acknowledge the digital technologies needed for virtualizing CE processes. Due to the increasing number of deconstruction ordinances, U.S.-based CE policies focus heavily on the end-of-life phase of the construction value chain (Figure 3).

4.4. Japanese Circular Economy Policies Scan

In Japan, while there have been laws aimed at promoting recycling and reuse, the Basic Act on Establishing a Sound Material-Cycle Society serves as the central legal framework that incorporates the comprehensive concept of a CE [42,43]. This law aims to shift away from a mass production, mass consumption, and mass disposal economic model. It promotes the efficient use of resources and recycling throughout the entire lifecycle, from production and distribution to consumption and disposal. Through these measures, it seeks to reduce resource consumption and establish a material-cycle society with minimal environmental impact.

Building upon this framework, this section analyzes five key laws and plans closely related to promoting CE in Japan’s construction sector, as well as four additional laws and policies that have a significant impact.

Japan’s CE policies in the construction sector have been progressively strengthened, as outlined in the Fourth Fundamental Plan for Establishing a Sound Material-Cycle Society (2018) [87] and the CE Roadmap (2022) [48], which was developed to monitor progress. The CE Roadmap, in particular, sets forth specific measures aimed at achieving a circular society by 2050. These include expanding the use of construction waste, improving the efficiency of raw material usage, promoting an environmentally conscious design, extending building lifespans, forming and maintaining high-quality social infrastructure, and utilizing reusable construction materials. Subsequently, in August 2024, the Fifth Fundamental Plan for Establishing a Sound Material-Cycle Society was approved by the Cabinet, positioning the transition to a CE as a national strategy and setting targets for 2030 [44]. This plan specifies improving the quality and expanding the use of recycled construction materials, promoting compact and resilient urban development, and reducing disaster-related building waste. A new CE Roadmap, based on the Fifth Fundamental Plan, is expected to be developed in the near future.

Key laws that serve as the foundation for implementing CE in the construction sector include the Act on Recycling of Construction Materials [88], the Act on the Promotion of Effective Utilization of Resources [89], the Act on the Rational Use of Energy (Energy Conservation Act) [49], and the Act on Promoting Green Procurement (Green Purchasing Act) [90]. These laws play a crucial role in promoting resource circulation and reducing environmental impact within the construction sector, thereby supporting the formation of a sound material-cycle society.

The Act on Recycling of Construction Materials [88] mandates that construction contractors properly sort waste materials such as concrete, asphalt, and wood generated from demolition and construction activities. The law aims to achieve high recycling rates and reduce environmental impact through the reuse and recycling of these materials.

Land, Infrastructure, Transport, and Tourism has committed to the steady implementation of the Construction Recycling Promotion Plan 2020 [91,92] as part of its Environmental Action Plan [93]. The plan notes that the recycling rate for construction waste, which was around 60% in the 1990s, had reached approximately 97% by fiscal year 2018, marking a transition from a growth phase to a maintenance and stabilization phase. Moving forward, the focus will shift toward improving the quality of recycling, specifically by enhancing the value of recycled materials and promoting the use of high-value-added recycled products.

The Act on the Promotion of Effective Utilization of Resources aims to promote the recycling and reuse of construction materials and recycled resources [89]. It mandates construction contractors to utilize recycled resources and recycle by-products for certain specified construction materials. Specifically, it encourages the use of recycled materials such as crushed concrete and asphalt concrete, as well as the recycling of soil and crushed concrete generated during construction activities. This law seeks to enhance the efficient use of resources in the construction sector.

The Act on the Rational Use of Energy [49] was revised in April 2023, mandating compliance with energy efficiency standards for nearly all newly constructed buildings. This revision contributes to reducing energy consumption in buildings and lowering greenhouse gas emissions.

The Act on Promoting Green Procurement mandates national and other public institutions to procure environmentally friendly goods and imposes a duty of effort on local governments [90]. This promotes the use of eco-materials and recycled resources in public sector projects, contributing to the reduction in environmental impact.

Looking more broadly at laws and policies related to the construction sector, the Waste Management and Public Cleansing Act (Waste Management Act) [94] and the Government’s comprehensive plan based on the Law Concerning the Promotion of Measures to Cope with Global Warming (Global Warming Countermeasures Plan) [95] are noteworthy. The Waste Management Act establishes a management framework for construction waste from generation to final disposal, forming the basis for proper waste management within the construction sector’s CE efforts.

The Global Warming Countermeasures Plan [90], formulated in 2021, aims to reduce greenhouse gas emissions by 46% from 2013 levels by fiscal year 2030, with a commitment to further pursue a 50% reduction. The plan outlines the direction of CE policies aimed at achieving carbon neutrality, including the expansion of construction waste utilization, improvement in the efficiency of raw material use, promotion of an environmentally conscious design, and extension of building lifespans.

The Green Growth Strategy [96] outlines action plans and concrete projections for 14 key sectors expected to drive growth from both industrial and energy policy perspectives. These sectors include next-generation renewable energy, hydrogen industries, automotive and thermal storage battery industries, semiconductor and Information and Communication Technologies (ICTs) industries, civil infrastructure, housing and building industries, and resource recycling-related industries. For housing and buildings, the strategy emphasizes strengthened regulatory measures, such as mandating compliance with energy efficiency standards, and the promotion of zero-energy homes and buildings. Additionally, the government supports corporate efforts through various means, including budgetary allocations, tax incentives, financial support, regulatory reforms, international cooperation, the promotion of initiatives in universities, the hosting of the 2025 World Expo, and the establishment of a youth working group.

The Circular Economy Vision 2020 [97] outlines the challenges and strategic directions for transitioning to a CE. Against the backdrop of the limitations of the linear economic model, advancements in digital technologies, and increasing demands from markets and society for environmental considerations, the vision aims to shift from the 3Rs (Reduce, Reuse, Recycle) as environmental activities to CE as an integral part of economic activities. It also promotes the development and global deployment of circular products and business models, advocating for companies to voluntarily advance their management and business strategies. Additionally, the vision emphasizes the long-term goal of reconstructing a resilient circular system.

The Growth-Oriented Resource Autonomy Strategy [98] presents a comprehensive policy package aimed at reconstructing resource circulation industrial policies to achieve autonomy and resilience in Japan’s domestic resource circulation system while capturing international markets. In the context of the construction sector, the strategy highlights a resource-efficient design, including the use of recycled and renewable resources (such as wood and bio-based materials). Instead of setting detailed standards at the national level, the government supports private-sector standardization efforts, encouraging companies to voluntarily establish and disclose quantitative targets.

Thus, the promotion of CE in Japan’s construction sector is progressively supported by a framework centered on the Basic Act on Establishing a Sound Material-Cycle Society and reinforced by related laws and policies. This framework enables the steady implementation of concrete practices across various stages of the construction value chain, including the proper disposal and improved recycling rates of construction waste, the promotion of recycled material use, enhancements in energy efficiency, an environmentally conscious design, and the extension of building lifespans.

Figure 4 synthesizes the phases of the construction value chains that are mostly impacted by the above-mentioned Japanese policies and the CE criteria that are considered.

5. Discussion

The results show that 23 out of 30 analyzed policies concern waste management, and 20 of those deal with increasing recycling rates. In contrast, virtualized processes are considered in five policies only, thus demonstrating that the major attention is still devoted to waste management and prevention while processes that deal with the digitalization of building information and design to optimize each life cycle stage or the use of sensors and machine learning to collect data for monitoring and optimizing activities are still less addressed by policies. Moreover, in terms of circular construction, Japanese and German policies had the highest emphasis on reducing resource use. U.S. cities’ policies mainly consider waste prevention and increasing recycling rates due to the high number of deconstruction ordinances included in the study, which specifically target those aspects.

The analysis of the construction process phases shows that the end-of-life is the most addressed by policies. This can be explained also by the fact that at least in Europe and Japan there is a regulation specifically targeting waste management, thus including the C&D waste in the category. The other two most investigated construction phases are manufacturing and construction, while the least addressed is the use and maintenance phase, considered by 19 policies across the four countries. This is important especially for the design of better future smart cities, since there is the need to interpret the already-built environment according to a circular perspective, thus trying to leverage retrofitting processes inspired by CE principles. For the use and maintenance phase, there is a need for policies not only focusing on the material and environmental dimensions but also acknowledging the importance of the social dimension and residents’ behaviour to achieve a more holistic and systemic transition.

As far as the role of digital technologies is concerned, there has been a growing number of publications considering them as enablers of CE strategies [99,100,101,102]. However, not all policies reviewed in this study yet incorporate or acknowledge digital tools in their frameworks. Digital technologies can support CE in the construction sector in several ways, and the literature emphasizes that the design phase is the most crucial step in the lifetime of buildings to encompass circularity. Still, designers are not aware of CE importance [19,103]. For example, the integration of BIM with IoT and Blockchain can allow material traceability throughout the construction value chain [104,105,106], a concept called “material passports” [107]. Spatial data acquisition technologies such as geographic information systems (GISs), light detection and ranging (LiDAR), and unmanned aerial vehicles (UMVs) can help collect data on existing building material stocks, and, if integrated into BIM and material passports, can create digital twins of existing building infrastructure. Digital twins are virtual replicas of existing objects (in this case, buildings) that utilize real-time data to monitor and track building performance, maintenance needs, and material data [14,108]. Digital marketplaces can help connect supply and demand for reusable building materials and close loops in the construction industry [109,110]. Artificial intelligence and machine learning technologies can predict material flows and C&D waste with accuracy, helping cities plan CE infrastructure [111,112].

However, outside the realms of academic research, numerous barriers hinder the application of digital technologies in the construction sector; this includes, for example, problems with data reliability and interpretation [113,114], technology integration challenges when different digital tools collect, store, and process data differently [115,116], and the lack of collaboration and transparency in the construction industry [117]. These challenges have been slowing down the process of digitalization in the building sector, which may explain why digital technologies are not usually acknowledged in CE policy in the U.S. and Europe. For example, in the Italian scenario, the National Circular Economy Plan [56] acknowledges the role of digitalization, especially for waste management, but does not specifically target the construction sector. Similarly, the National Action Plan on Green Public Procurement [58] mentions the BIM technology, but only for public buildings and only as a premium criterion. The same is valid for the German scenario, in which digital technologies were never emphasized or even mentioned in any of the previous circular-related regulations, including the German Closed Cycle Management Act [64], New Buildings Energy Act [65], Germany’s Federal Climate Change Act [71], and Germany Energy Concept [73].

However, for Europe, a new stimulus is coming from the recent adoption of the new eco-design directive [30], which will foster the adoption of the Digital Material Passport putting more emphasis on the role of digital technologies in the CE transition. The first result can already be seen in Germany, where at the end of 2024, the National Circular Economy Strategy (NCES) has been envisaged to further mitigate climate change, protect the environment, and create opportunities for value creation and competitiveness [118]. This national strategy particularly highlights the importance of fully leveraging the potential of digital technologies in the CE. To achieve these goals, key measures include promoting the Digital Product Passport (DPP) as a central tool, supporting DPP lighthouse projects in critical sectors including the construction sector, informing consumers about CE options, and developing digital services to encourage repair, reuse, and sustainable consumption. For the construction sector in particular, the strategy emphasizes establishing new CE regulations and promoting the design of resource-efficient, circular buildings and materials [118].

Conversely, many of the Japanese policies already promote the adoption and utilization of digital technologies. The Fifth Basic Environment Plan highlights the development and dissemination of advanced technologies as one of its key strategies for achieving a sustainable society [40]. It emphasizes optimizing production through the use of ICT, such as AI and IoT, and promoting low-carbon logistics through the adoption of autonomous vehicles and drones. The Fifth Basic Plan for Establishing a Sound Material-Cycle Society [46] emphasizes the importance of leveraging ICT and digital transformation, fostering human resource development, and enhancing collaboration among stakeholders as part of efforts to strengthen resource circulation and waste management infrastructure and ensure proper disposal and environmental restoration. It also references the European Digital Product Passport, highlighting the need to establish a quality database for recycled materials. In addition, the plan advocates for the use of digital technologies and robotics to enhance traceability and improve efficiency, thereby reinforcing resource circulation infrastructure and promoting decarbonization. The Environmental Action Plan [93] identifies the utilization of digital technologies and data as a key cross-sectoral and public-private partnership project. It calls for the promotion of digital transformation in urban infrastructure, transportation, and logistics, as well as the use of GIS and the development of open data platforms to enhance productivity and optimize green initiatives. Additionally, it highlights the importance of leveraging open data to foster new industries and services, advance civic technology, and enhance environmental data and monitoring systems to strengthen the PDCA cycle. The Construction Recycling Promotion Plan [91] sets the improvement of productivity in the construction recycling sector as a medium- to long-term goal and promotes the use of ICT through initiatives such as iConstruction [119]. With the realization of Society 5.0 [120], the utilization of data on materials and soil through BIM/City Information Modelling (CIM) has become increasingly important. Furthermore, efficient monitoring of by-product logistics, as well as the streamlining of administrative procedures and statistical surveys, are also emphasized. The Global Warming Countermeasures Plan [95] promotes comprehensive energy management in the residential sector through the adoption of Home Energy Management Systems, smart meters, and smart home devices. It aims for the widespread implementation of these technologies by 2030, facilitating the visualization of energy usage and promoting efficient energy management. The Green Growth Strategy [96] outlines support for the creation of new business models in energy management within the housing and building sector by leveraging AI, IoT, electric vehicles, and storage batteries. It emphasizes the importance of establishing relevant legal frameworks and providing demonstration support to facilitate these developments.

6. Conclusions

The paper analyzed CE direct and indirect policies in Italy, Germany, U.S. cities, and Japan. An overview of the policy instruments has been given, resulting in 18 binding regulations out of 30 policies analyzed in the study. The research reveals significant differences in how CE principles are embedded in construction policies across the EU, the U.S., and Japan. While the EU has a well-structured framework (e.g., Green Deal, Circular Economy Action Plan), the U.S. focuses more on local initiatives, and Japan integrates CE within a broader resource efficiency strategy.

The most common strategies adopted by national and local governments in the identified countries to achieve a circular built environment resulted in waste prevention and increased recycling rates, thus mainly addressing the end-of-life stage. This survey also confirms that Japan’s CE promotion policies in the construction sector emphasize using digital technologies across key CE processes, including production, distribution, operation, waste management, and recycling. Specifically, ICT technologies such as AI and IoT contribute to optimizing production processes and reducing carbon emissions in logistics, while data utilization tools like BIM/CIM play a critical role in resource traceability and improving the efficiency of by-product logistics. In the operation phase, energy management is advanced through the use of HEMS and smart meters. Additionally, initiatives such as the development of quality databases for recycled materials and the enhancement of energy management systems promote the recycling of construction materials and energy efficiency in residential buildings. Conversely, more effort seems needed in Europe and the U.S. to promote a more systematic use of digital technologies through the all-life cycle phases of buildings, even though new stimuli will probably come in the near future thanks to the recent adoption of the new eco-design regulation by the European Commission. This is especially true for the use and operation phase, in which the social dimension should be considered while planning policies for the development of better future smart and circular cities.

While the study has offered valuable insights, the findings may not fully capture the diversity of policy approaches in other global contexts, such as emerging economies, since it focuses on selected regions only (EU, U.S., Japan). Moreover, even though this study identifies barriers to integrating CE in construction policies, it does not conduct an empirical assessment of real-world implementation. Further studies could explore case studies or stakeholder perspectives to assess policy effectiveness. Future research could also expand the geographic scope of the study, exploring how CE policies are shaped by different socio-economic and regulatory contexts. Moreover, investigating how different actors (e.g., governments, private sector, and communities) collaborate in CE policy implementation could provide insights into governance models that enhance sustainable and circular urban transitions in the construction sector.