CONTESTOItalian SMEs are at the center of a critical challenge: the European Commission, through carbon emission pricing, requires the development of sustainable Supply Chains (SC). Companies are expected to reduce emissions by implementing Circu- lar Economy (CE) initiatives. The literatu- re has provided limited evidence regar- ding the relationship between market proximity, production, and the adoption of CE practices. Therefore, understanding the intersections between micro-level phenomena (green factory design and enabling technologies) and meso-level phenomena (SC structure) represents a significant research gap, especially in the SME scenario, which is characterized by the lack of an internal managerial layer capable of addressing this challenge.