<p>Drawing on a qualitative study of the French textile industry, this paper examines how Circular Economy (CE) policies impact on business model innovation and the geography, organization, and environmental upgrading of global value chains (GVCs). Our findings show that while policies which promote practices such as eco-design, reuse, and recycling have stimulated change, their impact varies significantly by firm type. Multinational lead firms have mostly reacted to policy incentives by integrating minor circular adaptations into pre-existing linear, volume-driven business models, resulting in little change to the organization or geography of their GVCs. Born-circular firms, by contrast, have developed innovative value propositions that embed circularity at their core, seeking to reorganize GVCs both geographically and organizationally, notably by integrating novel actors and creating inter-sectoral linkages. However, these firms faced significant commercial and technical constraints and remained limited in scale and influence. Overall, although these adaptations have led to the integration of new intermediary actors across the value chains studied, they have generally failed to trigger systemic change or geographic shifts. While broader EU-level policies have the potential to drive more far-reaching GVC restructuring and environmental upgrading, the challenges identified here will persist, hampering progress and making sustainability outcomes uncertain.</p>