Why we need to finance circularity

Building a Circular Economy is key to address issues ranging from greenhouse gase emissions to resource scarcity or plastic waste production. It also is at the core to align our economies with the UN Sustainable Development Goals (SDG). Re-directing financial resources plays a key role in this transformation.

The course for that has been set and there is no way back. However, the strategic implications of sustainability in general and circularity in particular challenge our financial as well as our economic systems. Financial flows need to be redirected in new, low-carbon business models. Not only businesses, but also financial institutions now need to adapt to this changing landscape. They are key to mainstream financing of circularity and sustainability.

While there are tremendous opportunities to scale up financing of circular solutions, downside risks from changes in business models or technological solutions need to be wisely managed as well. However, Financial institutions that help to scale up the transition to a circular economy can position themselves well, if they are an active part of such an economy fit for the future.

Chances for financial institutions

De-risk your portfolio

A carbon neutral and Circular Economy will change the risk profil of the econo­my. Con­se­quent­ly, finan­cial in­sti­tutes need to adapt their risk profil to the new cir­cum­stan­ces. An­tici­pa­ting the changes brings com­peti­tive ad­van­tage.

Growing market

If fi­nan­cial in­sti­tu­tions re-­orient invest­ments to­wards tech­no­lo­gies and busi­nes­ses that en­hance cir­cu­la­rity, they can parti­ci­pate in an eco­nomy, that could gene­rate about USD 4.5 trillion in annual eco­nomic out­put by 2030 [Accenture].

Securing talents

Sustain­abili­ty is a growth market that pro­mises emp­loyees pur­pose for their work. Only com­panies, that are tru­ly inves­ted in the future will secure young talents. And only young talents provide the com­pe­ten­ces we need to com­pete in the future markets.

How we can help you

The Circular Economy aims to keep resources at the highest possible value during their life­time and to reduce waste in our econo­mies. Coming from a currently linear economy, which operates from a take-­make-­waste model and degrades resources and generates unacceptable levels of waste, this will need a very different value creation architecture. Supporting this transition from a linear to a circular economy creates business oppor­tunities for the finan­cial in­dustry.

We are Circular Economy experts. We understand the circular transition and the challenges, risks & opportunities that come with it. Therefore, ecocircleconcept can support you to explore the strate­gies and actions that finan­cial institu­tions can take to accelerate the circular transition and highlight ways in which you can manage related risks and barriers and scale up innovation and oppor­tunites related to products, services and financial instru­ments or investments.

Strategy Development

Integrate circular transition into your institutions strategy

To accelerate financing circularity successfully, it has to be implemen­ted into your organi­sations core strategy. That means, you have ot manage linear and circular risks and oppor­tunities by applying the circular strate­gies and concepts in your financial institu­tions risk policies, product develop­ment and client engage­ment. As every industry has different sets of risks and oppor­tunities, it is beneficial to develop sectoral compe­tences.

As Circular Economy experts, ecocircleconcept helps you to identify linear risks and supports you to start developing long-­term execution pathways to contribute to the creation of a low-­carbon, climate resilient and circular economy. We introduce you to cirular process, product and business model strategies, and support your analysis of related material risks and opportunities.

Furthermore, we provide our experience and research capacities to evaluate sectoral best practices for finance focusing on sectors such as construc­tion, chemistry, electronics food and agri­culture and others. We help you to develop an under­standing of the Circular Economy market and its flow of materials, such as recycling infra­sctructure and capacity, relevant legislation, and changing consumer demands and patterns.

Internal transformation

Circular transformation requires additional competences

The circular transformation will take its´toll - your organisations needs to adapt to the requirements of the new circumstances. This means, some competences, knowledge and experiences might expire while others will become crucial.

ecocircleconcept helps you to pro-actively monitor the threats and opportunities to jobs internally for your financial institution as well as externally for the jobs destroyed and created in the businesses of your clients. We also support you to enhance the understanding of the circular transition of the internal C-suite level, which is critical to secure the necessary means and decision-making for the circular transition. The same holds true for decision makers of your clients: they need to be able to anticipate risks and opportunities of the circular transition. ecocircleconcept can support you with that.

Measuring internal circularity

Grow your circular footprint

To track your progress of circularity, you need to measure Circular Economy finance on your blance sheet. That way, you can strategi­cally decide for appropriate and dynamic measures to grow the Circular Economy foot­pring on lending, invest­ment and insu­rance activities. This can raise awareness about Circular Economy activities with clients, employees and investors.

ecocircleconcept supports you in disclo­sing your institutions level of financing for circularity on your balance sheet. As experts on circularity, we can also support your contri­bution to the standard­isation of Circular Economy metrics and finan­cial instruments. This can affect the develop­ment of financial instru­ments to main­streaming circularity, such as green bonds and loans, positive impact finance or ESG integration.

Reading recommendation

Read about what risks the current linear economy is facing, what successful circular solutions could look like and how this might affect our understanding of economy and your financing of circular solutions.