Sustainable Banking: Finance in the Circular Economy
Banks and other financial institutions can make an important contribution to the transition towards a circular economy. Within the banking sector—in particular within the remit of the FinanCE Working Group—studies were performed to monitor the actual implementation and performance of new circular business models and value networks that arise, and evaluate how these differ from the linear business models and how this impacts finance. These studies provide a better understanding of how investors could actually support circularity deployment. Financial institutions can contribute in two ways: first by enabling companies to make the transition to a circular economy on a financial level by providing the appropriate financial and legal structures, network development services, and advice; and second by looking at their own business models and risk assessment frameworks to better balance linear and circular risks. It should also be noted that a coherent accompanying policy framework is essential to speed up the transition. Circular economy involves different policy areas and legal settings which should be aligned to work together to design out waste and incentivise circular design, production, and consumption.
This chapter is based on the work done by the European Investment Bank in the context of the circular economy in collaboration with the FinanCE working group. Special gratitude goes to Mohamed Sameh—Technical Assistance Officer at the European Investment Bank—for sharing his insights and comments on this chapter.
The views and opinions expressed in this chapter are those of the authors and do not necessarily represent the official position of the European Investment Bank.
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