A financial system for the circular economy

About the programme

The Circle Economy Finance Programme exists to help the financial sector as the critical enabler for the circular economy transition. By supporting both financial market participants and businesses to navigate the financial, institutional, and operational obstacles that prevent circular economy initiatives from receiving funding at the scale and immediacy required, the Programme addresses the transition from both the top-down and the bottom-up.

The Finance Programme engages with local, national and international financial institutions, circular enterprises, accountants, legal experts and policymakers to help meet two broad goals:

1) To improve the salience of the circular economy as a cross-cutting approach for financial market participants to meet a range of sustainability objectives, while equipping the sector with the expertise required to identify, understand, and assess effective circular economy initiatives.

2) To help businesses access capital directly for circular economy projects by mitigating the myriad challenges of being circular in a largely linear system. This includes addressing difficulties in financial reporting; solving the accounting challenges that can arise for circular business models; and distributing that knowledge effectively and widely to provide solutions to scale up acquisition of capital for impact-driven developments.

Finance plays a critical role in allocating capital to projects and initiatives that accelerate the transition to a low-carbon circular economy. However, the relative novelty and complexity of the circular economy as a topic means that there is considerable difficulty in identifying and differentiating high-potential projects - in the absence of global standards for circular economy investing, financiers have been required to develop their own approaches.

As such, the landscape of circular finance is scattered and misaligned - financiers struggle to find suitable investments in the circular economy, while businesses are unable to effectively communicate their own developments in circularity.In order to address this unique problem, the Circle Economy Finance Programme engages in distinctly collaborative approaches to improving the allocation of capital to the circular economy. Our projects focus on knowledge sharing and exchange, and a belief that greater harmonisation will be key to unlocking the potential of the financial sector in the circular economy.

CIRCULARITY EXCHANGE NETWORK (CEN)

Our community-building approach engages with the people behind financial institutions – investors, relationship managers, product specialists, accountants and risk managers – to thoroughly understand how choices are made regarding circular investment and credit decisions. The recently developed International Financial Institutions Circularity Exchange Network (IFI CEN) represents a transnational effort from the leading Multinational Development Banks (MDBs) to scale up their own engagement with the circular economy. The group meets regularly to address the objectives outlined on the IFI Circular Financing Roadmap.

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Building the financial ecosystem

Co-financing our future

Together with a large consortium of financiers we organise “Co-Financing our Future”: a series of sustainable investment events where venture capital, private equity, family offices, impact investors, funds and banks meet to explore new collaborations, gain knowledge about co-financing and get inspired by best case practices.

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Research that matters

We combine insights from our practical projects, case studies, and in-depth research with the knowledge and expertise of our community network to introduce changes or new solutions that are required to help finance circular businesses.

Linear Risks

The 'Linear Risks’ essay demonstrates the real business threats linear economic business practices are creating, including risks associated with the use of scarce and non-renewable resources; prioritization and sales of products produced with virgin resources; the failure to collaborate; and failing to innovate or adapt. These are all factors that will negatively impact the ability of organizations to continue business as usual.

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