A new report, “Accelerating the transition to a circular economy: Improving access to finance for circular economy projects,” provides key recommendations to drive increased investment in circular economy initiatives. The study was authored by the European Commission Expert Group on Circular Economy Financing, of which EIT Climate-KIC is a member.
Like with any systemic change, the transition to a circular economy requires pressure on the right levers to trigger a system redesign: This means working across multiple disciplines simultaneously, rather than single point interventions.
The inertia and resistance of current linear economic systems prevent the transition from occurring. Concerted actions by a variety of stakeholders are needed: Governments at all levels, businesses, innovators, investors and consumers all have to play their distinct roles and contribute to the process.
When it comes to finance, most banks and other investors look to innovation to bring change, but avoid the unknown by favouring linear models. But not all of them: More and more financing institutions are recognising that new circular business models can actually reduce risk. However, the rules are not yet written—this is why DG RTD set out to bring together a group of experts to begin the process and explain why the traditional criteria for investment must evolve, and how.
Cliona Howie, EIT Climate-KIC, has been working for over a year in the European Commission Expert Group on Circular Economy Financing. This small, diverse group is made up of circular economy experts from a range of institutions, including those from the financial sector such as the European Investment Bank and other national banks interested in progressing towards a circular economy.
The ambition of the group was to come up with a very specific set of recommendations to actors responsible for financing and designing policy for the circular economy transition, and address circular economy promoters to improve the bankability of projects.
After more than a year of hard work, the group has published a report with those recommendations in a report titled: “Accelerating the transition to a circular economy: Improving access to finance for circular economy projects”.
The paper presents the summary of the discussions in the expert group and proposes three sets of recommendations that, if implemented, should together provide a framework that significantly improves access to finance for circular economy projects.
Actions range from rather technical and short-term measures, for example developing a definition of what constitutes a circular economy project, to long-term and complex measures involving legislative changes at EU and national level. However, these recommendations should be seen as a whole, addressing the main problem—the risk associated with circular economy projects—from different perspectives and by different actors.
The publication is timely, as EIT Climate-KIC led project CICERONE sets out to identify opportunities in the circular economy for a variety of stakeholders, including both investors and projects promoters (SMEs, NGOs, public-private partnerships, etc.). Cliona Howie specifically helped shape the section dedicated to recommendations for circular economy promoters.
The report is available here.