Finance firms need to scale circular economy, says UK foundation

Photo by Abi Ismail.

Financial services firms should scale the circular economy, said UK-based Ellen MacArthur Foundation.

The Foundation, which is focused on the transition to a circular economy, also advised the firms to work with governments and corporations in seizing opportunities in what it thinks is a a crucial part of the solution to climate change.

In its latest position paper, Financing the circular economy – Capturing the opportunity, the Foundation highlighted the rapid growth in circular economy financing and investments.

A circular economy revolves around “designing out waste and pollution, keeping products and materials in use, and regenerating natural systems,” as defined in the Ellen MacArthur Foundation site. It can tackle climate change and other Environmental, Social and Governance issues, according to the Foundation.

Photo by Meritt Thomas.

Growth opportunities abound industries such as fashion, plastics, and food stand, the paper said. The circular economy is most likely to significantly affect or even disrupt these industries in the near term. 

Innovation, regulation, and evolving customer preferences are set to drive changes in these industries.

“The question is no longer whether climate change and other global challenges matter to the financial services sector, but how it will address them,” said the Foundation.

“Circular economy opportunities can be found in nearly every sector in the global economy.”

Ellen MacArthur Foundation added that if just five key sectors, steel, aluminium, cement, plastic, and food, adopted the circular economy, annual greenhouse gas emissions could plunge.

The fall would be 9.3 billion tonnes of carbon dioxide emissions in 2050, equivalent to cutting all transport emissions globally, said the Foundation.