The financial system as an accelerator for the circular economy

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 Circularity Exchange Network (CEN) represents a supranational effort from the leading Multinational Development Banks (MDBs) to scale up their own engagement with the circular economy, to leverage it as a key appraoch to meeting their goals in sustainable development. Circle Economy developed and facilitates the group. The CEN has produced a high-level agenda for unlocking the potential of the MDBs in the circular transition, which now serves as a guide for the groups actions going forward.

Circle Economy Foundation, The Royal Netherlands Institute of Chartered Accountants (NBA), and Invest-NL operate a coalition to jointly identify and investigate reporting and accounting issues in the circular economy. The coalition consists of internal finance professionals, financiers, sustainability consultants, accountants and academic researchers. In the Coalition Circular Accounting (CCA), we collaborate to gain a better understanding of current financing and reporting guidelines and, where necessary, to formulate new guidelines that are fit for purpose in the circular economy. The coalition utilises a variety of practical case studies to investigate challenges and develop new knowledge and potential solutions.

The CCA has been working with several stakeholders in the past years, producing, among other publications, an overview paper titled 'FINANCIAL ACCOUNTING IN THE CIRCULAR ECONOMY: REDEFINING VALUE, IMPACT AND RISK TO ACCELERATE THE CIRCULAR TRANSITION' which illustrates the current state of accounting and reporting solutions, and how they can support businesses in driving the circular transition.

In the most recent trajectories (CCA 2.0) efforts have been focused on Swapfiets and Hempel case studies, looking into challenges relating to VAT and the CSRD respectively. Through the Community of Practice (CoP) format—a pre-competitive environment where stakeholders with different professional backgrounds share and develop knowledge—the CCA proudly shares the learnings from all its endeavours.

The Kopgroep Circulair Financieren (KCF) is part of the Platform for Sustainable Financing ‘Platform voor Duurzame Financiering’ (PDF) - a group of key actors in the Dutch financial sector. The group works directly to enact the Roadmap Circular Finance 2030 for the Dutch financial sector.

The Circle Economy Finance Programme is specifically supporting all work the Kopgroep Circulair Financieren is doing on Circular Economy Metrics (action 2 in the roadmap). This includes circular due diligence templates, overviews of preconditions for circular metrics for different financial products and more.

Since 2020, Circle Economy has facilitated the Circular Economy Indicator Coalition (CEIC) alongside the Platform for Accelerating the Circular Economy (PACE). The overarching goal of this work is to drive the harmonisation and increased application of circular indicators. Following a prolonged period of research, the Circle Economy Finance Programme developed a repository of indicators to help financial market participants better assess the circular economy credentials of potential investments. The indicator library for financial market participants can be found here.

Besides our collaborative endeavours, the Finance Programme also develops insights from our practical projects, case studies, and in-depth research. This work is utilised directly in our projects, but also incorporated in many of the reports and publications issued by Circle Economy more generally. For more information on our service offerings or current research endeavours, please get in touch with one of the team!