The UN Environment Programme Finance Initiative (UNEP FI) has released the first in a series of resources to help banks implement and benefit from interlinkages between the circular economy and challenges related to climate change, nature loss, and pollution. Designed for the 300+ signatories of the Principles for Responsible Banking and the wider banking sector. The guidance encourages firms to embed circularity into internal policies and processes, engage with clients in their transition to circular business models, redirect financial flows towards circular solutions and opportunities, and advocate for mainstreaming circularity. Once their sustainability targets are set, banks are also being urged to leverage the circular economy to advance in the implementation phase of their Principles for Responsible Banking journey by identifying solutions and opportunities in their portfolios. “This new guidance supports banks as they take their first steps in fostering the circular solutions that will be critical to address climate change, the pollution crisis and nature loss, while building a more sustainable, resilient and inclusive global economy for all,” said UNEP FI Head Eric Usher. “It is not just about investing in perfectly circular companies, but about providing banks – and the wider industry – with the strategies and methodologies to engage with companies in every industry to make the transition to a circular economy.” With resource extraction and processing accounting for over 55% of global greenhouse gas emissions, their use is at the centre of a “triple planetary crisis”, UNEP FI argued. As such, implementing the circular economy will be critical to achieve net zero and other sustainability objectives,. The report also highlights how adopting circular models can mitigate risks associated with linear business models as demand for raw materials intensifies and the regulatory landscape evolves. “Research shows that transitioning to a circular economy could generate significant economic benefits, estimated at US$4.5 trillion in annual economic output by 2030, through increased resilience to macroeconomic shocks and reduced costs from raw material and energy consumption, waste management and emissions control,” UNEP FI stated.
