"Significant and more innovative financing is required for a circular future."

The global economy is placing severe pressure on our planet and is pushing through our planetary boundaries. There is an urgent need to move from a take, use, waste linear economy towards a regenerative ‘reduce, reuse and recycle’ circular economy. This requires a fundamental transformation not only of the private sector’s businesses and value chains but also of the financial sector which plays a critical for financing businesses with circular ambitions. Currently, the financial sector is insufficiently equipped for financing circular businesses – including start-ups, SMEs, and corporates. Despite some very positive recent developments (e.g. ESG guidelines, EU green taxonomy, impact investment), there is a need to further transform financial sector policies and regulations, as well as the incentive structures and mental maps of its players.     

In this session, we explore, alongside global leaders, the critical issues that can inform policymakers and stakeholders within the financial sector. We explore, on the one hand, circular financing needs through the lifecycle of a business where start-ups, SMEs, and corporates have different risk profiles. On the other hand, we explore the capabilities and constraints of finance providers such as venture capital capitalists, banks, and institutional investors, as well as the role of government. Examples of issues discussed include the lack of risk capital for early-stage finance, a lack of understanding of circular business models, eligibility issues of collateral, and valuation techniques of residual value.