Circular finance: The financial industry’s role as a key enabler of sustainable transformation

Enabling the transition to a circular economy

Climate change is dominating the agenda. The impacts of climate change, biodiversity loss, resource scarcity, waste, and pollution point to the urgent need for a system change. To tackle these issues, the circular economy holds great potential especially for the financial services sector – it will be a rich source of opportunity besides adapting to the new regulation. 

The sector is now set to play a crucial role in the circular economy – enabling the transition to circularity across the entire economy and accelerate the circular economy transition. 

Circular finance

Circular finance, or circular economy finance, refers to any form of financial service or instrument integrating circular economy factors into the business or investment decisions in order to enable and accelerate the transition to a fully circular economy as a basic cornerstone of sustainable development.

Circular investing

Any type of investment that will be exclusively made to finance or re-finance new or existing companies or projects with a circular business model embedded in a circular resource strategy and generating long-term positive impact.

Unlocking the potential

Both regulators and financial service providers have a role to play in unlocking the financial sector’s full potential as a driving force of the circular economy. For the transformation in the financial sector to succeed, they will have to work together to create a framework for circular business by:

  • Increasing awareness of the benefits (and risks)
  • Developing a common understanding
  • Enhancing transparency
  • Creating a vision, roadmap and action plan
  • Developing standardised regulation
  • Establishing a new financial services offering and increase circular investments in order to encourage companies in every industry to make the circular transition

Challenges

Circular finance is a win-win for both investors and the real economy. However, the circular transition is a complex topic for businesses and financial service providers, often entailing fundamental changes such as the transformation of existing business models. The financial industry must overcome a few challenges to exploit the rich opportunities related to circular economy.

The industry needs to foster a deeper understanding of circularity and the related strategies and risks. It must adjust processes, particularly in relation to risk assessment and pricing models, as well as product offerings. Simultaneously, it has to make sure circularity is acknowledged by firms and financial institutions as an opportunity. Lastly, it should also be endeavouring to bring about changes in the mindset and behaviour of all stakeholders, including the general public and the financial sector.

And opportunities

The financial services sector has a chance to harness circular finance as an essential building block of sustainable finance. It is a way of enhancing risk management, reducing financial risks and making the financial markets (and the economy as a whole) more resilient. Circularity is a source of new market opportunities and products, services and financial instruments aligned with consumer preferences. By embracing circularity, financial services providers can anticipate and align themselves with regulatory trends (such as the EU’s SFDR and Taxonomy).

What are we waiting for?

Find out more in the recording of our webinar

Our webinar from 11 May 2021 is a chance to learn more about the financial services sector as a key enabler of the circular economy. We are looking at the financial sector’s role in building trust in circular finance, give some concrete recommendations and are discussing the challenges and opportunities with our experts:

  • Dr Günther Dobrauz, PwC Switzerland
  • Dr Antonios Koumbarakis, PwC Switzerland
  • Stephan Hirschi, PwC Switzerland
  • Antonio Garufi, DECALIA SA
  • Andreas Knörzer, Vontobel Asset Management
  • Dr René Nicolodi, Swisscanto Invest by Zürcher Kantonalbank

Take your place at the forefront of development:

Access the recording  Or contact us

Circular Finance Webinar

“Circular finance is a win-win for both investors and the real economy.”

Dr Antonios Koumbarakis, Head Strategic Regulatory and Sustainable Finance, PwC Switzerland

Download our new report

Discover how to transform and grow your business by adopting the circular economy in our new report ‘Circularity as the new normal – Future fitting Swiss businesses’.

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Circularity as the new normal

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Contact us

Dr. Antonios  Koumbarakis

Dr. Antonios Koumbarakis

Sustainability & Strategic Regulatory Leader, PwC Switzerland

Tel: +41 58 792 45 23

Dr. Günther Dobrauz

Dr. Günther Dobrauz

Partner and Leader Legal, PwC Switzerland

Tel: +41 58 792 14 97

Stephan Hirschi

Stephan Hirschi

Director, Sustainability Leader, PwC Switzerland

Tel: +41 58 792 27 89

Moritz  Obst

Moritz Obst

Strategic Regulatory & Sustainability Services, Legal, PwC Switzerland

Tel: +41 58 792 47 19