Change

Who finances the circular economy?

The circular economy has a money problem. Not because capital is lacking, but because it often does not flow to where it is needed for transformation. The eighth POLYPROBLEM report, “Change – Who finances the circular economy?” by the non-profit Röchling Foundation, is dedicated to a question that helps determine the pace of transformation: Who finances the circular economy? Answering this question leads to start-ups, established companies, banks, investors, and political decision-makers. They all play a central role in whether good ideas become economic reality.

For the report, we spoke with stakeholders from business, finance, and politics. Their experiences show that financing the circular economy usually fails less due to a lack of capital than due to structures that are still geared toward the logic of a linear economy. Circular business models often require longer investment periods, new forms of collaboration, and different evaluation criteria than those that have become established in the financial system over decades.

Young companies encounter financing hurdles during the transition from idea to scaling. Established companies must maintain existing business models while simultaneously investing in new circular structures. Banks and investors, in turn, face the challenge of assessing the opportunities and risks of an economic approach that cannot always be translated into classic return and risk models. At the same time, policymakers decide through their regulatory frameworks whether investments are facilitated or hindered.

However, the report also makes it clear that there are numerous examples of successful transformation. Companies are developing new materials, setting up take-back and recycling systems, or opening up innovative ways of financing. Time and again, it becomes clear: the circular economy is not just a question of technological innovation. It is also a question of the rules of the game by which capital flows today.

Click here to download the report directly.

Under the title POLYPROBLEM, the non-profit Röchling Foundation bundles various information and networking offers intended to contribute to better cooperation in solving the global plastic and resource crisis. These include studies, reports, webinars, workshops, and excursions.