The UN Environment Programme Finance Initiative (UNEP FI) on Thursday launched a guide to help banks implement a circular economy as what it said is a critical way of conserving nature, combatting pollution, and reaching net zero.
Embracing a circular economy through reusing or regenerating materials is key for achieving sustainability objectives, UNEP FI said, adding that practices such as less land use change, reduced reliance on synthetic substances, and alternative farming practices can support biodiversity.
The document, co-developed with a group of 18 banks, including Bancolombia, Rabobank, and UniCredit, is the first in a series of UNEP FI resources on the topic.
“Given the urgency of the biodiversity crisis, and recognising that over half of the world’s GDP is at risk due to business dependence on nature, economic activities must not only avoid further biodiversity loss but also work to rebuild it,” Peggy Lefort, circular economy lead at UNEP FI, told Carbon Pulse.
Circular solutions can help address all five of the key drivers of nature loss, as identified by the Intergovernmental Panel on Biodiversity and Ecosystem Services, said Lefort:
- Changes in land use: by reducing the amount of land needed
- Exploitation of natural resources: by minimising their extraction
- Climate change: by reducing GHG emissions
- Pollution: by tackling pollution at every stage of a product’s life cycle
- Invasive alien species: by addressing waste on which invasive alien species can be transported to other ecosystems
Transforming supply chains across agriculture, buildings, energy, and textiles in particular can help to rebuild biodiversity globally, according to the guide. The circular economy can alleviate most of the biodiversity pressures applied by these sectors, the European Environment Agency said last year.
In agriculture, regenerative practices can counter the impacts of industrial farming by enhancing agroecosystems through practices like agroecology, agroforestry, and managed grazing, UNEP FI said.
FIRST STEPS
The guidance encourages banks to embed circularity into internal policies, engage with clients on the topic, and redirect financial flows.
“This guidance supports banks as they take their first steps in fostering the circular solutions which 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 Eric Usher, head of UNEP FI, in a statement.
“It is not just about investing in perfectly circular companies, but about providing banks with the strategies and methodologies to engage with companies in every industry to make the transition to a circular economy.”
Banks could identify circular solutions such as relevant green loans or prioritising funding for businesses that use their waste, said the agency.
Transitioning to a circular economy could generate economic benefits of $4.5 trillion annually in output by 2030, according to UNEP research from 2020.
By Thomas Cox – t.cox@carbon-pulse.com
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