CE, or the Future of Financing: Experts on How to Build an Effective Circular Model
The market for sustainable financing is growing. Banks are betting on the development of a range of green instruments that businesses and other institutions can use to finance investments in various ESG areas. These include both green bonds and loans linked to specific climate goals. One of the areas that companies want to finance within the framework of ESG is the closed-loop economy, i.e. closing the product cycle according to the reduce, reuse and recycle principle.
The closed-loop economy is an important part of sustainability and ESG. As a bank, we would like to see it included in more and more transactions, – Armand Ferreira, director in the Sustainable Solutions Group at ING Wholesale Banking, tells Newseria. – We are seeing more and more transactions in relation to the closed-loop economy. When we talk to companies about financing their initiatives, we always look at the risks and benefits. Sometimes it’s a little too early, when the technology is too new, but during discussions with clients we look at the opportunities and ways we can help them invest in the closed-loop economy. It’s very important for us to finance these kinds of transactions. We aim to allocate more funds to sustainable development and closed-loop economy transactions rather than traditional transactions based on the use of fossil fuels or the old economy model.
According to Armand, many sectors can look at financing closed-loop projects. More and more companies are willing to invest in closed-loop activities, regardless of their size or the industry in which they operate. However, there are sectors for which the circular economy is becoming crucial.
This is, for example, retail and the issue of plastics, textiles – cotton and different types of fibers. Here it seems quite easy to talk about closed-loop and recycling opportunities. However, for recycling you need collection and recovery of raw materials, you need companies to recycle so that new raw materials can be created. This involves many challenges, but in the commercial sector it is possible, – the ING expert points out. – We also see such opportunities in the construction sector, for example, when a building is demolished, it is possible to ensure that as many materials as possible are reused. This is beginning to be implemented in several countries.
As of January 1 this year, construction companies in Poland are required to segregate construction waste into six fractions: wood, metals, glass, plastics, gypsum and mineral waste, such as concrete, brick and ceramic tiles. This is intended to increase recycling rates and reduce the amount of waste going to landfills.
Circular economy is just one – albeit increasingly important – area of ESG that companies are making part of their business strategies and for which they are using sustainable financing offered by banks. ING THINK analysis shows that the market for such green debt instruments is growing. In 2024, global issuance reached more than $1.65 trillion. Among the most popular financial instruments are green and sustainable bonds or sustainability-linked loans. This compares with less than $1.5 trillion a year earlier. The funds are flowing, among other things, toward closed-loop economy, but also for investments in renewables or climate change adaptation.
ING is definitely focusing on this topic. We have developed sustainable products that can help finance closed-loop products and projects. We have created a sustainable version for many of our financial products. Regarding loans, we have created a sustainability-linked loan product in which the amount of interest the customer will pay depends on meeting the company’s set targets(KPIs) – in this case a closed-loop economy KPI – and other ESG key performance indicators. If the company is able to achieve this closed-loop target, we reward that with a reduction in the loan’s interest. If they don’t meet the target, they will pay a penalty. – says Armand Ferreira.
According to the report “Green Finance in Poland 2024,” edited by Ludwik Kotecki, many changes are taking place in this market. First, governments and regulators around the world are introducing legal frameworks and policies to promote sustainable finance. In the EU, the move toward standardization in the area of ESG reporting is aimed at making it easier for investors to evaluate and compare sustainable investments. Indeed, ESG factors are increasingly being mainstreamed into investment strategies. Asset managers and institutional investors alike are gaining confidence that sustainable investments can deliver competitive returns and mitigate risks associated with environmental and social issues. Pressure from investors, but also from consumers, are making financial institutions and corporations increasingly committed to sustainability goals and integrating them into their strategies.
Banks in Poland – surveyed by PwC at the end of 2023 – indicated that they plan to expand their product offerings in sustainable financing (83 percent). When asked about ESG risk management and strategy in this area, they answer that they are mainly reducing financing to sectors considered controversial in terms of sustainability (92 percent). ESG risk assessment is used by banks in: the lending process (100 percent), updating the business strategy or business model (83 percent), the approval process for new products (67 percent) and supplier due diligence (50 percent).
Circular economy and ESG in the context of green finance were just some of the topics discussed by sustainability leaders at the Sustainable Economy Summit, held May 27-28 in Warsaw. ING was the main knowledge partner of the event.
Mr. Ferreira took part in Panel 2, titled “Circular Economy,” which was moderated by Prof. Krzysztof Pikoń, DSc, PhD, Eng. – Vice-Dean of the Faculty of Environmental and Power Engineering and Head of the Department of Waste Management Technology and Equipment at the Silesian University of Technology.
Among the panelists, alongside Mr. Ferreira, were: Paweł Lesiak – Vice President of the Management Board at Interzero Packaging Recovery Organization; Michał Mikołajczyk – Proxy and Director of Sales and External Relations at Rekopol Packaging Recovery Organization; Piotr Okurowski – CEO of Kaucja.pl – the Polish Deposit System; Dr. Bruna Petreca – Associate Professor of Human Experience and Materials at the Royal College of Art; Grzegorz Skrzypczak – CEO of ElektroEko, the Electrical and Electronic Equipment Recovery Organization; and Anita Sowińska – Undersecretary of State at the Ministry of Climate and Environment.
During the discussion, the experts sought to assess the current state of circularity in Europe and to identify the key barriers hindering its effective implementation. Despite ongoing efforts, the global circularity rate has declined from 9% to just 7.2%, while resource consumption has grown at an alarming rate – raising questions about the effectiveness of existing measures.
The panelists discussed potential regulatory and financial tools that could help reverse this trend. Among the proposed solutions were the deposit return system, extended producer responsibility (EPR), and the draft EU Packaging and Packaging Waste Regulation (PPWR), which promotes waste reduction at the source. The panel agreed that while these instruments alone are not sufficient, they provide a solid foundation for building a broader, multi-dimensional strategy for developing the circular economy.
The recording of the panel “Circular Economy” is available here: LINK
See also: How modern technologies shape the economy of tomorrow?
Last Updated on June 23, 2025 by Anastazja Lach