Circular economy is primarily understood as a waste management and recycling strategy, but economic opportunities are far broader and more diverse.
Developing countries are in a strong position to take advantage of these opportunities because many of their large informal sectors already practice ‘circular’ activities, especially in areas such as electronic waste (e-waste) and phone repairs. By investing in a circular economy, developing countries can ‘leapfrog’ developed countries in digital and materials innovation to embed low-carbon development, sustainable production, and consumption at the heart of their economies. And innovation is already under way in several countries, as well as certain sectors such as agriculture.
The circular economy is a key part of global efforts to meet the goals of the Paris Agreement. Circular economy activities aim to reduce overconsumption, design-out waste and restore and regenerate ecosystems and natural capital. However, new financial instruments and investments are needed to support the growth of these business models and innovations at scale.
With rising public awareness about the impacts of climate change around the world, financial institutions and investors are under mounting pressure to address sustainability concerns in their portfolios. One way to achieve this is through investments in projects that promote the development of the circular economy. In addition, circular economy investment can contribute to achieving several of the SDGs.
From a government perspective, policy instruments are key to de-risking and incentivizing financial investments in circular models. This paper makes the case for integrating the circular economy more directly into public investment and stimulus packages.
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