The background
The Netherlands Environmental Assessment Agency (Planbureau voor de Leefomgeving, PBL) conducts research into the living environment and related policy, with the aim of providing policymakers, politicians and other stakeholders with strategic knowledge about the subject. Every two years, PBL reports on the progress of the transition to the circular economy in the Integrated Circular Economy Report (Integrale Circulaire Economie Rapportage, ICER). In that context, Copper8 and Circular Finance Lab have provided PBL with a research report that offers in-depth insight into the role of the financial sector in the transition to a circular economy.
Context
Circular companies put the circular economy into practice. Because these companies are dependent on external financing, the Dutch financial sector has an important role in the transition to a circular economy. Various studies show that circular companies have difficulties acquiring the financing they need.
The question
To what extent do Dutch banks invest in circular companies, what risks (and opportunities) do banks weigh in their assessment of companies, and in what ways do obstacles within the financial sector hinder lending?
Current situation and future
To gain insight into this, it is important to understand how the financing process works and what the different parties’ roles are. In recent years, much research has been conducted into barriers to financing circular companies. The innovative element of this research is that it brings together barriers from different perspectives and analyzes them from a systemic perspective. This is how we get to the core of the problem.
The process
We started by mapping the current situation regarding financing of circular companies by Dutch banks, based on literature research, interviews with Triodos, ABN AMRO, Rabobank and ING, and data provided by these banks. This step led to insight into areas including:
- The current financing landscape
- Circular companies’ need for financing (the finance gap)
- The financing process
- Barriers that banks experience when financing circular companies
In order to arrive at relevant recommendations for improving financing for circular companies, we then mapped out the dynamics between the various barriers in a system dynamics sketch. Finally, various reviewers validated the report scientifically and policy-wise.
The results
Our report (link in Dutch) provides in-depth input for the ICER 2025. We have identified the underlying barriers that cause the mismatch between the banks’ supply and entrepreneurs’ demand. Based on this, we make policy recommendations that will result mainly in a better business case for circular companies and enable banks to adjust their financial risk assessments. The results of the research will be presented to stakeholders, including at a lunch lecture at the PBL.
