The circular economy offers a systemic response to the climate crisis. It is about rethinking how we use our raw materials and resources to create a sustainable economy free of waste and emissions. It means shifting from the current linear model of ‘take, make, waste’ to an economy where we ‘reduce, reuse, recycle’.
People and businesses need to change the way they produce and consume. Companies have to design differently, sell differently and value differently. They have to rethink their propositions, redesign their organisations, and cooperate more often, with more parties.
Many companies have started a journey to become more circular, which happens in many shapes and forms. There are well-known companies enabling product-sharing. Others like Signify and Michelin are actively redesigning the production and use of their lighting and tyres, for example.
But there is still a long way to go. Today’s world is far from circular and the trend is negative to neutral at best. The negative environmental effects of market activities remain unpriced, transaction and operational costs are higher for circular businesses, the demand and supply for secondary goods and materials is still too low and innovation within circular solutions carries higher risks. We need government policies to help support circular innovations and level the playing field with the linear economy.
We see circular economy as fundamental to help achieve global climate goals . We as a bank have to value differently, treat risk differently, and finance differently when it comes to the circular economy. Our role is important, as we can help unlock finance for new business models and engage on new value propositions with our clients.
What is ING doing?
We build our knowledge and network
We finance circular deals and investments, such as E-bike-to-go, a young and fast-growing company offering a circular subscription model for e-bikes to both business and consumer markets in the Netherlands. We also were green structuring advisor and joint active bookrunner on the first green bond for Smurfit Kappa, one of the world’s leading providers of sustainable packaging. These are just a couple of examples.
We’re also working to build our knowledge and network, which is why ING is an active member of several circular economy platforms, like Circle Economy.
We published several research reports on circular economy and financing the circular economy. Our publication: ‘Rethinking the road to the circular economy’ answers important questions: Why do we need to move to a circular economy? What are the hurdles for circular economy growth? How can we get the circular economy going?
The key seems to be to work together across the value chain, across industries and also between public and private parties. That’s why we regularly host roundtables with clients and other stakeholders to discuss the hurdles and challenges, for instance on plastics. Other value chains with a high potential for circularity we focus on are packaging, batteries and vehicles, and electronics/ICT equipment.
ING also regularly hosts Circular Economy Business Simulation games, as a start of our journey with clients, but also with employees and cities. Circular propositions are often a collaboration between different partners. We can help creating valid business cases for circular propositions, focusing on a proper risk reward distribution among all parties involved.
We finance circular deals and investments
With ING Sustainable Investments, we’ve invested in for instance Milgro, a leading cleantech company. Milgro has developed an interface platform that helps companies to control their waste streams, optimise recycling, reduce and prevent the waste of raw materials. We’ve also invested in Black Bear Carbon. They convert used car and truck tyres into raw materials for new products like pen ink, smartphone covers and new tyres.
ING has also provided several loans to recyclers and companies that produce goods using recycled resources. Some of these deals have been with ground-breaking circular businesses, like the La Trappe brewery with a closed loop water system and the world’s first energy neutral and circular hotel, Breeze.
We have also supported several green and sustainability bonds in support of the circular economy.
We explore and develop beyond banking solutions
ING regularly hosts Circular Economy Business Simulation games, as a start of our journey with clients, but also with employees and cities. Circular propositions are often a collaboration between different partners. We can help creating valid business cases for circular propositions, focusing on a proper risk reward distribution among all parties involved.