EIB Circular Economy lending by sector (2018-2022)
Source: European Investment Bank as of 05/2023
Regulation encourages longer lasting products
The rise of biodiversity regulation also helps eliminate harmful practices, encourages more sustainable activities, and promotes nature-positive policies. The European Green New Deal[1] has ushered in promising opportunities across sectors like fast fashion, mobility and construction. Circular regulations are compelling companies to design products that are more durable, easily repairable and longer lasting. For example, companies sometimes try to keep lifetimes of their products down, as lightbulb manufacturers infamously did since the 1920s.[2]Or take clothing companies; these have historically tended to use mixed textiles, which are hard to recycle. To become circular, textile manufacturing needs to re-engineer production processes to employ fibers that are easier to reuse.[3]
A sustainable supply chain can contribute to profits
“Firms that embrace sustainability in their supply chains could also be able to attract eco-conscious consumers, resulting in increased brand loyalty and market share. This can not only improve the firms' sustainability but can also contribute to their bottom line,” argues Paul Buchwitz, Head of ESG Thematic Equities at DWS. Not so long, one problem with this was that regulations differed across different countries and trading blocks. Circular economies rarely crossed borders. But as global environmental concerns continue to grow, one would expect national or regional norms to converge, often, presumably, in line with European regulatory templates.[4]
