Circular economy
The circular economy offers a systemic response to the climate crisis. It involves rethinking how we use raw materials and resources to create a sustainable economy free of waste and emissions. This means shifting from the current linear model of ‘take, make, waste’ to an economy where we ‘reduce, reuse, recycle’.
Adopting a circular approach to production and consumption focuses on reducing consumption, using fewer materials in production, and reusing products and materials as much as possible. This approach has a positive effect on emissions, while also limiting pollution and other harmful effects that impact biodiversity and human health.
Current state
Unfortunately, today’s world is far from circular, and the trend is negative to neutral at best. According to Circle Economy’s 2024 Circularity Gap Report, our global economy is hardly circular – with only 7.2% of our resources cycled back into the economy in 2023, compared to 8.6% in 2021. At the same time, global consumption continues to accelerate.
Circular approaches play an important role in reducing a company’s scope 3 emissions. This can be achieved through resource reduction (using less and replacing virgin materials with secondary materials), reduction of waste during both the manufacturing phase and at end-of-life, and optimizing the product use phase (such as extending the product’s lifetime or optimizing its use through sharing). This requires intensive value chain collaboration.
For example, in the case of plastics, replacing virgin resources with secondary materials in the production of new products requires strong collection, sorting, and recycling capacity. It also needs products to be designed in such a way that they can be recycled when they reach their end-of-life.
Our ambition
ING aims to be a banking leader in accelerating the low-carbon transition. As a systemically important bank, we believe that showing leadership means helping our customers and society decarbonize and drive down emissions in an inclusive way. We aim to be a frontrunner in financing the future economy (including the circular economy) and want to find ways to empower people to prepare for the future. We are doing this by focusing on supporting our clients and championing circularity.
Supporting clients
Circularity is a fundamental element in ING’s integrated climate approach. We support clients in transitioning their business models from a linear economy to a circular one. This includes financing solutions like green bonds and green loans, where the use of proceeds is allocated to circular activities, and sustainability-linked loans and bonds with KPIs connected to circular ambitions.
For example, we provided a green loan to RetuRO in Romania, to finance the setup of regional centers that aim to collect, sort, and prepare more than 6 billion returned plastic, glass, and metal beverage packages for recycling each year.
Through our Sustainable Value Chains team, we also support parties throughout the value chain who connect and form new partnerships to close the loop on material use. By offering sustainable structured finance solutions and/or sustainable investments, we can support scaling up new collection, sorting, and/or recycling technologies, such as chemical recycling for plastic and textiles.
Championing circularity
We primarily focus on value chains where both resource consumption and the potential for circularity are high, such as plastics, packaging, textiles, construction, electronics & ICT, batteries, and vehicles.
Our commitment to supporting circularity in plastic is illustrated by our active participation in the UNEP FI Finance Leadership Group on Plastic, which provides input from a financial industry perspective on the development of a legally binding treaty to end plastic pollution in UN member states.
Along with WRI Platform for Accelerating the Circular Economy (PACE), ING has organised a roundtable on circular textiles in the summer of 2022, titled ‘Creating an efficient textile recycling loop in Europe’. For this roundtable, we brought together international brand names from the textile and recycling industry to embrace collaboration across the entire value chain and discuss challenges around making more sustainable garments available from production, through upcycling to recycling.
In February 2023 we organised a second round table to discuss a theme which is relevant for the whole textile value chain : ‘The Extended Producer Responsibilityscheme and other prevailing value chain challenges in Europe’. This round table involved key players in the ‘Textiles value chain’, including producers, manufactures, brands, collectors, sorters and recyclers that came together to move beyond discussions and create the collaborations required to progress in the circular performance in the industry.
Policy actions translated into law and regulations will help create a more level playing field between the circular economy and the current economy, as commercial incentives to go circular are currently limited.
ING and climate
Society is transitioning to a low-carbon economy. So are our clients, and so is ING. We finance a lot of sustainable activities, but we still finance more that’s not. See how we’re progressing on our climate approach.
Research and Insights
Our ING Research colleagues regularly publish research articles related to the topic of circularity. Some recent examples include: