A Critical Assessment of the EU Circular Economy Action Plan in the Light of the Access to Finance for Circular Economy Projects

Abstract

As sustainability concerns advocate for a rapid deployment of circular economy, preserving and recovering the so-called ‘critical raw materials’ and minimising plastics waste, the European Commission issued an EU action plan for the Circular Economy in 2015 with two subsequent reports on its implementation. The focus of the action plan has been threefold: product design, facilitating durability of the products and waste management, while determining five priority areas of action and highlighting the need for financing the transition to a more circular economy. The latter has been seen as an accelerator for the deployment of circular economy, mentioned in the framework of creation of new circular business models and in the waste management framework. While it has been repeatedly highlighted that there is a need for extensive financing (an estimated EUR 320 billion by 2025) for a systemic transition to circular economy to come about (with estimated combined benefits of such shift of EUR 500 billion), the focus of the report has been on providing such finance in the current ‘business as usual’ framework, advocating for higher investment in such transition by the EU, without a comparative assessment of the current private financial market frameworks and their role in such transition. The present article critically assesses the action plan’s lack of focus on the access-to-finance as critical for the transition to a more circular economy outside of the public finance.