ROLE OF FINANCIAL INSTITUTIONS IN PROMOTING LOW-CARBON, CIRCULAR ECONOMY

Abstract

The transition to a circular economy presents a transformative opportunity for sustainable development, yet it requires substantial financial support to realize its full potential. Financial institutions play a pivotal role in fostering this shift by providing the necessary capital and innovative financial solutions that drive the circular economy's growth. These institutions can support the circular economy in several key ways. This paper focusses on the role of financial institutions to promote resource efficiency, waste reduction, and sustainable practices. It discusses the innovative products offered by the financial institutions and circular economy initiatives, to help bridge the funding gap for companies transitioning to circular models. Furthermore, banks and investors can facilitate the scaling of circular economy solutions through strategic partnerships and joint ventures, providing both capital and expertise to innovative projects. Additionally, government regulatory bodies play crucial role, to help businesses navigate the transition. They can also support research and development in circular technologies and business models by funding relevant innovations and pilot programs. Thus the paper uses discourse analysis to study how the financial institutions are crucial enablers of the circular economy. Their ability to provide tailored financing, integrate ESG criteria, and support innovation and education is essential for advancing sustainable practices and achieving long-term economic and environmental benefits. Through these efforts, they not only contribute to the transition towards a circular economy but also enhance their own sustainability credentials and market opportunities.