Only big industries and power plants need to follow sustainability patterns. Well, we are mistaken here because a complete change will come only when all institutions are walking on the sustainability path. Thus, to reduce the carbon footprint of financial sector, UNEP FI launches guidelines for banks to follow circular economy.
UN Environment Programme Finance Initiative (UNEP FI) has launched new products to assist banks in integrating circular economy principles. This step is taken to address climate change, nature loss and pollution. Over 300 banks who have signed the Principles for Responsible Banking. The broader banking sector will benefit from the resources.
Today’s first reports from UNEP FI lay down building blocks for responsible banking which unites environmental care and societal impact. Further editions will take a closer look at how to make sustainability better focusing on climate action as well as biodiversity conservation.
The reports suggest practical ways banks can use circular economy principles. These include:
- Making loans available to businesses employing such practices
- Supporting Product-as-a-Service models
- Investing in recycled material projects
- Backing closed-loop supply chains.
In addition, these resources enable banks to pre-empt the oncoming changes in regulation. A critical shift is needed for banks’ operations as governments worldwide adopt circular economy approaches. It also requires banks to consider circular economy principles when making financing choices. Also, to support sectors such as buildings, construction or textiles where there is huge potential for achieving circularity.
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Moreover, switching to a circular economy will create substantial economic benefits with a predicted $4.5 trillion annual output by 2030. Also, it will enhance social well-being by generating new jobs and reducing inequality. This transition fits neatly with the principles of an equitable just transition.
UNEP FI launches guidelines for banks to follow circular economy. It shows how committed they are towards a sustainable, resilient, and inclusive global economy. It believes this can be achieved by encouraging financial institutions to adopt a circular economy.
This comes at a very important time as there is a rising importance on global resource use in addressing the triple planetary crisis. Resource extraction and processing are responsible for huge emissions of greenhouse gases globally. Hence, it becomes imperative that circular economy practices are put in place to achieve net-zero emissions and meet other sustainability goals.
Source: The Principles for Responsible Banking Academy launches new course on nature for bankers
