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Circular economy finance: Clear winner or risky proposition?

Author

Listed:
  • Paul Dewick
  • Magnus Bengtsson
  • Maurie J. Cohen
  • Joseph Sarkis
  • Patrick Schröder

Abstract

A major shift in private and public investment is needed to forge a transition to a circular economy. A recent surge of activity from policy makers, the financial industry, and other stakeholders suggests commitment and progress toward providing resources to facilitate this process. In this forum article, we provide a measured, and in some respects critical and corrective, assessment of these developments. We highlight the riskthat progress toward a circular economy will be curtailed by strategic decisions based on contestable understanding, fuzzy indicators, and inadequate information. Before major industry actors implement international investment standards, launch innovative financing vehicles, and ramp up investment, we call for more effective oversight to prevent the circular economy from becoming yet another compromised and ultimately ineffectual sustainability concept.

Suggested Citation

  • Paul Dewick & Magnus Bengtsson & Maurie J. Cohen & Joseph Sarkis & Patrick Schröder, 2020. "Circular economy finance: Clear winner or risky proposition?," Journal of Industrial Ecology, Yale University, vol. 24(6), pages 1192-1200, December.
    • Handle: RePEc:bla:inecol:v:24:y:2020:i:6:p:1192-1200
    DOI: 10.1111/jiec.13025
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    References listed on IDEAS

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    Cited by:

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    2. Sara Moggi & Renata Paola Dameri, 2021. "Circular business model evolution: Stakeholder matters for a self‐sufficient ecosystem," Business Strategy and the Environment, Wiley Blackwell, vol. 30(6), pages 2830-2842, September.
    3. Peterson K. Ozili, 2021. "Circular Economy, Banks, and Other Financial Institutions: What’s in It for Them?," Circular Economy and Sustainability, Springer, vol. 1(3), pages 787-798, November.
    4. Gutberlet, Melissa & Preuss, Lutz & Thorpe, Andrea Stevenson, 2023. "Macro level matters: Advancing circular economy in different business systems within Europe," Ecological Economics, Elsevier, vol. 211(C).
    5. Peterson K. Ozili, 2022. "Circular Economy and Central Bank Digital Currency," Circular Economy and Sustainability, Springer, vol. 2(4), pages 1501-1516, December.
    6. Luthra, Sunil & Kumar, Anil & Sharma, Manu & Arturo Garza-Reyes, Jose & Kumar, Vikas, 2022. "An analysis of operational behavioural factors and circular economy practices in SMEs: An emerging economy perspective," Journal of Business Research, Elsevier, vol. 141(C), pages 321-336.
    7. Nidhi Bhagat & Archna & Jagdeep Singh Arora, 2026. "Circular Economy and Sustainability: Innovation and Finance Perspective," Circular Economy and Sustainability, Springer, vol. 6(2), pages 1-18, April.
    8. Mohammed Ibrahim Gariba & samuel Amponsah Odei & Emmanuel Ebo Arthur & Ivan soukal, 2026. "Driving circular economy transformation through technological innovation: the moderating role of regulatory environment, human capital, and technological capacity," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 13(1), pages 1-20, December.
    9. Ozili, Peterson K & Opene, Francis, 2022. "The role of banks in the circular economy," MPRA Paper 113466, University Library of Munich, Germany.
    10. Abednego Osei & Naiping Zhu & Hela Borgi & Joana Cobbinah, 2025. "Empowering Sustainable Production: Firm Governance, Finance Strategies, and Tech‐Innovation in Advancing Circular Economy for SDG 12 in the US, China and Japan," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(4), pages 5282-5307, August.
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    12. Pengyu Chen & QianYing Chen, 2025. "Two birds with one stone: can green finance drive the circular economy?," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 12(1), pages 1-14, December.
    13. Bhavesh Kumar & Love Kumar & Avinash Kumar & Ramna Kumari & Uroosa Tagar & Claudio Sassanelli, 2024. "Green finance in circular economy: a literature review," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(7), pages 16419-16459, July.
    14. Robert H. W. Boyer & Ann‐Charlotte Mellquist & Mats Williander & Sara Fallahi & Thomas Nyström & Marcus Linder & Peter Algurén & Emanuela Vanacore & Agnieszka D. Hunka & Emma Rex & Katherine A. Whalen, 2021. "Three‐dimensional product circularity," Journal of Industrial Ecology, Yale University, vol. 25(4), pages 824-833, August.
    15. Beatriz de Souza Mello Gonçalves & Flávio Leonel de Carvalho & Paula de Camargo Fiorini, 2022. "Circular Economy and Financial Aspects: A Systematic Review of the Literature," Sustainability, MDPI, vol. 14(5), pages 1-41, March.
    16. Pengyu Chen & Zhongzhu Chu & Yuhao Zhao & Yiming Li, 2025. "Is urban innovation capacity shaping new models of economic development? Evidence from the circular economy," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(1), pages 758-770, February.
    17. Khan, Syed Abdul Rehman & Yu, Zhang & Sharif, Arshian, 2021. "No Silver Bullet for De-carbonization: Preparing for Tomorrow, Today," Resources Policy, Elsevier, vol. 71(C).
    18. Olga Lingaitienė & Aurelija Burinskienė, 2021. "Core Elements towards Circularity: Evidence from the European Countries," Sustainability, MDPI, vol. 13(16), pages 1-16, August.
    19. Fedra Vanhuyse, 2024. "The Urban Circularity Assessment Framework (UCAF): a Framework for Planning, Monitoring, Evaluation, and Learning from CE Transitions in Cities," Circular Economy and Sustainability, Springer, vol. 4(2), pages 1069-1092, June.
    20. Ima Amaliah & Qaisar Ali & Tasya Aspiranti & Nunung Nurhayati & Abdul Razak Abdul Hadi & Asep Darmansyah, 2026. "Decoupling Commercial Banks Risk-Taking Through Circular Economy Financing and Economic Stability: The Case of a Developing G20 Economy," Circular Economy and Sustainability, Springer, vol. 6(2), pages 1-24, April.

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