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Financial institutions must play a part in accelerating the resources transition, says Triodos

Published: 1 May 2024

The Dutch sustainable lender is calling for “an urgent shift” from a wasteful and linear system to a restorative and circular economy, and believes the financial sector has a role to play.

Waste disposal
In 2020, around 40% of all waste generated in the EU ended up in landfill or in an incinerator, without recovering secondary raw materials or energy | Photo by zibik on Unsplash

Climate change and its impact on humanity and the environment not only requires better financing and new risk and business models, but also a system change in which companies and individuals see waste as valuable.

That’s the conclusion of a vision paper put together by Dutch sustainable lender Triodos Bank.  

‘We need to let go of our never-ending ambition to achieve maximum growth and profit, and instead ask ourselves: do we even need this product?’” Triodos researcher Matija Kajić said in a separate interview on the website of the Dutch sustainable lender.

Resource transition

Of the 100 billion tonnes of resources that enter the economy each year, only 7.2% ends up being recycled and used again, Triodos said in its vision paper. This is why the Zeist, Netherlands-based lender has made resource transition one of its strategic priorities.

According to Kajić, the resources currently entering our economies aren’t used for our basic needs, but are “instead fed into a system of over-consumption and over-production fuelled by an expectation of cheap, short-lived, non-reusable products, quickly available at our doorstep. The current system sees no value in the waste it incinerates or sends to landfill,” she said.

In 2020, around 40% of the 2,135 million tonnes of waste generated in the European Union ended up in landfill or in an incinerator, without recovering secondary raw materials or energy, Triodos said, citing Eurostat.

The failure to use resources adequately is hampering efforts to reduce global warming, with processing and product manufacturing generating about half of  total greenhouse gas emissions, according to the vision paper.  

Driving change

The financial sector can play a part in driving change, according to Triodos. Institutions have the ability to accelerate the resources transition though loans and investments to firms with a focus on circularity and nature conservation, the organisation said. Lenders can also play a key role in reducing negative impacts for the planet by refusing to back wasteful projects.  

Triodos also called on lenders to use true pricing, which incorporates the environmental and social cost of unsustainable production into prices. “True pricing is potentially the quickest way to circularity and we believe the financial sector should support this,” Triodos said in its vision paper.

‘Tremendous challenge’

The Dutch lender identified five sectors with a vast potential for positive impact: construction, nature-based solutions, ICT, renewable energy, and manufacturing.

“We have financing activities in these sectors – where a transition would entail replacing fossil fuels with renewable energy, minimising waste in all parts of the relevant supply chains and becoming more efficient with material. Using products for as long as possible by designing them with a view to repair, by refurbishing them and by creating second-hand markets and sharing platforms,” said Kajić.

At the end of the day, the financial world is “key to tackling the tremendous challenge we are all facing: moving away from damaging people and ecosystems and [to] build a society that allows people to live prosperous lives on a thriving planet”, Kajić said.   

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