Report on sustainable finance for a circular economy : Japan/EU Joint Workshop at the G20 resource efficiency dialogue 2019: 10 October 2019, 09:30-12:00, Tokyo (Japan).
Date: 2019-12-19
Institutions: Directorate-General for Environment
Subjects: EU financial instrument, European Union, Japan, circular economy, green economy, management of resources, report, summit meeting

Report on  
Sustainable Finance 
for a Circular Economy

Japan/EU Joint Workshop 

G20 Resource Efficiency Dialogue 2019 

10 October 2019, Tokyo (Japan)

Government of Japan

Acknowledgment: This report was prepared by Ms Annica Cochu and Mr Magnus Bengtsson (EU Contractors) 
on behalf of the Environment Directorate-General of the European Commission, with acknowledgements to the 
workshop’s co-chairs and speakers for their comments and contributions. 

Disclaimer: The information and views set out in this report are those of the authors and do not necessarily 
reflect the official opinion of the European Commission and the Ministry of Environment of Japan. The 
European Commission and the Ministry of Environment of Japan do not guarantee the accuracy of the data 
included in this report. Neither the European Commission, the Ministry of Environment of Japan nor any 
person acting on their behalf is responsible for the use that might be made of the information contained 
therein. 

Luxembourg: Publications Office of the European Union, 2019 

© European Union, 2019 Reuse is authorised provided the source is acknowledged. 
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Report on  

Sustainable Finance  
for a Circular Economy 

Japan/EU Joint Workshop 
at the G20 Resource Efficiency Dialogue 2019  
10 October 2019, 09:30-12:00, Tokyo (Japan) 

Organised by 
the Directorate-General for Environment of the European Commission 
and 
the Ministry of Environment of Japan 

1 

 
 
 
 
 
 
 
1. 

Introduction 

Background 

The G20 Resource Efficiency Dialogue 2019 and Follow up of the G20 Implementation Framework for 
Actions on Marine Plastic Litter took place in Tokyo (Japan) on 8-10 October 2019.  

As a contribution to the Dialogue, the Directorate-General for Environment of the European Commis-
sion and the Japanese Ministry of the Environment organised a workshop on 10 October 2019 to raise 
awareness on the linkages between the circular economy and sustainable finance – two mutually 
enabling policies supporting the required global transformation, as envisioned in the 2030 Agenda for 
Sustainable Development and the Paris Agreement. The workshop agenda is enclosed in Annex I and 
short biographies of the speakers in Annex II. 

The  specific  aim  of  the  workshop  was  to  inspire  circular  economy  practitioners  to  engage  in  the 
enhancement of frameworks for sustainable finance,  and to motivate  sustainable finance actors to 
integrate circular economy issues into the sustainable finance agenda. 

In particular, the workshop addressed the following topics: 

-  Specific characteristics and challenges for financing circular economy activities 
-  Options for financial institutions to help make circular economy “investable” or “bankable”  
-  Existing programmes and instruments for financing circular economy activities 

Speakers included representatives from governments, international organisations, the financial sector 
and academia. Around 150 people attended the event, including many from the private sector.  

The workshop built on results of a side event on “Sustainable finance for a circular economy” organ-
ised by the European Union and the United Nations Environment Programme Finance Initiative at the 
United Nations Environment Assembly in Nairobi (Kenya) on 13 March 2019. 

2 

 
 
 
 
Key messages 

-  A shift to a circular economy is not an option but an inevitable response to a growing world popu-
lation, increasing prosperity, and limited availability of natural resources. Transitioning to a circular 
economy involves great business chances and can create new employment opportunities. 

-  However, considerable barriers exist to a widespread adoption of more circular practices, includ-
ing  economic incentives, accounting rules, and regulation that often favour conventional linear 
solutions and business models.  

-  Governments have a crucial role to play in lowering the hurdles for a circular economy and creat-
ing a playing field that favours solutions, products, and business models that are more sustaina-
ble.  

-  The finance industry also has key roles to play in facilitating a shift to a circular economy. It can, 
for example, provide resources for circular investments, offer insurance products suitable for cir-
cular practices, such as leasing and sharing, and develop rating systems and information disclo-
sure  requirements  that  can  help  improve  transparency  around  sustainability-related  business 
risks.  

-  Banks  and  other  lenders  and  investors  can  also  raise  awareness  through  dialogue  with clients. 
They can help client companies identify various kinds of risks associated with  linear models and 
make them aware of the opportunities of transitioning to more circular solutions.    

-  Many circular economy business models have risk profiles that are hard to assess and generate 
low short-term return on investment. In addition, securities are often in the form of contracts, which 
banks consider riskier than physical assets. New models for risk assessment are called for. 

-  The finance industry has done significant work on how to assess and communicate risks related to 
climate change. As a result, the industry has developed knowledge and scenario analysis tools, 
and gained experience in working with natural science data. This will make it easier to address al-
so other sustainability issues, including circularity and resource-related risks, in a more holistic 
manner.  There  are  strong  linkages  between  climate  change  mitigation  and  circular  economy, 
which can help to stimulate investments in circularity.  

-  Some,  generally  large  companies,  use  green  bonds  to  raise  funding  for  sustainability-related 
investments.  However,  a  large  share  of  the  companies  in  the  waste  management  and  recycling 
sector are SMEs and lack the capacity and size to issue their own bonds. The recycling industry 
also suffers from an image problem that contributes to weak interest from investors.   

-  The transition to a circular economy requires the contribution of all groups in society. Business 
innovation,  regulatory  reforms,  and  lifestyle  changes  need  to  go  hand  in  hand.  Widespread 
awareness on the need for such a transition, and on the roles of various actors, is essential.   

3 

 
 
 
 
2.  Summary of workshop 

The  meeting  was  co-chaired  by  Mr.  Yasuharu  Ueda,  Deputy  Director  General,  Ministry  of  Environ-
ment,  Japan  and  Ms.  Astrid  Schomaker,  Director  for  Global  Sustainable  Development,  Directorate-
General for Environment, European Commission. 

Introductory speeches 

Mr. Yasuharu Ueda, Deputy Director General, Ministry of Environment, Japan 

-  The  Ministry  of  Environment  of  Japan  (MOEJ)  gives  high  priority 
to  circular  economy,  or  sound  material  cycle  society  and  the  3Rs 
(reduce, reuse, recycle) because it can create new opportunities for 
both employment and business.  

- 

Japan,  as  a  resource  scarce  country,  has  developed  advanced 
systems for waste reduction and management, source separation, 
energy recovery, and material recycling. Japan’s resource intensity 
has improved by 60% since the year 2000 and the volume of landfill 
disposal  has  decreased  by  80%  over  the  same  period.  This  has 
been possible through cooperation between citizen,  local  govern-
ments, businesses, and the national government. 

-  While innovation by the private sector plays an essential role for 

a transition to a circular economy, the government can facilitate this shift. For example, the MOEJ 
is providing subsidies to the equivalent of almost 93 million USD to support companies in plastic 
recycling.   

-  ESG  (environment,  social  and  governance)  investments  are  increasing  in  Japan,  including 
through the investments of the Japan Pension Fund - the world’s largest institutional investor. Sim-
ilarly, the green bond market has grown by a factor 7 over the past two years. The government of 
Japan seeks to stimulate this trend further through a number of initiatives.  

In 2019, the MOEJ and the finance industry established an ESG finance high-level panel.  

o 
o  A report on integrated sustainability assessment of companies was recently developed.  
o  The  summit meeting  of  the  Task  Force  on  Climate-related  Financial  Disclosures  (TCFD) 
took  place  recently  in  Japan.  Currently,  199  Japanese  companies  support  the  TCFD  guide-
lines.  The  MOEJ  has  issued  guidance  for  companies  on  scenario  assessment,  which  are 
aligned  with  the  TCFD  recommendations.  An  information  disclosure  platform  is  under  devel-
opment.  

o  MOEJ offers support for the issuance of green bonds, including through guidelines.  
o 

In an effort to promote the concept of Regional Circular and Ecological Sphere1, MOEJ sup-
ports regional finance institutions in providing ESG-related services and finance to regions 
that make use of decentralised, local resources. 

1 See, e.g., Japan Ministry of the Environment (2019): Creation of a Regional Circular and Ecological Sphere (Regional CES) to 

Address Local Challenges. Annual Report on the Environment in Japan 2018. 
https://www.env.go.jp/en/wpaper/2018/pdf/04.pdf 

4 

 
 
 
                                                      
-  To  summarise,  there  are  large  business  opportunities  in  circular  economy,  and  funding  such 
activities  should  be  attractive  to  the  financial  sector.  The  government  of  Japan  will  continue  to 
support  the  finance  industry  in  mainstreaming  ESG  in  investments  and  in  making  the  most  of 
these opportunities, including through public-private partnerships.  

- 

Japan will also continue to play an active role in promoting international cooperation in this area.  

Ms. Astrid Schomaker, Director for Global Sustainable Development, 
Directorate-General for Environment, European Commission 

-  For  the  European  Union  (EU),  transitioning  to  a  circular  economy 
is not optional - it is unavoidable. The limit of the planet’s ecologi-
cal capacity  has been reached and ecosystems are under severe 
pressure.  A  radical  shift  from  the  dominant  linear  economic 
model is needed. 

-  Transitioning  to  a  circular  economy  can  bring  great  opportunities 
for  investments,  growth,  and  employment.  This  transition  has  al-
ready started but much more needs to be done to reach the scale 
and  pace  necessary.  Enabling  policies  and  factors  need  to  be 
identified and put in place.  

-  Sustainable finance is a major enabler - perhaps the major ena-
bler of a circular economy. It can help entrepreneurs develop inno-
vative  circular  business  models  and  build  capacities  to  expand  such  models  for  a  wide  range  of 
economic activities.  

- 

In Europe, the need for circular economy investments clearly exceeds the financial capacity of the 
public  sector.  The  private  sector  can  contribute  in  many  ways,  e.g.  by  providing  tailor-made  fi-
nancial products and by making long-term risks of linear business models clearer to investors.  

-  There are many hurdles to be overcome, including the low immediate cash flows of circular busi-
ness models that are based on product use rather than sales. Here the public sector has a role 
to create an enabling environment for private finance.  

-  The EU sees three main roles for the public sector and is taking steps in this direction:  

o  Develop  and  implement  policies  and  regulations  to  level  the  playing  field:  Current  frame-
works  often  favour  a  “throughput  economy”  and  conceal  the  risks  of  business-as-usual.  The 
Circular Economy  Action Plan is an important start  as it promotes a systemic approach to 
circularity. The public sector is also an important consumer that can send signals to the mar-
ket through its procurement decisions. To strengthen this influence, the EU has adopted new 
green public procurement criteria, which include circular economy aspects. The EU is also 
collaborating with industry, academia, and civil society to develop better tools, including both 
mandatory and voluntary ones. The EU is also developing a “taxonomy” for circular econ-
omy to provide guidance on what economic activities contribute to the six environmental ob-
jectives.  

o  Public  funding  and  de-risking  can  support  the  shift  to  innovative  finance  mechanisms. 
Around €10 million has been mobilised for this transition, through various mechanisms. Circu-
lar economy is also included in the EU’s funding criteria for international cooperation, especial-
ly with Africa and the EU neighbouring countries.  

o  Finally,  outreach,  capacity  building,  and  awareness  raising  remain  critically  important. 
Similar to what Japan has done, the EU has set up an informal expert group to support circu-
lar economy finance, which published a set of recommendations in 2019 (see Annex III).  

5 

 
 
 
Key note speeches 

Mr. Shigemoto Kajihara, President, Japan Waste Research Foundation 

- 

- 

Identifying the actions that will lead to a circular economy system is challenging. It requires efforts 
by a wide range of actors at different stages of products’ value chains.  

Japan has a comprehensive legal system for establishing a sound material cycle society, includ-
ing  broad  basic  acts  (vision,  set  of  principles,  actions,  hierarchy  of  circular  options)  and  specific 
acts targeting individual product groups or waste streams (e.g. including financing arrangements).  

-  The  concept  of  Regional  and  Ecological  Sphere,  which  the  government  currently  promotes, 
seeks to realise local, regional, national, or international scale resource circulation, based on the 
nature of each resource. It emphasises innovation to better utilise local resources for local needs.  

- 

Japan uses three types of headline indicators to track progress towards a circular economy: (1) 
GDP divided by total resource use, 2) use of circular resources divided by total resource use and 
recycled  wastes  divided  by  waste  generated,  and  3)  landfill  disposal  amount),  all  of  which  have 
improved significantly since the year 2000.  

-  The headline indicators have proven quite useful for evaluating the overall effectiveness of poli-

cies, but they are less suitable for supporting individual business decision making.  

-  Circular  economy  is  a  very  broad  and  comprehensive  concept.  The  shift  to  a  circular  economy 
needs  to  happen  as  the  result  of  an  enormous  number  of  independent  actions  at  different 
stages of value chains. Finance for circular economy thus needs to be designed to support such 
specific individual actions. 

-  Finance for a circular economy will need to come mainly from the private sector, including com-
mercial  banks  and  stock  markets.  But  governments  also  have  roles  to  play,  for  example  by 
providing  subsidies  and  tax  breaks,  by  supporting  technological  development,  and  by  adopting 
green purchasing standards. All such policies are currently used in Japan.  

-  There is now in Japan a policy on the mainstreaming of ESG/SDG financing. Under this policy, 
which  covers  not  only  circular  economy  but  also  climate  change,  a  number  of  guidelines  have 
been developed, for example on company assessment and information disclosure. A platform for 
peer-to-peer  learning  and  accumulation  of  experiences  has  also  been  set  up,  as  well  as  a  high-
level panel on ESG finance consisting of top business leaders.  

-  Clear  vision  and  targets  are  a  powerful  tool  but  need  to  be  widely  understood  and  shared  by 
various stakeholders, including by citizens. This requires simple action-based yardsticks as well as 
shared understanding and common language.   

- 

Information gathering and sharing is essential for deepening our understanding. Standardisa-
tion and certification can also be important.  

-  More success stories are needed as inspiration.  

-  Policy dialogues among governments can improve our learning and accelerate the transition to a 

circular economy.   

6 

 
 
 
Mr. Hein Brekelmans, Head of Sustainable Finance Desk, ABN AMRO Bank 

-  The circular economy is about retaining the value of materials by constantly reusing them. Current 
financial and fiscal systems are not aligned with this purpose - governments and banks need 
to change the rules of the game in order to align these systems with a circular business model.  

-  ABN AMRO has shifted from looking at sustainability as a reputation management issue to view-
ing  it  as  a  strategic  business  opportunity.  By  2020,  ABN  AMRO  wants  to  have  100  circular 
deals amounting to €1 billion in total. Currently, 44 such deals have been made with a cumulative 
amount of €508 million.  

-  ABN AMRO’s Sustainable Finance Desk provides inspiration and support to relationship manag-
ers and financing specialists on how to execute as many sustainable transactions as possible, and 
to change risk models within ABN AMRO. Furthermore, together with the bank’s relationship man-
agers the Sustainable Finance Desk offers the two-day Business Innovation Workshop on cir-
cularity for clients, in order to activate them to make their business model more circular. Over 150 
clients have participated so far. As a result, ABN AMRO is building a community of activated en-
trepreneurs,  to  support  them  in  their  transition.  Lastly,  a  network  of  55  intrinsically  motivated 
employees (“the green 40”) from across the bank are allowed to work one day per week on ac-
celerating the sustainable shift together with the Sustainable Finance Desk. 

-  The three largest banks in the Netherlands have developed shared definitions on circularity and 
joint guidelines that identify seven types of circular economy business models (going far beyond 
waste management; pointing to the need for manufacturers to embrace extended ownership and 
responsibility – something that creates incentives for circular design).  

-  Yet, from the perspective of commercial banks, a circular economy comes with many challenges: 

o 

It is still an immature market; risks are perceived as high and difficult to assess since circular 
companies are innovative to a large extent. Innovation and straightforward bank finances are 
not a “happy marriage”. Traditional financial assessment methods and tools are not equipped 
to accurately validate circular economy business models. For example, Product-as-a-Service 
is based on contracts instead of assets, which makes them riskier for banks to finance. Banks 
often prefer hard assets as security for their lending. 

o  Relatively  high  transaction  costs  make  financing  for  circular  economy  models  expensive. 
Since there are many legal challenges, replication and standardisation of contracts is needed 
to lower the transaction costs. 

o  Many circular solutions require collaboration across value chains. Ideally, banks should fi-
nance the value chain, where they normally finance single companies. A holistic approach is 
desirable. Risks and profits are unevenly divided within the value chain and, therefore, this ho-
listic approach is hard to accomplish.  

o  Currently,  shareholders  look  mainly  at  financial  gains  based  on  conventional  indicators.  It  is 
important to move towards more integrated reporting that accounts for different kinds of val-
ue  for  society,  beyond  financial  value.  In  other  words,  circular  economy  adds  value  that  is 
not taken into account when investment decisions are made.  

-  The  Dutch  government  has  formulated  ambitious  targets  for  shifting  to  a  circular  economy.  By 
2030, the country’s economy should be 50% circular; in 2050 the goal is to have a 100% circular 
economy. Moving towards this goal requires action from policy makers.  

o  Currently,  the  fiscal  system  tends  to  favour  conventional  linear  business  models  because 
taxes  are  levied  on  labour  rather  than  on  virgin  resources.  Of  taxes  in  Europe,  51%  comes 
from labour and only 6% from resources. Taxes should be levied on resources instead of la-
bour (“Ex’Tax”).  

7 

 
o  Accounting methods also tend to put circular businesses at a disadvantage due to the rules 
for depreciation of physical capital. Companies are fiscally incentivised to depreciate as quick-
ly as possible. This conflicts with the idea of a circular economy in which value preservation is 
key. 

o  Value added taxes (VAT) do not currently differentiate between new products and materials, 
and circular ones. VAT also create high upfront costs for companies that purchase products to 
be leased to customers.  

o  The Dutch waste legislation has very strict rules for how waste can be used. This hampers 

innovation and efforts to recover resource value from the waste stream.  

o  Governments have easy access to low-cost funding and should act as a role model for a circu-

lar economy through their investments, purchasing, and service provision.  

In its circular pavilion, Circl, ABN AMRO has a striking example of a circular success: the M-Use ele-
vator. The elevator is financed in a 20-year leasing facility, structured via a tripartite credit agreement. 
End-users  pay  approximately  €0.18  per  ride.  Since  Mitsubishi  covers  the  whole  value  chain,  many 
hurdles  are  coped  with.  An  independent  study  of  the  elevator  market  in  the  Netherlands  by  KPMG 
Sustainability shows that M-Use elevator installations are more than €15,000 cheaper over a period of 
30 years in comparison to an average Dutch elevator. This demonstrates that the M-Use concept is a 
positive business case. 

8 

 
 
 
 
Panel discussion 

Initial round of questions 

At the beginning of the panel discussion, moderator Ms. Astrid Schomaker posed individual questions 
to each one of the five panellists.  

Ms.  Yuki  Yasui,  what  is  your  perspective  on  worldwide  efforts  for  financing  the  circular  economy? 
What  are  ongoing  public  and  private  efforts  on  sustainability  reporting,  in  Asia  but  also  beyond,  and 
how can they help to increase investments in the circular economy? 

Ms. Yuki Yasui, Asia Pacific Region Co-ordination Manager, UN Envi-
ronment Finance Initiative 

-  The UN Environment Finance Initiative (UNEP FI, launched in 1992 to 
advance  sustainable  finance  and  integrate  environment  and  social  is-
sues  into  business  decision  making)  is  just  starting  to  work  on  a  new 
annual report on the role of the finance industry in a transition to a cir-
cular economy. Existing guidance in this area is still scarce. The guide-
lines recently developed by Dutch banks are the best that currently ex-
ist.  

-  The  Task  Force  on  Climate-Related  Financial  Disclosures  (TCFD) 
has been instrumental in making the finance industry recognise climate 
change  impacts  as  a  substantial  risk  to  the  stability  of  the  financial  system.  Analysing  forward-
looking information and scientific  data,  including geospatial information, to  identify future risks to 
their  assets has equipped  the  industry  with skills and methods that  will make it easier to assess 
resource-related risks.  

-  Circular economy goes hand in hand with topics such climate change. In order to reach scale an 
integrated  approach  is  required.  In  recent  years,  the  UN  Environment  has  promoted  “Positive 
Impact Financing” as a holistic approach that considers both positives and negative impacts, in-
cluding in environmental as well as social dimensions, of finance related decisions.   

9 

 
 
 
 
Mr. Minoru Matsubara, how can the finance industry support companies in strengthening their circular 
economy business models? What are best practice examples of successful circular economy financ-
ing?  How  can  regulators  and  other  actors,  such  as  rating  and  research  agencies,  help  the  financial 
industry expand its role? 

Mr.  Minoru  Matsubara,  Chief  Manager  of  Responsible  Investment  Group,  Asset  Management 
Division at Resona Bank, Limited 

-  Resona Bank, as an institutional investor with a long-term perspective, 
needs  to  consider  changes  in  the  social  structure.  It  works  together 
with its clients to reviews trends, anticipate how changes affect future 
value,  and  envisage  desirable  societies  and  economic  system.  It  also 
engages  with  its  clients  in  dialogue  about  environmental  issues  and 
helps  them  develop  and  adopt  circular  economy  practices,  responding 
to expected concerns over resource issues. 

-  Resona Bank particularly focuses on climate-related risks, food supply 
chains and plastic marine debris. It currently tries to support compa-
nies that find solutions for cold chains that do not require stable supply 
of electricity. This is important for reducing food waste and improving food security, and for ensur-
ing access to medicines. These are serious sustainability challenges in developing countries, es-
pecially in Southeast Asia.  

-  Resona Bank is supportive of the TCFD and its recommendations. 

Mr.  Daniel  Houska,  what  are  your  practical  experiences  on  raising  funding  for  waste  and  recycling 
companies?  How  is  financing  for  this  sector  different  from  for  other  sectors  and  what  can  we  learn 
from experiences made in this sector?  

Mr. Daniel Houska, Board Member, European Recycling Industries’ Confederation (EuRIC) 

-  The recycling industry is at the centre of a circular economy. Yet, deal-
ing  with  end-of-life  products  and  the  substances  they  contain  can  be 
risky from an investor’s perspective since secondary raw material prices 
depend  on  commodity  markets.  This  can  make  investors  unwilling  to 
provide funding. 

-  While  public  funding  and  subsidies  have  helped  build  up  the  recycling 
industry, private funding through equity and debt is important for scal-
ing  up.  Public  de-risking  (e.g.  via  catalytic  first-loss  capital)  can  in-
crease private  investors’ confidence.  Better tools for  risk assessment 
can also be helpful as well as integration of the public good (i.e., proper 
consideration of both positive and negative externalities levelling the playing field between circular 
and linear business models).   

-  On  an  example  of  debt  investments,  some  of  EuRIC’s  larger  members  have  secured  funding 
through green bonds. These are attractive for investors because they yield fixed income. Howev-
er, many companies in the recycling industry (a sector that is dominated by SMEs, as are many 
others) do not have the capacity to issue bonds or their projects are not scalable beyond a €5 mil-
lion threshold (which is important for a mainstream investor, e.g. when decarbonising her portfo-
lio). 

10 

 
 
 
 
 
Ms.  Mariko  Kawaguchi,  where  does  Japan  stand  with  regard  to  financing  the  circular  economy  and 
why  is  this  topic  important  for  Japan?  How  can  circular  economy  finance  be  strengthened  in  Japan 
and what can other countries learn from your country? 

Ms. Mariko Kawaguchi, Senior Principal, Daiwa Institute of Research 

- 

In general, the preconditions for a transition to a circular economy are 
good  in  Japan.  There  is  a  comprehensive  legal  framework  for  circular 
economy in place and many companies are working with environmental 
issues in a systematic manner, using tools like ISO 14000. There is po-
tentially  great  interest  from  the  finance  industry  in  circular  economy 
opportunities.  

-  However, many people in the private sector are not convinced about the 
opportunities to make money from circular solutions. There is also con-
fusion on whether to focus on downstream solutions, such as recycling, 
or more upstream circular options. Many circular economy solutions are 
currently small scale and the opportunities for upscaling may not be obvious since it is difficult to 
build business models which cover the whole circular chain. There is also an image issue – waste 
is a “dirty” businesses that investors hesitate to be associated with.  

- 

Inspiring  examples  could  help  popularise  circular  business  models.  Normally,  circular  business 
models do not generate good revenues. On the other hand, there is a company, named RICOH, 
which has successfully operated leasing models for office equipment since the 1990s. The point of 
this company’s business model, named ‘Comet circle,’ is creating a closed loop not only in a lim-
ited but also in an entire business field. The financing aspects of such cases could be studied in 
more detail to draw lessons. 

-  The  public  sector  can  play  a  critical  role  in  removing  existing  hurdles  in  the  not-profitable  area 
which the private sector is not able to play. Good laws and policies can revive circular solutions 
and encourage innovation. High awareness among general citizens is also an essential precondi-
tion.  

Mr.  Hein  Brekelmans,  what  are  best  practices  and  investors’  insights  for  Circular  Economy  finance? 
How and why did you personally shift from corporate banking to fostering circular economy finance? 
What is the motivation behind your bank’s sustainability efforts?  

Mr. Hein Brekelmans, Head of Sustainable Finance Desk, ABN AMRO Bank 

-  Sustainability is an extremely meaningful topic as it is about the long-
term survival of humanity. Circular economy can contribute to protect-
ing  the  climate,  as  saving  resources  can  also  often  reduce  energy 
consumption  and  emissions.  This  can  be  one  way  to  expand  the  fi-
nance  industry’s  sustainability  interest  beyond  its  current  focus  on  cli-
mate.  

-  ABN  AMRO’s  board  members  are  concerned  about  the  future  the 
generations  to  come  and  agreed  to  place  sustainability  at  the  heart  of 
their  strategy.  The  bank’s  staff  members  (on  all  levels)  are  also  very 
enthusiastic about working on sustainability, including on circularity, be-
cause it is engaging and motivating. Recruiting and retaining staff also becomes easier because 
young talented people want to work with building a better society. Overall, good support from the 
top and enthusiasm from the bottom are key to a successful transition.  

11 

 
 
 
 
-  Yet,  many  different  perspectives  have  to  be  reconciled  in  a  bank  to  finance  circular  economy 
business models: The CEO of ABN AMRO is very much in favour of investing in sustainable busi-
nesses  and  solutions.  The  Chief  Finance  Officer  (CFO),  who  feels  a  stronger  pressure  to  show 
short-term results to shareholders, is usually  in favour as long as there is a decent financial re-
turn. The Chief Risk Officer (CRO) demands that the investment has a reasonable risk profile.   

-  ABN  AMRO has agreed that circular economy finance is not required to comply with exactly the 
same risk assessment routines and financial return rates as its normal business. This higher 
risk taking is agreed to since the amount of money allocated is rather limited compared to the total 
balance sheet of ABN AMRO.  

-  The  circular  economy  investments  that  ABN  AMRO  finances  are  much  smaller  than  its  regular 

investments but allow the bank to gather experiences with financing the circular economy.  

Open discussion / comments 

The initial round of questions was followed by an open discussion on various topics (not presented in 
order of discussion): 

Regulation 

-  Mariko Kawaguchi: Regulation can create obstacles. In Japan, consumers pay a fee for the col-
lection and recycling of used home appliances; recycling plants should not make any profits. How-
ever, some companies have made progress on recycling even though there is no incentive.    

-  Daniel Houska: Regulatory measures and/or public funding are necessary to ensure that recycling 
makes sense from a business perspective. For example, governments could help to reward recy-
cling  environmental  benefits  in  terms  of  CO2  and  energy  savings  which,  in  turn,  would  in-
crease  the  competitiveness  of  recycled  material  prices  on  commodity  markets.  Policy-makers 
could also help stabilise prices for secondary raw materials that follow a price development of vir-
gin  materials  (e.g.  recycled  high-density  polyethylene  (rHDPE)  and  crude  oil).  The  “sustainable 
finance taxonomy” (i.e. list of sustainable business activities), which the EU currently develops, 
can also have great influence by increasing transparency and confidence around circular economy 
as an approach to sustainable development.  

Risk and opportunity management 

-  Minoru Matsubara: Many circular economy models are difficult to evaluate from a risk perspec-
tive. For example, some circular models involve long chains of actors that all depend upon each 
other. It can be difficult for investors to assess whether such value chains are functioning well.  

-  Hein Brekelmans: Linear business models are risky. Depending on rare resources, for example, is 

a significant supply risk that can be reduced by shifting to systems that are more circular. 

-  Daniel Houska: Finance companies that are now taking the lead, such as ABN AMRO, are likely to 

gain benefits when green investing goes mainstream. 

-  Mariko  Kawaguchi:  Building  trust  by  being  honest  and  transparent  is  important  for  consumers’ 

willingness to pay premium prices for more circular products. 

12 

 
 
 
 
 
Questions from the audience 

Following the open discussion, Astrid Schomaker invited questions from the audience. 

The price difference between virgin materials and recycled ones is an obstacle to a circular economy 
and a great challenge. Secondary materials are often at a disadvantage. What can the finance indus-
try do to address this challenge?  

-  Yuki Yasui: Over time, increasing awareness on resource constraints could influence the pricing 
of virgin and secondary materials. The TCFD has helped the finance industry understand natural 
science  information.  Some  companies  in  the  industry  are  developing  “science  based  targets” 
and methods for scenarios and pathway  analysis. The industry’s  work on sustainability  will  likely 
broaden beyond climate to consider also biodiversity impacts and resource issues.  

-  Mariko Kawaguchi: Products made from recycled materials usually do not have a positive image. 
But there are signs that consumer perceptions are changing (e.g. towards “upcycling”). For ex-
ample, second hand clothing is becoming popular. Ways need to be found to make consumers of 
other  products  with  high  content  of  recycled  materials  or  reused  parts,  such  as  air  conditioners, 
pay extra for such products.  

Recycling (of plastics) may not be the only solution. How could the finance industry stimulate reduced 
use and consumption of plastics? 

-  Mariko Kawaguchi: Funders can support entrepreneurs with new solutions that reduce the need 
for  plastics.  Larger  companies  can  perhaps  issue  green  bonds  to  raise  necessary  funds  while 
SMEs may need to turn to local banks and credit unions.  

-  Minoru Matsubara: At the current stage, awareness raising is important and to broaden sustain-

ability concerns beyond climate change.  

How can we move from de-risking to scaling up?  

-  Daniel Houska: Current methods for financial risk assessment ignore many future risks asso-
ciated  with  linear  business models;  for  example,  market,  technological  (stranded  assets),  opera-
tional, regulatory and reputational risk are often not factored in. Better instruments for assessing 
and managing such risks are needed.  

It  is  usually  difficult  for  banks  to  evaluate  the  return  on  investment  for  novel  circular  economy  ideas 
and resource efficient technology. Meeting requirements for pay-back times of three years is challeng-
ing since revenues are often spread out over time. What new indicators can banks develop to enable 
lending to this kind of businesses?  

-  Minoru Matsubara: Sustainable funding is complex. It is easier for individual banks to build exper-
tise through specialisation. Bank groups can have different arms focusing on separate sustaina-
bility  issues.  Yet,  an  overall  framework  and  capacity  building  for  the  whole  banking  sector  are 
needed.  

13 

 
 
 
 
 
-  Yuki  Yasui:  The  Principles  for  Responsible  Banking2  were  launched  on  22  September  2019, 
and has been signed by 130 banks from around the world. The signatories of this new framework 
represent 33% of total banking value. 

-  Hein  Brekelmans:  It  is  challenging  to  evaluate  the  potential  of  new  technologies.  ABN  AMRO  is 

building up internal expertise and sometimes engages external consultants.   

Reused parts and recycled materials often have lower carbon footprints than new parts and materials. 
How do you see the issue of stranded assets in this context?  

-  Minoru Matsubara: Carbon footprints are currently not considered enough by investors. It is desir-
able to develop holistic sustainability assessment methods since “piecemeal” approaches with 
different  tools  looking  at  individual  aspects  of  sustainability  are  not  effective  enough.  In  the  ab-
sence of quantitative tools, it is important to engage clients in dialogues about these issues.  

-  Hein Brekelmans: Large / important companies in the value chains can play an important role in 

requesting disclosure of carbon footprint information. 

When trying to reduce the use of plastics we risk running into trade-offs and we can create other prob-
lems. For example, plastic packaging is often used to protect food from turning bad and with reduced 
use of plastics we risk increasing the amount of food waste. How can we deal with such complex is-
sues?  

-  Mariko Kawaguchi: It can be hard for the large-scale food industry to shift away from plastics un-
der the current system. Other players may have solutions, such as more local production and con-
sumption systems with the use of fresh produce that may require less packaging or that can use 
other materials than plastics. A shift to such systems requires changes in awareness and  atti-
tude.  

-  Yuki Yasui: There are many  opportunities for using less material, shifting to other materials than 
plastics, and selling services instead of products. These are areas with great potential for innova-
tion.  

2 UNEP FI: Principles for Responsible Banking. https://www.unepfi.org/banking/bankingprinciples/ 

14 

 
 
 
 
 
 
                                                      
Closing remarks 

Astrid Schomaker 

-  There are many new opportunities but also many hurdles related to circular economy finance.  

-  The finance industry has a very important role to play in promoting sustainability and is already 
showing significant leadership. Prices and accounting rules that create adverse incentives need 
to be addressed.  Improved tools and procedures that help  investors and  lenders  evaluate risks 
associated with linear and circular business practices are required.  

-  A more holistic approach to sustainable finance beyond climate is needed. There are strong link-
ages  between  climate  change  mitigation  and  circular  economy  and  biodiversity  protection.  This 
can help stimulate investments in circularity.   

-  The  shift  to  a  circular  economy  needs  to  be  widely  supported.  Innovation,  lifestyle  changes  and 
demand by both companies and consumers are required. International collaboration and experi-
ence sharing can be helpful. There is room for continued exchange between the EU and Japan. 

Yasuharu Ueda 

-  Risk  assessment  related  to  the  circular  economy  is  complex.  Some  good  practices  exist,  but 

mainstreaming is not yet happening at the required scale or pace.  

-  Circular economy financing can learn from progress made on finance for the climate.  

-  Many  actors,  including  citizens  and  governments,  will  need  to  contribute  to  the  transformation.  

Much work is needed to convince and engage those who are still not active. To address these is-
sues globally, developing countries also need to be involved.  

15 

 
 
Annex I: Agenda 

Date: Thursday 10th October 2019 
Japan/EU Joint Workshop on Circular Economy and Finance 
Co-organised by the Ministry of the Environment, Japan and EU 

U Thant International Conference Hall (3rd Floor) , United National University Headquarters 

9:30-9:40 

9:40-9:50 

9:50-10:05 

10:05-10:20 

10:20-11:20 

Welcome speech by Yasuharu Ueda, Deputy Director General, Ministry of 
Environment, Japan 
Welcome speech by Astrid Schomaker, Director for Global Sustainable Devel-
opment, Directorate-General for Environment, European Commission 

Presentation by Shigemoto Kajihara, President, Japan Waste Research Foun-
dation 
Presentation by Hein Brekelmans, Head of Sustainable Finance Desk, ABN 
AMRO Bank 

Panel Discussion 
Moderator: Astrid Schomaker, Director for Global Sustainable Development, 
Directorate-General for Environment, European Commission 
 

Yuki Yasui, Asia Pacific Region Co-ordination Manager, UNEP Finance 
Initiative  

  Minoru Matsubara, Chief Manager of Responsible Investment Group, 

Asset Management Division at Resona Bank, Limited 

  Daniel Houska, Board Member and Vice-President EFR, European Recy-

cling Industries’ Confederation 

  Mariko Kawaguchi, Senior Principal, Daiwa Institute of Research 
  Hein Brekelmans, Head of Sustainable Finance Desk, ABN AMRO Bank 

11:20-11:50 

Questions and Answers 

11:50-12:00 

Summary & Closing by Yasuharu Ueda, Deputy Director General, 
Ministry of Environment, Japan, and Astrid Schomaker, Director for 
Global Sustainable Development, Directorate-General for Environ-
ment, European Commission 

16 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annex II: Speakers’ biographies 

Hein Brekelmans, Head of  
Sustainable Finance Desk, ABN 
AMRO Bank 

Daniel Houska, Board Member and 
Vice-President EFR, European Re-
cycling Industries’ Confederation 

Shigemoto Kajihara, President, 
Japan Waste Research Foundation 

Mariko Kawaguchi, Senior Princi-
pal, Daiwa Institute of Research 

Hein Brekelmans is Head of the Sustainable Finance Desk at the ABN 
AMRO  Bank  in  the  Netherlands,  after  having  worked  in  the  financial 
sector  for  about  14  years;  his  previous  positions  include  Senior  Rela-
tionship Manager and Financing Specialist at  ABN  AMRO as  well as 
Credit  Analyst  at  various  financial  institutions.  He  holds  a  Master’s 
degree  in  Financial  Economics  from  Tilburg  University  and  a  Bache-
lor’s degree in Psychology. 

In  the  context  of  his  work  with  ABN  AMRO,  Hein  Brekelmans  con-
tributed  in  the  production  of  the  “Circular  Economy  Finance  Guide-
lines”, which is the outcome of a joint project with ING and Rabobank 
and  which  has  been  picked  up  by  the  European  Commission  in  their 
“Accelerating  the  transition  to  the  circular  economy”  report  of  March 
2019. 

Daniel  Houska  is  Project  Lead  and  In-House  Consultant  at  Kovosrot 
Group CZ, a recycling business located in the Czech Republic, and has 
been  appointed  Board  Member  and  Treasurer  at  EuRIC  (European 
Recycling Industries' Confederation). Daniel Houska is engaged mostly 
in  mergers  and  acquisitions  (M&A)  and  operational  projects.  He  also 
advises  on  cross-disciplinary  topics  regarding  environment/recycling 
and  financing  to  a  local  recycling  association  and  chamber  of  com-
merce. He holds Master’s Degrees in Law and Business Management.  

Between  2011-2015,  Daniel  Houska  worked  for  clients  in  various  in-
dustries at EY and PwC. 

Shigemoto  Kajihara  is  President  of  Japan  Waste  Research  Foundation 
(JWRF),  since  July  2018,  which  has  organised  wide  range  of  waste 
management and 3R research activities.    

Before joining JWRF, he worked for the Ministry of the Environment, 
Japan (MOEJ) for 38 years, particularly in the field of  waste  manage-
ment and global environmental issues such as climate change, as Direc-
tor-General  for  Waste  Management  and  Recycling,  Director-General 
for Global Environment Bureau and finally as Vice Minister for Inter-
national Affairs. 

Mariko  Kawaguchi  is  involved  in  research  related  to  sustainability  at 
Daiwa Institute of Research. Before starting as the Chief Researcher in 
the Research Department at Daiwa Institute of Research in April 2012, 
she served as head of the CSR group and general manager in charge of 
CSR in the Corporate Communication Department at the headquarters 
of Daiwa Securities Group since 2010. Her responsibilities include all 
areas of sustainability, including CSR and ESG investment.  

She  is  a  Chartered  Member  of  the  Securities  Analysts  Association  of 
Japan, Guest Assistant Professor at Waseda University, Director of the 
UN  Global  Compact  Network  Japan,  Joint  Representative  Director  of 
Japan  Sustainable  Investment  Forum,  extraordinary  member  of  the 
Central  Environment  Council,  Ministry  of  the  Environment  (since 
2018). 

17 

 
 
 
 
 
 
Minoru Matsubara, Chief Manager 
of Responsible Investment Group, 
Asset Management Division at 
Resona Bank, Limited. 

Astrid Schomaker, Director for 
Global Sustainable Development, 
Directorate-General for Environ-
ment, European Commission 

Minoru Matsubara has been Chief Manager at Responsible Investment 
Group,  Asset  Management  Division,  since  April  2017.  Prior  to  his 
current position, he was Group Lead at Trust Fund Management Divi-
sion. Planning and Monitoring Group at Resona since April, 2009. He 
began his carrier at Daiwa Bank (current Resona Bank) in April 1991.  

Minoru Matsubara’s membership role at government agencies includes 
Chairman of the Working Group of Principles for Financial Action for 
the  21st  Century  (PFA21)  at  Ministry  of  Environment  (MOE),  and 
TCFD  Working  Group  member  for  Ministry  of  Economy,  Trade  and 
Industry  (METI).  He  is  currently  a  member  of  ESG  working  group  at 
MOE,  Committee  Member  of  Japan  Sustainability  Investment  Forum 
(JSIF);  and  Chairman  of  the  Corporate  Working  Group  of  PRI  Japan 
Network.   He is a chartered member of the Securities Analysts Associ-
ation of Japan (SAAJ). He also used to be a Steering Committee mem-
ber for Investor Forum until July 2016. He is a member of the Nippon 
Finance Association. 

A lawyer by training, Astrid Schomaker is Director for Global Sustain-
able  Development  in  the  European  Commission's  Directorate  General 
for Environment.  

Since joining the Commission in 1992, she has held a variety of posts 
in the areas of international relations and environment policy, amongst 
them leading the work on chemical policy, marine issues and the EU's 
environment policy strategy to 2020. 

Yasuharu Ueda, Councillor (for 
Environmental Policy and Global 
Environmental Affairs), Ministry of 
the Environment, Japan 

Yasuharu  Ueda  is  Councillor  (for  Environmental  Policy  and  Global 
Environmental Affairs), Ministry of the Environment of Japan.  

Prior  to  assuming  his  current  position  in  July  2019,  Mr.  Ueda  served 
key  positions  in  the  Ministry  including  Councillor  (for  Environmental 
Management  Affairs) (2018) and Director, Personnel  Division, Minis-
ter’s  Secretariat  (2017).  He  has  extensive  knowledge  and  experience 
regarding  environmental  issues,  having  held  several  positions  after  he 
joined the Ministry in 1989. 

Yuki Yasui, Asia Pacific Region 
Co-ordination Manager, UNEP Fi-
nance Initiative 

Yuki Yasui has been working on sustainable finance since 2002 when 
she  joined  the  UNEP  Finance  Initiative  in  Geneva,  Switzerland.  She 
has recently moved to the UN Environment Asia Pacific Office to ex-
pand UNEP Finance Initiative’s activities in the region. Yuki has man-
aged  various  UNEP  FI  projects  such  as  the  setting  up  the  online  Cli-
mate Change Training Course, organizing of the first UNEP FI Global 
Roundtable in Asia in 2003 in Tokyo and leading the UNEP FI partici-
pation in Rio+20 in 2012.  

She is a chartered accountant (ACA) qualifying with Pricewaterhouse-
Coopers in London and has a BSc honours degree in Economics from 
the  London  School  of  Economics  and  an  MSc  in  Environmental 
Change and Management from the University of Oxford. 

18 

 
 
 
 
 
Annex III: Recommendations by the Informal European 
Commission Expert Group on Support to Circular Economy 
Financing 

The transition to a circular economy in the EU is at an early stage. Regulations, markets, investment 
tools and practices, including financial risk assessment, are adjusted to linear models, and externali-
ties linked to linear business models are largely not taken into account. This poses a problem for the 
emerging  circular  models,  which  have  to  contend  with  the  challenge  of  accessing  finance,  as  the  fi-
nancial sector sees circular projects as highly risky and often not bankable. 

To improve the conditions  for financing circular  economy  projects, the  European Commission estab-
lished an Expert Group on Circular Economy Financing to analyse barriers and identify the main areas 
where incentives need to be provided. Based on this, recommendations for three stakeholders groups 
were developed and published in 20193: 

1. 
1.1. 

1.2. 
1.3. 

1.4. 

2. 
2.1. 

2.2. 

2.3. 
2.4. 

Recommendations to the financial sector 
Develop definitions, taxonomy and tools to measure the ‘circularity’ of projects by setting up a multidisciplinary working 
group of recognised experts with a clear mandate and working plan. 
Analyse the risk of linear business models and adjust credit risk assessment methods to take into account linear risks. 
Establish risk-sharing financial instruments and create a pool of experts available for financial institutions to assess the 
technological risk of innovative circular technologies. 
Clearly label financial instruments fit for financing circular economy projects and increase awareness and knowledge of 
the circular economy within the financial sector. 

Recommendations to project promoters 
Identify circular sources of revenue and update the organisation’s strategy through a series of actions such as scanning 
existing processes, developing new business models, assessing risk, etc. 
Take  part in collaborative  communities  of circular  economy  practices to identify  opportunities  and form  business  part-
nerships to implement circular economy business models or projects. 
Disclose the project’s environmental and social benefits through credible, standardised methods. 
Increase  the  organisation’s  internal  capacity  to  design  and  implement  circular  economy  projects  by  training  staff  and 
using external advisory services. 
Recommendations to financial policy makers  

3.1. 
3.1.1  Develop  reporting  standards  for  the  linear  risks  of  investments  and  companies  and  incorporate  them  into  standard 

accounting practices. Ensure that linear risks are sufficiently evaluated and disclosed. 

3.1.2  Develop a definition of circular economy finance for use within the EU by classifying circular economy activities (devel-
oping a taxonomy) and setting criteria and benchmarks for the environmental performance of circular economic activi-
ties (linked to recommendations provided under Section 1.1). 

3.1.3  Establish technical and financial advisory services to support the development of business models for circular economy 

businesses or projects seeking finance. 

3.1.4  Prioritise the financing of circular economy projects and businesses within the InvestEU Fund. 

Recommendations to non-financial policy makers  

3.2 
3.2.1  Create favourable framework conditions for circular economy projects through specific policy actions, e.g. development 

of metrics and indicators for national, regional and corporate level. 

3.2.2  Make public authorities act as facilitators of a circular economy, e.g. by performing an analysis of the potential of having 
a circular economy at different geographical scales and by developing national and regional strategies for the circular 
economy and linking them with regional development strategies. 

3 European Commission (2019): Accelerating the Transition to the Circular Economy - Improving access to finance for circular 

economy projects. 

19