ABSTRACT
This chapter focuses on the relationship between the circular economy (CE) and finance, investigating why the latter can be a powerful catalyst for the circular transition. Many studies report on why finance should support CE and complain about the fact that there are not enough investments in the transition. Here, the perspective is reversed, and the financial industry's standpoint is taken. Pursuant to a theoretical framework, based on four pillars of consideration, there are some areas to consider when finance enters the CE field: in fact, the existence of opportunities offered by a circular transition to the financial players, and described through the 3R Model, is the crucial trigger for steering the financial services (FS) industry in supporting it. Relying on empirical research on the topic, selected evidence is shown in support of the thesis. The first focus is on the CE as a de-risking strategy for circular assets and a driver of superior resilience against external shocks, such as the COVID-19 pandemic. The second topic relates to non-financial info-disclosure and metrics on circularity as a necessary means for transferring the opportunities from a circular company to investors. These results support the idea that financial players may catch significant advantages by investing in companies that move toward circularity. In turn, such convergence is a system-wide ‘catalyst’ of the circular transition.
