The EIB Circular Economy Guide: Supporting the circular transition

1. Introduction 
The circular economy concept is gaining attention as the consumption and use of resources increases 
to serve a fast-growing population with rising standards of living. Circularity refers to the circular flow 
and efficient use and reuse of resources, materials and products. This new economic model represents 
sustainable green growth, moving from a consumption and disposal-based linear model to a system that 
extends the life of products and materials and minimises waste. The circular model has many 
environmental, climate, social and economic benefits. 
The circular economy is backed strongly by the European Commission and other EU institutions, as well 
as by a growing number of cities and countries across the European Union. It is also attracting increasing 
attention from the business community and public and private investors. The circular economy goes 
beyond resource efficiency and recycling. It provides the framework to develop new business models 
aimed at increasing the value, use and life of materials, products and assets and designing out waste 
from production and consumption. 
In light of the European Commission’s new Circular Economy Action Plan1, the EIB, as the EU bank, is 
supporting the transition to a circular economy, particularly in the European Union, but also in other 
parts of the world. The EIB has a long track record of lending to projects focusing on recycling and the 
recovery of waste and by-products in various sectors. We aim to increase lending to innovative circular 
economy projects aimed at systematically designing out waste, extending the life of assets and closing 
material loops. The EIB also offers circular economy advisory services, and is active in networking, 
sharing of best practices, connecting stakeholders and facilitating access to finance for circular economy 
projects. In light of this, this guide aims to: 
a. promote a common understanding of the circular economy as well as the challenges and 
opportunities among our financial and project partners;  
b. raise awareness about circular solutions among project promoters and other stakeholders;  
c. facilitate and harmonise due diligence and reporting related to circular economy projects with our 
financial and project partners; 
d. outline the EIB’s vision to support the circular economy.  
The EIB Circular Economy Guide will be updated as our understanding of the needs, opportunities and 
risks evolves. Any suggestions for future editions can be sent to CircularEconomy@eib.org. 
2. The circular economy 
The background and needs 
Our current linear take-make-use-dispose economy originates in the second industrial revolution, which 
generated considerable growth in prosperity in the years after World War II. However, it also increased 
resource use and led to the development of a consumption and throw-away society. 
The turn of the millennium saw the reversal of a 100-year trend, with natural resource prices decreasing 
steadily in parallel with economic growth. Since then, real commodity prices have risen in tandem with 
economic growth2 and have increased the focus on resource efficiency and security of supply. While 
recessions in recent years have temporarily reversed these trends, price volatility and uncertainty 
remain. 
With expected global population growth of about 500-750 million per decade, accompanied by rapid 
growth in living standards and purchasing capacity in less developed areas, the United Nations 
Environment Programme’s International Resource Panel predicts that material resource use may double 
from 2015 to 20503. This raises concerns that the earth’s finite resources may not be sufficient to sustain 
the expected increases in consumption and wasteful resource use. The increasing raw materials 

consumption also increases the costs and related externalities of extraction and transport of resources 
from more remote and less accessible deposits. 
Furthermore, it has been estimated that 20% of global material extraction ends up as waste.4 
Considering that the import dependency for some raw material categories used in the European Union, 
such as metal ores, is over 90%, and that the European Union has listed 27 raw materials5 as critical in 
terms of supply, this presents resource supply constraints and related price volatility risks that may hurt 
the competitiveness of EU companies. 
The concept 
In a fully circular economy, waste is minimised by designing products and industrial processes so that 
resources are kept in use in a perpetual flow, and by ensuring that unavoidable waste or residues are 
recycled or recovered. The Ellen MacArthur Foundation has described the circular economy in a 
diagram shown in Figure 1, which comprises two cycles: a biological cycle, in which residues are 
returned to nature after use, and a technical cycle, where products, components or materials are 
designed and marketed to minimise wastage. Such a circular system aims at maximising the use of 
pure, non-toxic materials and products designed to be easily maintained, reused, repaired or refurbished 
to extend their useful life, and later to be easily disassembled and recycled into new products, with 
minimisation of wastage at all stages of the extraction-production-consumption cycle. 

This circular way of producing and consuming disconnects economic growth from the extraction and 
consumption of materials. As such, a circular economy offers a way to hedge future resource and 
material supply chain risks for companies and increase their resilience to decreasing supplies and 
increasing price uncertainty and volatility. This will reduce resource dependency, spur innovation and 
increase competitiveness. The circular economy is also an opportunity for economic and industrial 
renewal with a related increase in investments. 

The EIB Circular Economy Guide: Supporting the circular transition