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Green Financing: Financing Circular Economy Companies

Case Studies of Ragn-Sellsföretagen AB and Inrego AB

Written by J. Acheampong

Paper category

Master Thesis

Subject

Business Administration>Management

Year

2016

Abstract

Master Thesis: The evolution of circular economy The concept of circular economy is hailed as a concept that can help protect the environment while providing economic benefits to society (Ellen MacArthur Foundation, 2015; 2013; Alfredsson & Wijkman, 2014; Clements-Hunt, 2011). The term was first proposed in 1990 by environmental economists David W. Pearce and Kerry R. Turner in their book Natural Resources and Environmental Economics; however, the origin of the concept comes from industrial ecology (Andersen, 2007; Preston , 2012). Before using the term "circular economy", economist Kenneth E. Boulding had conceived the concept of circular economy and realized that given the trajectory of human activities, the availability of natural resources may pose a threat in the future. In his article "The Economics of the Coming Spaceship Earth", he said, "The Earth has become a single spaceship, without an infinite reservoir... Therefore, humans must find in the circular ecosystem "Own position" (Boulding, 1966, p. 7), implying that resource consumption is a cyclic system that uses resources repeatedly. In the next few years, Swiss architect and economist Walter Stacher studied how activities that extend product life can contribute to a more sustainable environment and wealth creation. He asserted that activities aimed at extending product life Activities such as reuse, restoration, renovation and recycling will create an economy that replenishes its resource base in a circular manner, ultimately reducing poverty and creating jobs, thereby making the world economy more sustainable (Stahel, 1982). In the late 1990s, William McDonough and Michael Braungart turned the discussion of sustainability back to the economic concept of a spiral of resource consumption, so they published their book "From Cradle to Cradle: Reshaping the Way We Make Things" in 2010. They believe that in product design, resource efficiency should be considered so that the product does not go from "cradle to grave"; on the contrary, all wastes should be "designed": biological components can be returned to the natural environment, and technical components can be reused ( McDonough & Braungart, 2010). Figure 4 depicts how production materials are divided into two categories, namely, biological and technological flows in the cycle of circular economy. The biological material at the end of the product's service life becomes the "biological nutrient" in the biosphere. On the other hand, technical materials can maintain their performance, so they are directly reused by subsequent owners, after some repairs, and then distributed to consumers for use or recycling. 2.2 Relationship: Circular economy and sustainable development "Sustainable development is the development that not only meets the needs of contemporary people without compromising the ability of future generations to meet their needs" (Brundtland Report, WCED 1987, p.43). Achieving sustainable development is the goal of sustainable development (UNESCO). As a model of global long-term development, the goal of sustainable development is to achieve environmental and social development in a symmetrical manner while protecting the environment. In non-academic literature, three pillars or areas of sustainability have emerged: economic development, social development, and environmental protection (United Nations General Assembly). Conclusions based on empirical evidence (Ellen MacArthur Foundation, 2013; 2015; Murray, Skån and Haynes, 2015; Wijkman & Skånberg, 2015) believe that CE is very suitable for the three areas of sustainable development, Because it is a system that supplements the resources needed for manufacturing, and at the same time provides opportunities for economic development, thereby improving the quality of life. The main features that make CE stand out in achieving the Sustainable Development Goals are (1) a closed material cycle and (2) the possibility of reusing them when designing products (Murray, Skene, and Haynes, 2015). In 1987, UNWCED released the Brundtland Report, aiming to create a sustainable development path. In 1992, the "Earth Summit" (also known as Rio+92 Conference) was held in Rio de Janeiro, Brazil, and transformed the sustainable development goals mentioned in the Brundtland report into tactical plans and action points (UNCSD, 2012). The Rio+92 meeting organized by the UNCED secretariat was attended by 172 governments and 2,400 representatives of non-governmental organizations (NGOs). One of the main strategies proposed by the Rio+92 conference is "eco-efficiency". Eco-efficiency simply incorporates ethical, environmental and economic considerations into linear production models to reduce adverse effects (McDonough & Braungart, 2010). When a company reduces the pollution and waste it generates and uses cleaner energy, renewable energy instead of non-renewable energy, thereby reducing the negative impact of its operations on the environment, it can be said to be ecologically efficient. These are effective ways to control resource consumption, but CE provides a more effective way to use resources (Wijkman & Rockström, 2012). 2.3 The impact of the business model of the circular economy Stahel (2014) believes that CE is not only to ensure environmental sustainability; it also has a “business case”. As mentioned in the introduction, a successful transition to CE requires a new business model. In this section. Read Less