Study examines financing barriers facing circular economy business models
15/11/2014
“Meeting the financing needs of circular businesses” is the title of this study, by the author of a Schmidt-MacArthur Fellowship, Beate Sonerud.
Beate Sonerud says that investors who are aware of circular economy business models “all agree conceptually that they can capture some value from this,” but the “key barrier so far is risk and lack of data”, therefore, they are wary about getting involved in new business models when it is hard to quantify the risks and returns.
One of the main issues that came up in Sonerud’s research is that the residual value of assets – the sale value of assets at the end of their useful life – is important to investors, and data is currently lacking on this in relation to the circular economy.
The circular economy has definite scope for growth, according Sonerud, but she estimates that 10-15 years are required before it becomes “mainstream.”
The report “Meeting the financing needs of circular businesses” by Beate Sonerud will be published under the Ellen MacArthur Foundation´s Schmidt-MacArthur Felowship Programme.
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