EBF RESPONSE

EBF submits recommendations to create robust business cases and unlock private financing for the EU Circular Economy

Brussels, 6 November 2025 – The European Banking Federation (EBF) strongly welcomes the European Commission’s initiative for the Circular Economy Act (CEA) and recognises that the transition to a circular economy is essential not only for meeting sustainability objectives but also for strengthening Europe’s long-term competitiveness and autonomy. To unlock private financing and scale circular solutions, the EBF highlights the importance of correcting existing market failures, integrating circularity into EU financing instruments, supporting service-based business models (including in the regulatory framework) and improving access to reliable data.

The EBF’s key recommendations include:

• Strong business cases for circularity: The Circular Economy Act must correct market failures to create robust, profitable business cases on a large scale. Transitioning to a circular economy not only requires clear recycled content standards and phasing out high-impact materials, but also strong structural economic incentives to reward circularity and stimulate demand, including through public procurement, ensuring that these measures create a permanent level playing field rather than temporary subsidies.

• Financing for circularity: We recommend explicitly and systematically integrating circular principles (durability, repairability, and recyclability) into the eligibility criteria for EU public financing instruments and replicating initiatives, such as the Hydrogen Bank or Decarbonisation Bank for circularity. A Bank for Circularity could be offering off-take guarantees for recycled inputs in industry sectors or for new technologies. Guarantees or other forms of de-risking and deployment of public-private financing schemes would also enhance the bankability of the circular business models, projects, or activities, given the limited public money. The CEA should deploy and promote blended finance mechanisms, especially for financing innovation in disruptive technologies, which often have a higher level of risk and long maturation periods. Simplicity, replicability, and scalability should be the key features of the blended financing.

• Support, recognize and reward products as service-oriented business models: European banks have extensive experience in asset-based financing and are well-positioned to scale circular leasing and products as service models. However, this scaling requires a supportive regulatory framework that recognizes and rewards the circular characteristics of these portfolios and provides the data infrastructure necessary for robust risk assessment.

• Data and capability building: Advancing the circular economy requires consistent, reliable, and forward-looking data. Given the limited CSRD scope, voluntary reporting of simple and essential metrics should be incentivized. Member States should also make every effort to provide access to data already available at the national level and support the development of searchable data platforms, enabling a more efficient, transparent, and harmonized ESG data ecosystem.

You can access the full EBF response here.

For more information, please contact:

Jānis Priekulis, Policy Adviser – Sustainable Finance, j.priekulis@ebf.eu

Denisa Avermaete, Head of Sustainable Finance, D.Avermaete@ebf.eu

About the EBF:
The European Banking Federation is the voice of the European banking sector, bringing together national banking associations from across Europe. The EBF is committed to a thriving European economy that is underpinned by a stable, secure and inclusive financial ecosystem, and to a flourishing society where financing is available to fund the dreams of citizens, businesses and innovators everywhere.