The Role of Sustainable Finance in the Circular Transition

Abstract

This article aims to analyze the role of finance in accelerating the transition to a circular economy (CE). The transition requires long-term sustainable growth, which focuses on regenerative models with the help of new and efficient financial instruments. The methodology involves a thorough examination of the relevant literature, which considers the tracking of investments, bonds and ESG criteria, which are circumscribed to the green economy. The research results highlight the ability of these instruments to capture financial resources that are currently not properly exploited, but which can bring great ecological and social benefits. The article also highlights the inconsistencies between economic reality, fiscal and environmental policies, as well as sustainable development objectives, which result in the presence of these deficiencies. At the same time, there is a gap between what should be done, what can be done and what is actually done in partnership between the public and private sectors in the field of environmental finance. The conclusions of the article draw attention to the need to align financing with sustainable development goals. JEL: Q01, Q23, Q56