Financing recommendations (Final)

This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. D7.15 – Financing Recommendations March 2025 Authors: Jerome Friedrichs (EURADA), Fatih Ege (EURADA), Jose Carpintero Molina (EURADA), Facundo Pérez Rubio (CARM), Rafael Ataz (INFO Murcia), Raquel Faraldo Alonso (CAJAMAR) Ref. Ares(2025)2541297 - 29/03/2025 A2C – Deliverable D7.15v1.0 Page 2 І100 Technical references Project Acronym Agro2Circular Project Title TERRITORIAL CIRCULAR SYSTEMIC SOLUTION FOR THE UPCYCLING OF RESIDUES FROM THE AGRIFOOD SECTOR Project Coordinator Fuensanta Monzó CETEC [email protected] Project Duration October 2021 – March 2025 (42 months) Deliverable No. 7.15 Dissemination level* PU Work Package 7 – A2C systemic solution adoption, replication and scalability Task 7.5 – Multidimensional model for adoption, replicability and scalability of A2C systemic solution at regional and EU level Lead beneficiary 27 (EURADA) Contributing beneficiary/ies 23 FUNDACION CAJAMAR (CAJAMAR), 24 (CARM), 32 (INFO Murcia), Due date of deliverable 31 March 2025 Actual submission date 28 March 2025 * PU = Public PP = Restricted to other programme participants (including the Commission Services) RE = Restricted to a group specified by the consortium (including the Commission Services) CO = Confidential, only for members of the consortium (including the Commission Services) A2C – Deliverable D7.15v1.0 Page 3 І100 Document History Version Date Distributed to V0.1 July 2024 First Draft (EURADA) V0.2 October 2024 Revised version after internal check (EURADA) V0.3 February 2025 Updated version with regional partners contribution (EURADA, Info Murcia, CARM) V0.4 March 2025 Revised version (EURADA, KVELOCE, UNI BOCCONI) V1.0 28/03/2025 First final version, approved by the WP leader and the project coordinator, (will be) submitted to EC. Document Distribution Log Version Date Distributed to V0.1 July 2024 KVC, CJM, CARM, INFO, UB V0.3 March 2025 KVLC, Uni Bocconi V0.4 28/03/2025 Coordinator and WP leader Verification and approval Name Date Verification Final Draft by WP leader Alba Matamoros (KVC) 28 March 2025 Approval Final Deliverable by coordinator Fuensanta Monzó (CETEC) 28 March 2025 A2C – Deliverable D7.15v1.0 Page 4 І100 Disclaimer and acknowledgement This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 101036838 Disclaimer This document reflects only the views of the author(s) the European Research Executive Agency (REA) is not responsible for any use that may be made of the information it contains. Whilst efforts have been made to ensure the accuracy and completeness of this document, the A2C consortium shall not be liable for any errors or omissions, however caused. A2C – Deliverable D7.15v1.0 Page 5 І100 Table of contents List of Tables .................................................................................... 9 List of abbreviations ........................................................................ 10 1 Executive Summary ................................................................... 13 2 Introduction ................................................................................ 14 3 International Financing Schemes for the Circular Economy ...... 18 3.1 European Union Funds ..................................................................................... 18 3.1.1 Horizon Europe ............................................................................................ 19 3.1.2 Regional Policy Support ............................................................................... 21 3.1.3 Interreg Europe ............................................................................................ 23 3.1.4 LIFE .............................................................................................................. 24 3.1.5 Single Market Programme ............................................................................ 25 3.2 Financial Institutions ......................................................................................... 26 3.2.1 World Bank Group ........................................................................................ 27 3.2.2 European Investment Bank .......................................................................... 29 3.2.3 Joint Initiative on Circular Economy ............................................................. 31 3.2.4 European Bank for Reconstruction and Development .................................. 32 3.3 International Private Investments and other Private Funding Opportunities 33 3.3.1 Asset Management Firms ............................................................................. 33 3.3.2 Investment Funds ......................................................................................... 35 3.3.3 Crowdfunding ............................................................................................... 36 4 Green Public Procurement ........................................................ 39 5 Public Financing Schemes in the Region of Murcia .................. 43 5.1 INFO ......................................................................................................................... 43 5.1.1 Grant programme for energy efficiency actions in SMEs and large companies in the industrial sector ................................................................................................. 43 A2C – Deliverable D7.15v1.0 Page 6 І100 5.1.2 HSOS grant line for the calculation and certification of carbon footprint in organisation/product and water footprint ..................................................................... 44 5.1.3 Innovation voucher for optimising industrial processes and products ecoinnovation ................................................................................................................... 45 5.1.4 R&D support to regional technological centres for developing sustainable products and processes .............................................................................................. 46 5.1.5 R&D support to enterprises for developing sustainable products and processes ................................................................................................................... 46 5.2. CARM ..................................................................................................................... 46 5.2.1 Subsides to operational funds of fruit and vegetable producer organisations (FVPOs) ...................................................................................................................... 47 5.2.2 Establishment and operation of Innovation and Environmental Adaptation (IEA) Task Forces ................................................................................................................ 48 5.1.6 Subsides for investments in agricultural holdings ......................................... 48 5.1.7 Aid for the creation of agricultural enterprises by young farmers .................. 49 5.1.8 Grants for investment in processing, marketing and development of agricultural products ................................................................................................... 49 5.1.9 Grants for the consolidation of irrigation by using reclaimed water from wastewater reservoirs ................................................................................................. 50 5.1.10 Grant for the improvement of energy efficiency and renewable energy generation in irrigation communities. RDP 2014-2022 / IRUE Funds. Call for proposals 2024 50 6 Private Financing Schemes in the Region of Murcia ................. 52 6.1 Bank and Financial Cooperatives Schemes.................................................... 52 6.2 Alternative Private Financing Schemes in the Region of Murcia .................. 59 6.2.1. Venture Capital (VC) ......................................................................................... 59 6.6.2. Private Equity .................................................................................................... 59 6.2.3. Crowdfunding .................................................................................................... 60 6.2.4. Angel Investors ................................................................................................. 60 7 Financing Schemes & Agro2Circular Business Models ............ 62 A2C – Deliverable D7.15v1.0 Page 7 І100 8 Good Practices .......................................................................... 71 8.1 CIRCWASTE (Finland) ....................................................................................... 71 8.2 URBIOFIN (Greece) ............................................................................................ 72 8.3. Circular Economy for Businesses (Murcia, Spain) ......................................... 73 8.4. EIB Financed Projects ....................................................................................... 75 8.4.1. Novamont Renewable Chemistry, Italy ........................................................ 75 8.4.2. ISP Loan for Circular Economy, Italy ............................................................ 76 8.4.3. IREN Climate Action and Circular Economy Loan, Italy ............................... 76 8.4.4. Winnow, Romania ........................................................................................ 77 8.4.5. Tackling Food Waste, France ....................................................................... 77 8.5. De Clique (Netherlands) .................................................................................... 77 8.6. GPP Good Practices .......................................................................................... 78 8.6.1. GPP in Flemish Governments Cooperation Agreement with Municipalities . 78 8.6.2. GPP Regional Plan, Liguria .......................................................................... 79 8.6.3. Promotion of Green Public Procurement by Providing Green Technical Specifications, Lithuania ............................................................................................. 80 8.6.4. Good Practices in Green Public Procurement in Regional Waste Management, Spain 80 8.7. Good Financial Practices of Banks in the Region of Murcia ......................... 81 8.7.1. Cajamar Cooperative Group ......................................................................... 81 8.7.2. CaixaBank .................................................................................................... 83 8.7.3. BBVA ............................................................................................................ 83 8.7.4. Unicaja Banco .............................................................................................. 84 9 Financing Recommendations .................................................... 85 9.1. Circular Economy Overview & Challenges ......................................................... 85 9.2. Financing & Investment for Circular Economy ................................................... 85 9.3. Business Models & Market Considerations ........................................................ 87 9.4. Role of Technology & Innovation in Circular Economy ..................................... 87 9.5. Investment Priorities for Sustainability ............................................................... 87 9.6. Green Public Procurement (GPP) & Sustainable Procurement ......................... 88 A2C – Deliverable D7.15v1.0 Page 8 І100 10 Conclusions ............................................................................... 90 11 Bibliography ............................................................................... 92 A2C – Deliverable D7.15v1.0 Page 9 І100 List of Tables Table 1 - World Bank Group Municipal Solid Waste Management Operations by Country Income Group 29 Table 2 - EIB Circular Economy Signed Operations, 2015-2019 30 Table 3 - Main Bank and Cooperative Bank Financing Mechanism 53 Table 4 - Sources of Equity Capital and Company’s Stage of Development 60 Table 5 - The Impact of Circular Business Models on a Linear Economy 63 Table 6 - Circular Business Impact on the Economy Value Chain 64 A2C – Deliverable D7.15v1.0 Page 16 І100 trillion by 2030. 6 Furthermore, the circular economy promises a competitive advantage to manufacturing firms by reducing their reliance on materials and components. The transition to the circular economy will require significant financial resources, from both the public and private sectors and “incentives are vital to overcome barriers stemming from linear models” 7 . There are several incentives that policy makers may implement with the goal to stimulate circular economy that can benefit investors in the transition process. Barriers that need to be overcome and that can be targeted by incentives include market failures preventing or delaying circular products, services and solutions, non-pricing of negative externalities, and the steering of markets towards sustainability and promoting behavioural change. As noted in a report by the European Commission: “incentives have the capacity to create value, reduce the risk of investment and improve the competitiveness of value chains that deliver net environmental benefits compared to linear economies.” 8 The mechanisms for meeting the finance needs of the circular economy and for reorienting capital from linear to circular solutions are becoming increasingly diverse. The primary catalyst for accelerating the transition to a circular economy include European Union funds, other global grants, instruments created by financial institutions, asset management funds, and the benefits of scaling up green public procurement practices are the main drivers for accelerating the transition to a circular economy. Other financial products and services that have been identified as contributing to this transition include public equity funds, bonds, private market funds, banking, and crowdfunding. 9 This document constitutes Deliverable 7.15 Financing Recommendations of the Agro2Circular project, developed within Task 7.5 Multidimensional Model for Adoption, Replicability, and Scalability of the A2C Systemic Solution at Regional and EU Level. It represents the main outcome of Sub-task 7.5.3 Financing Schemes Linked to the Business 6 Ellen MacArthur Foundation, "Financing the Circular Economy: Capturing the Opportunity," 2020. [Online]. Available: https://emf.thirdlight.com/file/24/Om5sTEKOn0YUK.Om7xpOmgdwc/Financing%20the%20circular%20economy%20-%20Capturing%20the%20opportunity.pdf 7 European Commission, "Incentives to Boost the Circular Economy," 2021. [Online]. Available: https://op.europa.eu/en/publication-detail/-/publication/51378e0a-d303-11eb-ac72-01aa75ed71a1 8 Ibid. 9 Ellen MacArthur Foundation, "Financing the circular economy," [Online]. Available: https://ellenmacarthurfoundation.org/topics/finance/overview A2C – Deliverable D7.15v1.0 Page 17 І100 Models Generated. Work Package 7 (WP7) focuses on ensuring the adoption and scalability of the Agro2Circular systemic solution by addressing key factors such as public engagement, environmental and socio-economic assessment, and financial sustainability. Within this framework, Task 7.5 analyses business models and the financial mechanisms required for their implementation at both territorial and European levels. This document presents the final version of the financing recommendations, following an initial draft submitted midway through the project in month 18 (March 2023). Accordingly, the present document concentrates its analysis and recommendations principally on international and regional financial frameworks that enable the circular economy. In addition, the deliverable aligns its analysis and recommendations with the concrete outcomes and results of the Agro2Circular, an EU (H2020) funded project that implements a territorial, scalable, systemic and digitally powered solution for the upcycling of fruits and vegetables residues and non-renewable, multilayer plastic into high added value products. The document is structured into dedicated sections, which present both public and private financing schemes in the region of Murcia, as it is the territorial centre of the Agro2Circular project. Chapter III explores international financing schemes for the circular economy, with a particular focus on the various funding programmes provided by the European Union. Other points of interest are international financial institutions and other for-profit initiatives, asset management firms and crowdfunding opportunities. Chapter IV then focuses on green public procurement as key mechanism in enabling the transition towards the circular economy. Chapters V and VI present the above-mentioned public and private financing schemes in the Spanish region of Murcia. Chapter VIII is a selection of good financing practices, while, lastly, chapter IX provides the name-giving financing recommendations and overall conclusions. A2C – Deliverable D7.15v1.0 Page 18 І100 3 International Financing Schemes for the Circular Economy 3.1 European Union Funds The European Union has long been considered a pioneer in environmental protection since the von der Leyen Commission announced the European Green Deal in 2019. The declared goal of the Green Deal is to make Europe the first climate-neutral continent by 2050 and to decouple economic growth from resource use. An ambitious goal for which the European Commission has identified the circular economy as a key to success, a term that first appeared in the late 1980s and was used by David Pearce and Kerry Turner in 1990 to describe an economic system around the valorisation of waste. 10 Notwithstanding the fact that no finite definition of the circular economy exists, the definition provided by the European Union can provide guidance for the purposes of this document: “Circular economy is a system which maintains the value of products, materials and resources in the economy for as long as possible and minimises the generation of waste.” 11 The circular economy is increasingly being embraced by policy makers worldwide, particularly in Europe, as a key strategy to respond to the unprecedented environmental challenges of the 21st century. In Europe, the Circular Economy Actions Plans, adopted in 2015 and 2020, provide the main policy framework guiding this transition. Reflecting its commitment, the EU has allocated 30% of its €1,074.3 billion Multiannual Financial Framework (MFF) for 2021-2027 to climate-related initiatives. Similarly, over €800 billion from the EU’s Next Generation Recovery Plan is directed towards green transformation 10 D. W. Pearce and R. K. Turner, “Economics of Natural Resources and the Environment”, Harvester Wheatsheaf, 1990. 11 European Union, “Circular economy”. https://eur-lex.europa.eu/EN/legal-content/glossary/circulareconomy.html A2C – Deliverable D7.15v1.0 Page 19 І100 efforts. 12 As a result, substantial EU funding is currently available to support the shift to a circular economy. The European Union supports stakeholders who want to research or invest in this field through various funding programmes, such as the Horizon Europe programme, regional policy support, the LIFE programme, and the Single Market programme. Following the 2024 elections, the new Parliament and Commission have maintained Green Deal commitments while shifting toward a focus on “competitive sustainability” and resilience. Funding remains stable, with Horizon Europe dedicating a significant share to circular economy innovation, LIFE maintaining strong support for environmental projects, and cohesion policy allocating substantial investments to regional circular initiatives. 3.1.1 Horizon Europe The main source of funding for research and innovation projects in Europe is Horizon Europe, the successor programme to Horizon 2020 in the MFF 2021-2027 and the largest European R&I funding programme to date with a budget of €95.5 billion. In line with the overarching policy strategy of the twin transition, Horizon Europe's stated objectives are to “tackle climate change, help to achieve the UN’s Sustainable Development Goals and boost the EU’s competitiveness and growth.” 13 Participation is open to legal entities from the EU and associated countries. Horizon Europe offers extensive and diverse funding opportunities. Its civilian component is divided into three pillars: Excellence Science, Global Challenges and European Industrial Competitiveness, and Innovative Europe, each further subdivided into funding areas and/or managing authorities. These three pillars are connected by the program section “Widening Participation and Strengthening the European Research Area.” 14 While Pillar I “Excellent Science”, supports research, and Pillar III “Innovative Europe”, supports innovation, Pillar II 12 European Council, "Long-term EU budget 2021–2027," *Online*. Available: https://www.consilium.europa.eu/en/policies/the-eu-budget/long-term-eu-budget-2021-2027/ 13 European Commission, "Horizon Europe," [Online]. Available: https://research-andinnovation.ec.europa.eu/funding/funding-opportunities/funding-programmes-and-open-calls/horizoneurope_en 14 European Commission, Horizon Europe: Investing to Shape Our Future, 2021. [Online]. Available: https://research-and-innovation.ec.europa.eu/system/files/2022-06/ec_rtd_he-investing-to-shape-ourfuture_0.pdf A2C – Deliverable D7.15v1.0 Page 20 І100 “Global Challenges and European Industrial Competitiveness” focuses on developing technologies across six clusters. In the context of this report, the latter pillar – Global Challenges and European Industrial Competitiveness – is particularly relevant. However, regarding corporate technology adoption, it is important to note that 70% of the Horizon Europe budget for SMEs is allocated to the European Innovation Council, a “one-stop shop” designed to “support to innovations with breakthrough and disruptive nature and scale up potential that are too risky for private investors” 15 . Another key change in Horizon Europe compared to Horizon 2020, alongside the European Innovation Council, are the EU Missions, which are cross-disciplinary “portfolios of actions” designed to support the EU’s strategic priorities, like, for example, the European Green Deal. 16 In addition to funding programmes, an action portfolio can also include, for example, policies and regulations. The five main mission areas are: 1. Adaptation to climate change, including societal transformation – By 2030, the goal is to prepare Europe to deal with climate disruptions, accelerate the transition to a healthy and prosperous future within safe planetary boundaries and scale up resilience solutions that will trigger transformations in society. 2. Cancer – By 2030, the mission aims to save more than 3 million additional lives, extend and improve quality of life, achieve a thorough understanding of cancer, prevent avoidable cases, optimise diagnosis and treatment, support the well-being of all individuals affected by cancer, and ensure equitable access to these advancements across Europe. 15 Ibid. 16 European Commission, "EU Missions in Horizon Europe," [Online]. Available: https://research-andinnovation.ec.europa.eu/funding/funding-opportunities/funding-programmes-and-open-calls/horizoneurope/eu-missions-horizon-europe_en A2C – Deliverable D7.15v1.0 Page 21 І100 3. Healthy oceans, seas, coastal & inland waters – By 2030, objectives include cleaning marine and freshwaters ecosystems, restoring degraded habitats, and decarbonising the blue economy to sustainably harness the essential goods and services these ecosystems provide. 4. Climate-neutral & smart cities – By 2030, the goals are to support, promote and showcase 100 European cities in their systemic transformation toward climate neutrality, turning them into innovation hubs that enhance quality of life and sustainability in Europe. 5. Soil health & food – By 2030, at least 75% of all soils in the EU should be healthy for food production, people, nature and climate. The mission combines research and innovation, education and training, investments and the demonstration of good practices using “Living labs” (experiments and innovation in a laboratory on the ground) and “Lighthouses” (sites showcasing good practices). 17 Although all these missions are related in some way to the circular economy approach, there are concrete opportunities for action in this area, particularly under Missions 1, 4 and 5. 3.1.2 Regional Policy Support Alongside Horizon Europe, regional policy support is another major instrument for financing the circular economy in the EU, as it can contribute to “increased recycling, improved waste management, resource and energy efficiency, strengthening the bioeconomy, novel product design solutions, new business models and green job creation” 18 . These policy supports were commonly known as “European Structural and Investment Funds (ESIF)” in the previous programming period. For the 2021-2027 period, efforts have been made to simplify and yet expand these funds. The main funds to be mentioned for the 17 European Commission, "Horizon Europe - Investing to shape our future," *Fact sheet*, 2021. [Online]. Available: https://research-and-innovation.ec.europa.eu/system/files/2022-06/ec_rtd_he-investing-to-shapeour-future_0.pdf 18 European Union, "Financing the circular economy," [Online]. Available: https://circulareconomy.europa.eu/platform/en/financing-circular-economy A2C – Deliverable D7.15v1.0 Page 22 І100 purposes of this report are the European Regional Development Fund (ERDF) and the Cohesion Fund (CF), as well as the Just Transition Fund (JTF). For the period 2021-2027, the EU’s regional or cohesion policy identified 5 priorities with a total allocated budget of €392 billion (compared to the 11 thematic objectives of the previous funding period): 1. A more competitive and smarter Europe, 2. A greener, low carbon transitioning towards a net zero carbon economy, 3. A more connected Europe by enhancing mobility, 4. A more social and inclusive Europe, 5. A Europe closer to citizens by fostering the sustainable and integrated development of all types of territories. 19 The list of bodies and organisations that can benefit from regional funding includes public bodies, certain private sector organisations (especially small businesses), universities, associations, Non-Governmental Organisations (NGOs) and voluntary organisations. Foreign companies located in the region of the respective operational programme can also apply, provided they comply with European public procurement rules. Funding via the European Regional Development Fund operates under a system of shared responsibility between the European Commission and national or regional authorities in Member States. As part of this framework, all regions and Members States based on their level of prosperity, are required to focus their support on building a more competitive and smarter Europe, as well as greener, low-carbon economy and more resilient Europe. This approach is implemented through the mechanism known as 'thematic concentration'.” At least 30% of all ERDF operations are expected to contribute to climate objectives. 20 In contrast, the Cohesion Fund specifically targets the less developed Member States, defined as those with a Gross National Income (GNI) per capita below 90% of the EU-27 19 European Commission, "New Cohesion Policy," [Online]. Available: https://ec.europa.eu/regional_policy/2021-2027_en 20 European Commission, "European Regional Development Fund," [Online]. Available: https://ec.europa.eu/regional_policy/funding/erdf_en A2C – Deliverable D7.15v1.0 Page 23 І100 average. Currently, the Cohesion Fund covers Bulgaria, the Czech Republic, Estonia, Greece, Croatia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Portugal, Romania, Slovakia and Slovenia. It is expected that 37% of the total Cohesion Fund allocation will contribute to climate objectives. 21 The Just Transition Fund is a new instrument of Cohesion Policy 2021-2027 designed to support the territories most affected by the transition to climate neutrality. Its aim is to reduce regional and structural inequalities across European Regions, while at the same time promoting a green transition. 22 Considering the relevance of circularity for achieving the key objectives of the EU in terms of climate policies, under cohesion policy programmes an investment of 12,5 billion euros is allocated for circular economy and waste management, with 8.6 billion euros coming from EU funds. Although one of the main priorities of this budget is to fund circular waste management initiatives, there is also a focus on promoting a change in consumption patterns and on raising awareness of the necessity of a circular transition. 23 Previous initiatives funded within that framework include research projects with a focus on circular management of water or projects focusing on raising awareness and education on re-using food waste. 24 3.1.3 Interreg Europe Another instrument that supports European regional policy is Interreg Europe, part of the European Territorial Cooperation (ETC) framework. Specifically, it falls under the third component of ETC, known as “European Territorial Cooperation” (often referred to as the “C-part” of ETC), which aims to enhance the effectiveness of Cohesion Policy by fostering cooperation between regions and countries. 21 European Commission. “European Regional Development Fund”. https://ec.europa.eu/regional_policy/funding/cohesion-fund_en 22 European Commission, "Just Transition Fund," [Online]. Available: https://ec.europa.eu/regional_policy/funding/just-transition-fund_en 23 European Union, “Cohesion policy support to the circular economy”, [Online]. Available: https://cohesiondata.ec.europa.eu/stories/s/21-27-Circular-economy/t6h5-3fup/ 24 Ibid. A2C – Deliverable D7.15v1.0 Page 24 І100 Interreg Europe is an interregional cooperation programme co-financed by the European Union that aims to reduce disparities in development, growth, and quality of life within and between European regions. It covers all 27 EU Member States, as well as Albania, Bosnia and Herzegovina, Moldova, Montenegro, North Macedonia, Norway, Serbia, Switzerland and Ukraine. With a budget of €379 million, it supports local, regional and national governments across Europe to develop and implement better policies for the 2021-2027 period. One of its main thematic priorities is ‘Greener Europe’, with a special focus on the circular economy. It contributes to all EU priorities and aims to improve regional governance through capacity building. Public bodies such as national, regional and local authorities, as well as organisations relevant to regional development policy, such as regional development agencies, innovation agencies, chambers of commerce, environmental agencies, energy agencies, NGOs, universities and/or research centres can benefit from this programme. 25 3.1.4 LIFE In 1992, the European Union created a dedicated financial instrument to fund environmental and climate action – the LIFE programme. In the current funding period (2021-2027), it has been allocated a budget of €5.4 billion and consists of four sub-programmes: 1. Nature and Biodiversity 2. Circular Economy and Quality of Life 3. Climate Change Mitigation and Adaptation 4. Clean Energy Transition 26 The Circular Economy and Quality of Life sub-programme has been allocated €1.3 billion and is designed to support the shift towards a more “sustainable, circular, toxic-free, energyefficient and climate-resilient economy”. It also aims to safeguard, restore, and enhance 25 Interreg Europe, "What is Interreg Europe?" [Online]. Available: https://www.interregeurope.eu/what-isinterreg-europe 26 European Commission, “LIFE Programme”, [Online]. Available: https://cinea.ec.europa.eu/programmes/life_en A2C – Deliverable D7.15v1.0 Page 25 І100 environmental quality, either through direct interventions or by supporting the integration of those objectives in other policies.” 27 The mechanisms of funding are the Standard Action Projects (SAPs) and Strategic Integrated Projects (SIPs). The former targets projects implementing innovation or best practices solutions, while the latter targets policy and legislation actions. 3.1.5 Single Market Programme The Single Market is one of the central pillars of the European Union and the largest market in the world that enables the free movement of people, goods, services and money among its members. Following those principles, the Commission has proposed “a dedicated €4.2 billion programme for the period of 2021-2027 to empower and protect consumers and enable Europe’s many small and medium-sized enterprises (SMEs) to thrive”. 28 The objectives of the Single Market Program (SMP) are to: 1. Maintain a high level of food safety; 2. Give even higher protection to consumers; 3. Boost the competitiveness of businesses, in particular SMEs; 4. Improve the governance of the Single Market and compliance with rules; 5. Produce and disseminate high-quality statistics; 6. Develop effective European standards. 29 Of particular relevance to the objective of this deliverable is the focus of this programme on improving the competitiveness and sustainability of European SMEs, especially in areas such as access to European markets or promoting their modernisation to meet global 27 European Union, "Circular economy and quality of life," [Online]. Available: https://cinea.ec.europa.eu/programmes/life/circular-economy-and-quality-life_en 28 European Commission, "Single Market Programme," *Fact sheet*, 2021. [Online]. Available: https://ec.europa.eu/docsroom/documents/45590 29 Ibid. A2C – Deliverable D7.15v1.0 Page 32 І100 The sectors that the JICE supports are diverse and include several companies and projects on different topics such as water and waste management, design of innovative materials or the fashion and food industry. For example, Starmeat, a Polish company that deals with food waste from meat, or Aquaservice, a Spanish water services company that deals with recycling and repairs, have been supported by this initiative. 3.2.4 European Bank for Reconstruction and Development The last financial institution to be mentioned at European level is the European Bank for Reconstruction and Development (EBRD). The EBRD, as well as the rest of the Multilateral Development Banks (MDB) has acknowledged the relevance of the circular economy in the transition to a sustainable economy and in achieving the goals of the Paris Agreement. 46 More specifically, the EBRD recognizes that financing circular economy projects is a “key” component of the Green Economy transition. 47 Founded to support the reconstruction of Central and Eastern Europe after the Cold War, the EBRD is committed to promoting market-oriented economies and fostering private sector and entrepreneurial initiatives, with a clear focus on achieving sustainability and circularity. The EBRD also offers direct financing for SMEs adopting circular economy business models offering customized financial solutions. Investment amounts range from €1 million to €25 million, with an average of €3.5 million, are available in all EBRD-operating countries. This support is tailored to fast-growing local companies looking to improve their competitiveness and corporate governance. However, the EBRD has stipulated that it will not finance projects that do not meet its environmental standards or that may at any time be harmful to the environment or society. 48 As a result, circular economy business models align well with the bank’s financing priorities. 46 European Bank for Reconstruction and Development, “MDBs publish shared vision for circular economy finance at WCEF 2024,” Apr. 19, 2024. [Online]. Available: https://www.ebrd.com/news/2024/mdbs-publishshared-vision-for-circular-economy-finance-at-wcef-2024.html 47 Ibid. 48 European Bank for Reconstruction and Development, “EBRD project financing.” [Online]. Available: https://www.ebrd.com/work-with-us/project-finance/funding-adviser.html A2C – Deliverable D7.15v1.0 Page 33 І100 In addition to the financing aspect, the EBRD also offers advisory support, connecting businesses with local and international consultants to help them adopt best practices, develop new products, and improve energy and resource efficiency. Additionally, in 2021, the EBRD launched its first circular economy plan, the Circular Economy Regional Initiative for Turkey and the Western Balkans. This initiative is designed to remove barriers to circular economy adoption, with a focus on SMEs. Funding for the initiative is supported by the Global Environment Facility (GEF) and the technical cooperation of the Austrian Federal Ministry of Finance in the amount of $13.76 million and $1 million respectively. 49 3.3 International Private Investments and other Private Funding Opportunities Projects aimed at supporting, promoting and participating in the circular economy can be funded by various international actors. While it is true that public funding from European institutions is fundamental for the financing of projects focussing on the circular economy, there is also an increasing interest from private actors. Therefore, there is a growing number of funding opportunities for start-ups and SMEs, which undoubtedly needs to be considered. This section will explore how private financing for circular economy projects operates on an international level. 3.3.1 Asset Management Firms The transition to a circular economy, which contributes to business prosperity as well as controlling environmental impacts, offers new and better investment opportunities for all sectors. According to the Ellen McArthur Foundation, a circular economy could improve job quality, increase employment and boost Europe’s economy by up to €1.8 trillion per year. 50 For these reasons, asset management firms are increasingly attracted to the new 49 EBRD, "EBRD launches first circular-economy programme," [Online]. Available: https://www.ebrd.com/news/2021/ebrd-launches-first-circulareconomy-programme.html 50 Ellen MacArthur Foundation, "Financing the circular economy," [Online]. Available: https://ellenmacarthurfoundation.org/topics/finance/overview A2C – Deliverable D7.15v1.0 Page 34 І100 opportunities offered by the circular economy model, both for their contribution to the transition to a carbon-neutral economy and for the benefits of maintaining a strong, sustainable portfolio that enhances their reputation. While most international asset management funds currently focus on financing the circular economy initiatives, providing a comprehensive overview of their strategies would be beyond the scope of this report. Therefore, this section highlights only a selection of the strategies presented by the main asset management companies. Firstly, the financing of the circular economy should be introduced by the largest asset management fund. For example, the North American company Blackrock, which follows the approach explained previously, sees the circular economy not only as a solution to the climate crisis, but also as a very profitable area for investment. 51 With this in mind, this company has a special fund, the “Circular Economy Fund”, which invests 80% of its assets in circular economy projects. The areas of the circular economy in which this fund can invest are very broad, as it invests in "companies worldwide that benefit from or contribute to the promotion of the circular economy". In order to decide which companies to invest in, an assessment is made of their ability to manage risk and their growth opportunities. 52 Some other asset management companies, such as the Vanguard Group or Fidelity Investments, do not have a dedicated circular investment fund, but are nonetheless committed to sustainability. Therefore, they classify their investments as “sustainable investments”, guaranteeing that their decisions are always guided by sustainability principles. Taking this into account, these companies can demonstrate a commitment to the circular economy, which undoubtedly offers financing opportunities. 53 51 Financial Times, “Funds.” [Online]. Available: https://markets.ft.com/data/funds/tearsheet/summary?s=LU2041044095:USD 52 BlackRock, “BlackRock Circular Economy Fund.” [Online]. Available: https://www.blackrock.com/ch/individual/en/products/310165/blackrock-circular-economy-fund 53 Fidelity International, “Sustainability at Fidelity.” [Online]. Available: https://www.fidelity.no/sustainableinvesting/sustainability-at-fidelity A2C – Deliverable D7.15v1.0 Page 35 І100 3.3.2 Investment Funds It is worth noting the increasing number of medium-sized funds focussing on investing in circular economy initiatives. Even if their investment capacities are smaller than those of the giant asset management companies mentioned above, they still represent a very interesting way to raise funds. This category includes various investment funds whose business model are based exclusively on investing in projects and initiatives related to the circular economy. In other words, these investment funds are dedicated to researching and investing in new companies related to the circular economy with the aim of increasing their market value and providing them with economic returns in the future. Although this business model is relatively new, the increasing prominence that the circular economy has gained in political and economic debates has led to the creation of several investment funds specifically focussed on this sector over the last decade. Given that this represents another way to raise funds for circular economy initiatives, it is useful to examine some of these investment funds, how they work and their approach. One example of this type of investment fund is “Circularity Capital”. This investment fund presents itself as a “a specialist investor in businesses enabling the circular economy”. Their approach is highly specialised and focuses on providing both financial and technical support for the growth of the business model of the companies they want to invest in. To receive their investment, businesses need to engage with them directly and present an innovative business model that either offers an alternative to traditional linear businesses or manufactures or produces materials or products using circular principles. They also focus on financing companies that want to develop technological solutions to facilitate the transition to a circular economy. 54 Another example of this type of fund is the Circular Innovation Fund. This venture capital fund also focuses on financing circular innovation projects and is active in various regions of the world, including Europe. With a clear focus on mitigating climate change and 54 Circularity Capital, “Versnelde Groei & Innovatie in de Circulaire Economie.” [Online]. Available: https://circularitycapital.com/our-approach A2C – Deliverable D7.15v1.0 Page 36 І100 promoting green growth, this company offers investments for growth-stage companies. The fund targets companies involved in various aspects of the circular economy, such as initiatives in waste management, circular packaging, recycling or innovation. 55 Lastly, a fund whose investments are directly focussed on the circular economy is known as “Circulate Capital”. This fund’s main unique feature is that it is narrower in terms of the areas of the circular economy it focuses on. Originally focused on reducing plastic waste in the oceans, it has recently broadened its objectives to focus on financing projects that aim to reduce plastic waste in general. Therefore, its main interest is in companies involved in supply chains where plastics are present, not only through capital investment, but also by providing technical expertise. 56 Even though there are some other investment funds that focus on the circular economy, there is only a limited amount that focus exclusively on financing projects on this topic. Given the increasing importance of the circular economy in the public debate, it is very likely that a growing number of investment funds will attach importance to this topic. 3.3.3 Crowdfunding A concept that has gained traction recently and has proven a legitimate way to collect the necessary funds for an initiative, project, or product, is crowdfunding. It consists of the product’s owner, who digitally promotes it in the crowdfunding platform, in order to find people willing to provide the financial resources needed to realise the owner’s product. Due to the fact that it is a relatively new funding strategy, no formal institutions are involved in the process yet, therefore it is considered an alternative form of financing. The main difference between crowdfunding and other traditional funding strategies is the number of contributors and the scale of their contributions. Where traditional funding comes from a small number of sources in sizeable amounts, crowdfunding engages numerous 55 Circular Innovation Fund. [Online]. Available: https://circularinnovationfund.com/ 56 Circulate Capital, “A platform for impact and returns.” [Online]. Available: https://www.circulatecapital.com/impact/ A2C – Deliverable D7.15v1.0 Page 37 І100 sources in smaller contributions. Thus, crowdfunding can mostly or entirely fund small initiatives but will only constitute a part of the capital in case of larger projects. Crowdfunding offers the advantage of serving not only as a funding mechanism but also as a mean of promotion and awareness-building for the initiative in question. By leveraging the broader reach that crowdfunding platforms can offer, projects can attract a large audience whose contributions also serve as a form of validation. If a project quickly meets its funding goal, it can further demonstrate its market potential. However, despite the possibility that financial institutions may be willing to invest in the project, crowdfunding still presents the setback that, due to its lack of regulation, it can be seen as non-reliable by institutionalised funders. Crowdfunding can take different forms. One common type is peer-to-peer tending, where a crowdfunding campaign is posted online, and different contributors provide their donations to support the project. Another approach is reward-based, in which the owner of the product or service sets up different “rewards” depending on the funder’s contribution. For example, a tier system can be set up and the funders will receive from the most basic to the most elaborate version of the product they funded). Finally, crowdfunding may be equity-based, where funders will receive the amount, they contributed to company shares. It is widely accepted that crowdfunding can deliver a business with more than just money to invest. In a study focused on reward-based crowdfunding Leone et al. showed that it can also be a source of some non-monetary benefits such as validation of the business idea, definition of the product/service (through customer feedback), product promotion, innovation, or identification of internationalisation opportunity among others. Furthermore, this type of crowdfunding shapes circular business models in informational mechanisms, innovation networking and marketing aspects – and it can reduce risks connected to the circular business model. 57 57 D. Leone, M. C. Pietronudo, H. Gabteni, and C. Rosaria, “Reward-based crowdfunding for building a valuable circular business model,” J. Bus. Res., vol. 157, 2023. [Online]. Available: https://doi.org/10.1016/j.jbusres.2022.113562 A2C – Deliverable D7.15v1.0 Page 38 І100 Multiple crowdfunding platforms are widely available and well-known to the public, including Kickstarter, GoFundMe and Indiegogo. Additionally, platforms such as LiTA, Invesdor or StartSomeGood provide further crowdfunding opportunities. Beyond these, the European Crowdfunding Network offers professional training and transparent digital financing options. 58 A success case of circular business model foundation through crowdfunding (kickstarter platform) is Vesica Piscis, a small enterprise created in Elx, Spain, and mainly specialised in footwear. Their business model is based on circular economy and respect to the environment. Their campaign was launched at the beginning of December 2015, using rewards as pairs of shoes, and aiming to obtain €15.000 in one year. In June 2016, the project reached €17.589 allowing them to launch the creation of their business. 59 58 Eurocrowd, "Home," [Online]. Available: https://eurocrowd.org 59 D. Leone, M. C. Pietronudo, H. Gabteni, and C. Rosaria, “Reward-based crowdfunding for building a valuable circular business model,” J. Bus. Res., vol. 157, 2023. [Online]. Available: https://doi.org/10.1016/j.jbusres.2022.113562 A2C – Deliverable D7.15v1.0 Page 39 І100 4 Green Public Procurement Green Public Procurement (GPP) is defined as “a process whereby public authorities seek to procure goods, services and works that have a lower environmental impact throughout their life cycle than goods, services and works with the same primary function that would otherwise be procured”. 60 GPP is a valuable tool for advancing the circular economy, as it allows the public sector to leverage its substantial purchasing power – approximately €2 trillion per year (around 14% of the EU’s gross domestic product) – to drive demand for more sustainable products and services. By prioritizing greener procurement choices, public authorities can influence markets, encouraging businesses to adopt circular strategies and more resource-efficient production models. 61 GPP has the potential to reshape markets by stimulating demand for circular solutions, When public authorities integrate sustainability criteria into their procurement processes, industries are incentivized to develop and invest in greener products, services, and technologies. 62 This shift not only drives innovation but also encourages private sector actors to align their business models with circular economy principles. 63 Due to the nature of public procurement processes covering key sectors such as transport, construction, health services, education, GPP can also have a great infrastructural impact, reinforcing sustainability across multiple industries. However, GPP remains a voluntary initiative and public authorities can choose to what extent they implement it. Therefore, considering the impact that public procurement has on the economy, it is evident that a public procurement plan based on promoting sustainability can have a direct impact on the transition to circular economy. However, there are still barriers to further introduce GPP, such as a lack of political support, the perception that green products are more costly, lack of consistent 60 European Union, "Green Public Procurement," [Online]. Available: https://ec.europa.eu/environment/gpp/what_en.htm 61 European Union, “Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions Public procurement for a better environment.” [Online]. Available: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52008DC0400 62 Ibid. 63 World Bank, “Squaring the Circle: Policies from Europe’s Circular Economy Transition,” Dec. 6, 2022. [Online]. Available: https://www.worldbank.org/en/region/eca/publication/squaring-circle-europe-circulareconomy-transition A2C – Deliverable D7.15v1.0 Page 40 І100 criteria evaluating which products are more environmentally friendly, and the low cooperation between public authorities or the lack of training of staff responsible. 64 Nowadays, most European Countries (Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain and Sweden) have adopted National Action Plans for GPP, aligning their implementation strategies with the EU Public Procurement Directive 2014/24/EU. As of June 2024, Romania is the only country that does not have a national action plan in force, although efforts are underway to develop one. 65 In Spain, GPP is regulated by Article 202 of Law 9/2017, of November 8, on Public Sector Contracts. In line with this, the Murcia regional development agency, INFO Murcia, includes environmental and sustainability-related conditions in its procurement specifications and contracts whenever its link with the object of the contract is possible. These requirements apply to various contracts, such as some furniture supply for participation in fairs, travel agency service contracts, audit service contracts, consultancy contracts, IT support service contracts, etc. Failure to comply with these conditions may entail for the contractor the penalties established in the specific administrative clauses that govern that range of contracts. The European Commission has developed GPP criteria for specific sectors to facilitate the inclusion of environmentally friendly requirements. GPP criteria are to be understood as part of the procurement process and must comply with its standard format and rules as set out in the Public Procurement Directive 2014/24/EU (public works, supply and service contracts). Therefore, following the principles of the European Union’s Internal Market, the EU GPP criteria must comply with the following principles: Free movement of goods and services, freedom of establishment; non-discrimination and equal treatment; transparency; proportionality and mutual recognition. 64 OECD, “Public Procurement.” [Online]. Available: https://www.oecd.org/gov/publicprocurement/Going_Green_Best_Practices_for_Sustainable_Procurement.pdf 65 European Union, "Green Public Procurement Advisory Group & National Action Plans," *Online*. Available: https://ec.europa.eu/environment/gpp/action_plan_en.htm A2C – Deliverable D7.15v1.0 Page 41 І100 Apart from the aforementioned criteria, there are some recommendations provided by the EU for some specific sectors. These criteria are not binding, and should be considered as recommendations for public authorities, for them to have more knowledge regarding the level of environmental safety of the products they are purchasing. These specific sectors are the following: ● Cleaning products and services, ● Computers, monitors, tablets and smartphones, ● Data centres, server rooms and cloud services, ● Electricity, ● Food catering services and vending machines, ● Furniture, ● Imaging Equipment, consumables, and print services, ● Office building design, ● Construction and management, ● Paints, varnishes and road markings, ● Public Space Maintenance, ● Road Design, Construction and Maintenance, ● Road lighting and traffic signals, ● Textiles, ● Road transport The EU’s approach to sustainable procurement is further reinforced using “Ecolabels”, which plays a crucial role in verifying the environmental impact of products and services. According to the EU directive 2014/24, public contractors may ask for a specific label that proves that the services, works, or supplies that they are purchasing comply with certain environmental requirements. 66 “Ecolabels” not only simplify decision-making process for procurement officers but also provide businesses with a valuable opportunity to improve their positioning in the European market. By certifying environmental excellence, ecolabels enhance 66 European Union, Directive 2014/24/EU of The European Parliament and of The Council of 26 February 2014 on Public Procurement and Repealing Directive 2004/18/EC. [Online]. Available: https://eurlex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014L0024 A2C – Deliverable D7.15v1.0 Page 48 І100 5.2.2 Establishment and operation of Innovation and Environmental Adaptation (IEA) Task Forces The objective of this intervention is to support the preparation and/or implementation of one or more innovative projects by an Agri European Innovation Partnership (IAP) Operational Group (GO) to accelerate innovation in the agri-food and forestry sector and to respond to the modernisation needs of the primary sector by promoting knowledge sharing, innovation and digitisation of agriculture and rural areas, and to promote the adoption of these approaches in their activity. The GOs are aimed at the productivity and sustainability of the agri-food and forestry sector, focusing on the productive link as a lever for change towards the green and digital transition of both the primary sector and rural areas. In relation to the beneficiaries, those natural or legal persons, including public administrations, that form part of an AEI-Agri Operational Group, constituted for the preparation and/or implementation of one or more projects aimed at the modernisation of the agri-food and forestry sector, or operational groups constituted as a legal entity, will be eligible for support. The sources of funding will be 28% from the CARM, 60% from the European Agricultural Fund for Rural Development (EAFRD) and 12% from the MA, with an intensity of 100% of the eligible expenses, up to a maximum of 100,000€ per application. This intervention is regulated by the Order of 31 July 2024 of the Regional Ministry of Water, Agriculture, Livestock and Fisheries, which establishes the regulatory bases for the granting of subsidies for cooperation for the preparation and implementation of innovation projects carried out by the operational groups of the AEI. 5.1.6 Subsides for investments in agricultural holdings The objective of these subsidies is to grant aid, on a competitive basis, to cover part of the eligible investments in agricultural holdings located in the Region of Murcia, established in the Spanish PEPAC (period 2023-2027) as interventions 6841.1 (Productive investments in agricultural holdings linked to contributing to the mitigation-adaptation to climate change, efficient use of natural resources and animal welfare) and 6841.2 (Investments in modernisation and/or improvement of agricultural holdings). The beneficiaries of this aid are citizens, companies and other entities, as well as the owners of agricultural holdings that make investments in their holdings. The financing comes 60% from the EAFRD, 28% from A2C – Deliverable D7.15v1.0 Page 49 І100 CARM and 12% from MARM, the intensity of which is 40% of the eligible amount of the eligible investments in general and may be increased by a further 40%. These aids are regulated at national level, on the one hand, by Law 30/2022, and on the other hand, by the Order of 12 April 2024 of the Regional Ministry of Water, Agriculture, Livestock and Fisheries, which establishes the regulatory bases for aid for investment in agricultural holdings, in the framework of the Strategic Plan of the Common Agricultural Policy. 5.1.7 Aid for the creation of agricultural enterprises by young farmers The objective of this subsidies is to attract and support young farmers, as well as to facilitate sustainable business development in rural areas. It also aims to promote employment, growth, gender equality, including women's participation in agriculture, social inclusion and local development in rural areas, including the circular bio-economy and sustainable forestry. Therefore, the grants are aimed at young citizens, 60% of which are financed by the EAFRD, 28% by CARM and 12% by MARM. The amount of the aid will be 27,500 euros (basic module) per young person installed, which may be increased up to a maximum of 67,000 euros per young person. This aid is regulated by the Order of 14 March 2023, of the Regional Ministry of Water, Agriculture, Livestock and Fisheries, which establishes the regulatory bases for the same. 5.1.8 Grants for investment in processing, marketing and development of agricultural products These aids seek to grant aid for investments in the transformation, marketing and development of agri-food products, increasing yield and economic development, promoting quality products, improving food safety, promoting innovation and digital transformation, the development of new products and the valorisation of by-products and improving social and economic sustainability ratios with a positive impact on the rural environment of the Region of Murcia. The beneficiaries will be those food industries with physical or legal personality and communities of goods whose work centres are located in the Region of Murcia. A2C – Deliverable D7.15v1.0 Page 50 І100 As regards the sources of financing, 60% of the amount will be provided by the EAFRD; 12% by the Ministry of Agriculture, Fisheries and Food (MAPA), charged to the General State Budget, and 28% by the Regional Ministry of Water, Agriculture, Livestock and Fisheries. The aid will consist of 25% in general for SMEs, 20% for products outside Annex I of the EU Treaty and, in mountain areas, an additional 5%. However, in the case of large companies, the aid will be 18%. These aids are regulated by the Order of 5 April 2024 of the Regional Ministry of Water, Agriculture and Livestock, as well as by an extract of the Order of 16 April 2024 of the Regional Ministry of Water, Agriculture, Livestock and Fisheries by which aid for investments in processing, marketing and/or development of agri-food products of the Strategic Plan of the Common Agricultural Policy is called for the year 2024. 5.1.9 Grants for the consolidation of irrigation by using reclaimed water from wastewater reservoirs These aids seek to consolidate pre-existing irrigation systems in irrigation communities through the execution of new works, installations, devices and equipment that allow the incorporation and use in irrigation areas of reclaimed water from wastewater treatment plants. Companies and other entities may benefit from this aid, with 63% of the amount coming from the EAFRD, 11% from the MARM and 26% from the CARM. On the other hand, an aid intensity of 40% of the eligible investment budget is established, except for investments in renewable energies, where the intensity will be 20%. In any case, the maximum amount of aid will not exceed EUR 400,000 per application. These subsidies are regulated by means of the Order of 24 May 2019, of the Regional Ministry of Water, Agriculture, Livestock and Fisheries. 5.1.10 Grant for the improvement of energy efficiency and renewable energy generation in irrigation communities. RDP 2014-2022 / IRUE Funds. Call for proposals 2024 This call for applications is aimed at improving energy efficiency and the generation of renewable energy in irrigation communities and irrigation communities in general in the A2C – Deliverable D7.15v1.0 Page 51 І100 Region of Murcia. The beneficiaries of this aid are companies and other entities, as well as what are known as irrigation communities and general irrigation communities (user communities regulated in Chapter IV of the Consolidated Text of the Water Act approved by Royal Legislative Decree 1/2001 of 20 July 2001 and in Chapter IV of the Regulations on the Public Hydraulic Domain approved by Royal Decree 849/1986 of 11 April 1986). The financing of the aid comes from the European Union Recovery Instrument (EURI) funds, with an intensity of 40% of the eligible investment budget, up to a maximum aid amount of 850,000 euros per application. This type of aid is regulated, on the one hand, by the extract of the Order of 16 May 2024 of the Regional Ministry of Water, Agriculture, Livestock and Fisheries, responsible for approving the call for this aid, and on the other hand, by the Order of 22 May 2020 of the Regional Ministry of Water, Agriculture, Livestock, Fisheries and the Environment, which establishes the regulatory bases for the aid. A2C – Deliverable D7.15v1.0 Page 52 І100 6 Private Financing Schemes in the Region of Murcia Private financing plays a crucial role in driving the growth and development of circular economy initiatives. By providing essential capital, expertise, and networks, private funding enables businesses to scale, innovate, and advance their sustainability goals. The optimal financing mechanism for a circular economy project depends on its development stage and unique business model. Early-stage ventures may rely on angel investors or venture capital firms, while more established companies might seek funding from private equity funds or institutional investors. The following sections outline the key private financing options available for circular economy initiatives, categorized into two main groups: 1. Bank and Financial Cooperative Systems: This section will examine traditional debt financing options, such as loans and green loans, as well as other financial products offered by banks and cooperative banks. 2. Alternative Private Financing Schemes in the Region of Murcia: This section will explore a broader spectrum of financing mechanisms, including equity financing, crowdfunding, leasing, and impact investing. By understanding the nuances of these financing options, circular economy entrepreneurs and project developers can make informed decisions to secure the necessary capital and propel their sustainable ventures forward. 6.1 Bank and Financial Cooperatives Schemes Traditional banking institutions, including commercial banks and cooperative banks, offer a range of financing mechanisms that can be tailored to the specific needs of circular economy initiatives. These institutions often provide debt-based financing, such as loans and green A2C – Deliverable D7.15v1.0 Page 53 І100 loans, as well as other financial products like guarantees and leasing. An overview of the different private financing mechanisms is given on the table below. Financial Mechanism Sub-type Description Debt Loans Traditional debt financing, often secured by collateral. Can be used for various purposes, including working capital, equipment purchases, and facility expansion. Green Loans Loans specifically designed to finance environmentally friendly projects, such as renewable energy, energy efficiency, and waste reduction. Bonds Debt securities issued by banks or corporations to raise capital. While not as common for smaller businesses, some cooperative banks may offer bond issuance services. Green Bonds Bonds specifically issued to finance environmental projects, such as renewable energy, clean transportation, and sustainable agriculture. Alternative forms of funding Guarantees Financial instruments that guarantee repayment of a loan, reducing the risk for lenders and improving access to credit. Leasing A financing arrangement where the bank purchases an asset and leases it to the borrower. This can be particularly useful for financing equipment or vehicles. Equity Equity Investments In some cases, banks, especially development banks, may invest equity in promising circular economy ventures, particularly those with a strong social or environmental impact. Table 3: Main Bank and Cooperative Bank Financing Mechanisms. A2C – Deliverable D7.15v1.0 Page 54 І100 In Spain, the Bank of Spain has demonstrated its commitment to sustainable economy by the analysis of climate change impacts and the transition towards a more sustainable growth model in its research agenda. This is reflected in the last report of analytical and research priorities for 2020-2024 74 . Among the long-term trends of the Spanish economy, it prioritises the study of the informative content on sustainability and the degree of compliance with the recommendations on climate risk included in corporate reports, as well as the incorporation of sustainability factors in public debt markets, in portfolio management and in the conduct of monetary policy. According to the Regional Statistics Center of Murcia, in 2022, 25 different credit institutions operated in the Region, including credit cooperatives and banks. Together they totalled to 520 branches, from which 187 are based in Murcia city, and 76 in Cartagena, the two most populated cities in the region. The most representative entities among banks are Caixabank, with 167 branches, and Cajamar Group, with 113 branches, within credit cooperatives. The Cajamar Cooperative Group has consistently focused on local development, with the agri-food sector serving as its primary area of activity. Its commitment lies in supporting the agricultural industry, include both core businesses and auxiliary industries, ensuring longterm sectoral growth and sustainability. Over the years, Cajamar’s trajectory has closely aligned with the economic development of the regions where it operates. Through its engagement, it has integrated agri-food sector values into its corporate identity, recognising the sector as a strategic pillar of its operations. Given that the agri-food industry represents a significant portion of its total activity, Cajamar has established a dedicated internal and external structure to support its role in fostering sectoral resilience and development. Cajamar has developed a distinct approach to supporting the agri-food sector, setting it apart within the financial landscape: ● A wide range of specific products and services; 74 Banco de España, "Prioridades analíticas y de investigación del Banco de España 2020–2024," [Online]. Available: https://www.bde.es/f/webbde/INF/MenuVertical/AnalisisEconomico/Actualizacion_2021_Prioridades_analitic as_BE.pdf A2C – Deliverable D7.15v1.0 Page 55 І100 ● Its commitment to research and innovation in production systems; ● And the dissemination of knowledge among farmers and managers in the auxiliary industry. Providing support and quality financial services to farmers and agri-food businesses remains a key priority for Cajamar Cooperative Group, regardless of their size. This commitment extends to cooperatives, which have played a fundamental role in ensuring that the efforts of farmers translate into economic impact, both across Spain and in various European markets. The Ethics and Corporate Social Responsibility (CSR) Management Committee of Banco de Crédito Cooperativo, head of Grupo Cooperativo Cajamar, ratifies and promotes its commitment to the social, economic, and sustainable environment in which it interacts. While the group's core activities have a minimal direct environmental impact, its business model integrates sustainable development principles, taking into account not only direct but also indirect impacts—including those arising from its financing activities, asset management, and supply chain operations. Cajamar Cooperative Group aims to support economic development and social progress by providing financial solutions that serve its members, clients, and the broader community. Its strategy is based on the principles of cooperation, social economy, and sustainable development. It seeks to be the leading cooperative banking institution in Spain and a reference for the agri-food sector, recognized for its financial strength, commitment, and ethical standards in its relationships with customers, members, employees, and the environment. Its purpose is to foster well-being and social progress, encouraging innovation and collaboration to strengthen the sustainable development of local and regional economies. The cooperative banking model brings diversity to the banking system. By focusing on longterm, locally embedded economic development, it fosters sustainable relationships with communities and mitigates risks associated with market speculation and financial bubbles. Additionally, its countercyclical approach helps address key financial challenges, including A2C – Deliverable D7.15v1.0 Page 56 І100 moral hazard, adverse selection, and asymmetric information, thereby contributing to a more resilient and transparent financial system. Their main objectives are: ● To adapt to regulatory expectations, which encompass compliance with the EU action plan for sustainable finance and adaptation to important regulatory changes in disclosure and management of environmental risks; ● To expand the products and services catalogue that include ESG criteria (Environmental, Social and Governance), responding to demand of individuals and companies and taking advantage of financing opportunities that will arise in the transition towards low carbon economy; ● To advance in climate and environmental risk management through the implementation of climate indicators in the risk methodology and manuals, and developments in carbonisation analysis process of the portfolio; ● To develop and implement an internal training plan in sustainable finance to strengthen the presence of values related to sustainability in the group’s culture. ● Continue reinforcing the presence of sustainability and the consolidation of ESG criteria in the group’s strategy and governance. In 2023, The European Investment Bank (EIB) and Grupo Cooperativo Cajamar signed a purchase agreement of a €350 million covered bond issue. The transaction enables the cooperative bank Cajamar to make up to €784 million in financing available to support investment in projects of small and medium-sized enterprises (SMEs) and mid-caps, especially those operating in rural areas, including those with links to the agri-food sector, and up to €196 million to accelerate the green transition. CaixaBank is another key financial institution in the region. Its environmental and climate strategy aims to support the transition to sustainability through financing and investment in sustainable projects, environmental and climate risk management, and the reduction of the direct impact of its operations. As part of this strategy, CaixaBank offers specific financial lines, including: A2C – Deliverable D7.15v1.0 Page 57 І100 ● Loans linked to sustainability variables, which are loans linked to ESG criteria (€10,832 million mobilised through the 92 loans made available in 2021); ● Green loans: These are loans with a positive environmental impact, whose underlying are eligible projects or assets, in areas such as renewable energy, energy efficiency, sustainable transport, emission reduction, waste treatment and sustainable building, which comply with the Green Loan Principles (GLP) issued by the Loan Market Association (€1,625 million mobilised in 36 green loans in 2021). ● Eco-financing: Encouraging sustainable investments that use resources more efficiently and/or reduce environmental impacts. This type of financing consists of offering personal eco-loans and eco-microloans to finance the purchase of efficient vehicles and household appliances and home renovations to improve energy efficiency. Eco-financing could also be directed towards projects related to efficient water use, renewable energies, waste management, energy efficiency, ecological agriculture and rural development, through eco-financing lines for the agricultural sector (€61 million available through 919 loans linked to eco-financing lines in 2021). Banco Sabadell is also among the most represented entities in the region of Murcia. It has promoted different projects related to circular economy (Givers, W3R, Ding Dong project or B·COME). Thus, Banco Sabadell is committed to sustainability, and it has established a framework for action that ensures the integration into a strategy of a forward-looking vision in relation to ESG commitments, that aligns its business objectives with the Sustainable Development Goals (SDGs), and that establishes action levers to generate transformation and promotion activities. To do that, it has brought on board all the institution’s corporate bodies, establishing four strategic pillars: ● Progress as a sustainable institution; ● Support customers in the transition to a sustainable economy; ● Offer investment opportunities that contribute to sustainability; ● Work together for a sustainable and cohesive society. A2C – Deliverable D7.15v1.0 Page 64 І100 circular sales strategy prioritizes higher-quality, longer-lasting products over high sales volumes of short-lived goods, which is typical in traditional business models. Another common circular approach focuses on providing access to shared products rather than individual ownership. Additionally, circular businesses often offer repair and remanufacturing services to maximize material value and strengthen customer loyalty. The growing literature on circular business models provides a great variety of approaches and definitions. Among the existing taxonomies, this chapter adopts the one adopted by the Organisation for Economic Co-operation and Development (OECD) 90 , which categorises circular activities according to the underlying business proposition. According to the OECD report, there are five major business models: circular supply models, resource recovery models, product life extension models, sharing models, and product service system models. Figure 3 summarises the key features of the mentioned circular business, while Figure 4 illustrates their impact on the linear economy value chain. Table 5: The Impact of Circular Business Models on a Linear Economy (OECD, 2019) 90 Ibid. A2C – Deliverable D7.15v1.0 Page 65 І100 Table 6: Circular Business Impact on the Linear Economy Value Chain In the context of Agro2Circular, the circular supply models and resource recovery models are recognized as the most relevant business models for the project. Circular supply business models differ from linear models by replacing traditional inputs with more sustainable alternatives, such as bio-based, renewable, or recovered materials. By adopting this approach, companies can simultaneously reduce the environmental pressures across their supply chains while ensuring that input materials do not become waste. This strategy also aligns with the resource recovery model, where material recovery is considered early in the process. The advantages of these business models include reduced regulatory risks associated with stricter environmental policies and lower dependency on natural resources concentrated in a limited number of countries. Additionally, by replacing conventional inputs with sustainable alternatives, firms can position their products as ‘green’, expanding their appeal to environmentally conscious consumers. To design a circular supply agri-food business, the Ellen MacArthur Foundation suggests selecting inputs and ingredients that meet specific criteria. These include greater diversity, which increases the genetic resilience of crops and livestock; upcycling, which maximizes the return on invested resources such as land and energy; lower environmental impact, for example, by shifting from animal to plant-based proteins; and regenerative production, which incorporates context-specific practices that enhance food output, biodiversity, and climate benefits. 91 91 Ellen MacArthur Foundation, "The Big Food Redesign," 2021. [Online]. Available: https://ellenmacarthurfoundation.org/news/the-big-food-redesign-new-study-launched-today A2C – Deliverable D7.15v1.0 Page 66 І100 The core strategy of resource recovery business models is to produce secondary raw materials from waste streams. This model includes three different activities, which are generally carried out by different actors: collection, sorting, and secondary production. In most cases, local governments oversee waste collection, while private firms manage secondary production. Sorting can be handled by either public facilities or the private sector. Resource recovery processes take various forms, including downcycling, which produces lower-quality raw materials; upcycling, which generates higher-quality raw materials; and closed-loop recycling (industrial symbiosis), where secondary raw materials become inputs for other manufacturing processes. In food production, there is growing interest in processing technologies for food waste reuse and recycling. 92 Among the most effective applications, food waste can be used as fertilisers, reducing the need for synthetic and more expensive alternatives. 93 Additional applications include using food waste as compost to nourish the soil, as bioplastic or textile fibres 94 , as biogas, and as animal feed. 95 To support the development and implementation of circular business models, several visualization tools have been developed, based on the traditional business model canvas. This tool provides a structured approach to mapping how an organization creates, delivers, and captures value and is a key step in business development. 96 According to Osterwalder, Pigneur, and Tucci (2005), a business model consists of nine elements: value proposition; target customer; distribution channel; relationship with different customer segments; value 92 V. Rizos et al., "Barriers and Enablers for Implementing Circular Economy Business Models: Evidence from the Electrical and Electronic Equipment and Agri-Food Value Chains," 2021. 93 UNEP, UNEP Food Waste Index Report 2021, 2021. [Online]. Available: http://www.unep.org/resources/report/unep-food-waste-index-report-2021 94 J. Esteban and M. Ladero, "Food Waste as a Source of Value-Added Chemicals and Materials: A Biorefinery Perspective," Int. J. Food Sci. Technol., vol. 53, no. 5, pp. 1095–1108, 2018. [Online]. Available: https://doi.org/10.1111/ijfs.13726 95 K. Murugesan et al., "Chapter Eleven - Conversion of Food Waste to Animal Feeds," in Curr. Dev. Biotechnol. Bioeng., J. Wong et al., Eds., 2021, pp. 305–324. [Online]. Available: https://doi.org/10.1016/B978-0-12-819148-4.00011-7 96 A. Osterwalder, Y. Pigneur, and C. L. Tucci, "Clarifying Business Models: Origins, Present, and Future of the Concept," Communications of the Association for Information Systems, vol. 16, doi: 10.17705/1CAIS.01601. A2C – Deliverable D7.15v1.0 Page 67 І100 configuration; core competency; partner network; cost structure; revenue model. The following table summarises these components: Elements of Business Model Description Value proposition Gives an overall view of a company’s bundle of products and services. Target customer Describes the segments of customers a company wants to offer value to. Distribution channel Describes the various means of the company to get in touch with its customers. Relationship Explains the kind of links a company establishes between itself and its different customer segments. Value configurations Describes the arrangement of activities and resources. Core competency Outlines the competencies necessary to execute the company’s business model. Partner network Portrays the network of cooperative agreements with other companies necessary to efficiently offer and commercialise value. Cost structure Sums up the monetary consequences of the means employed in the business model. Revenue model Describes the way a company makes money through a variety of revenue flows. In the context of circular economy, a set of adaptations of the traditional business model canvas proposed by Osterwalder et al. (2005) have been developed to include social, environmental, and economic aspects. 97 Circular solutions often generate a set of nonmonetary benefits that are difficult to quantify and frequently overlooked. 98 Integrating these 97 A.-T. Braun, O. Schöllhammer, and B. Rosenkranz, "Adaptation of the Business Model Canvas Template to Develop Business Models for the Circular Economy," Procedia CIRP, vol. 99, pp. 698–702, DOI: https://doi.org/10.4337/9781035301003.00022 98 CCRI, "Methodology for the implementation of a circular economy at the local and regional scale," *European Union, LIFE Programme*. [Online]. Available: https://cinea.ec.europa.eu/programmes/life_en A2C – Deliverable D7.15v1.0 Page 68 І100 components to the business model canvas allows for a more comprehensive consideration of social and environmental impacts during the business development process. One example is the canvas developed within the "Route to Circular Economy" project, funded by the European Union’s Horizon 2020 research program. This model expands the traditional nine business model elements by adding two additional components that account for the social and environmental costs and benefits of business activities. 99 The goal of this adaptation is to highlight the role of sustainability and circularity in creating value for both people and the planet. Another example is the Ecocanvas, developed by Daou et al. (2020). 100 Unlike the previous model, the Ecocanvas does not focus on business impact, but rather expands the economically driven approach of the original canvas by incorporating external business challenges. These challenges are categorized into legal, environmental, and social factors. Economic and legal challenges may include stricter environmental regulations, such as emission taxes, market innovations, or macroeconomic fluctuations. Environmental challenges encompass issues affecting production and supply chains, such as water scarcity, climate change, and pollution. Social and technological challenges refer to cultural and technological shifts that influence consumer behavior. By integrating these elements, this model enables businesses to identify external drivers of change and take proactive steps to embrace eco-innovation and long-term competitiveness. Recently, the key drivers guiding the adoption of circular business models have been the intensification of business risks from operating a linear production model (e.g., supply chain stability and new regulations), technological advancements that reduce the cost structure of circular activities, and the shift in consumer preferences toward more sustainable 99 S. McDermott, D. Morwood, P. Laczko, R. Slaughter, and A. Smith-Gillespie, Circular Business Model Innovation Toolkit, n.d. [Online]. Available: https://ec.europa.eu/research/participants/documents/downloadPublic?documentIds=080166e5c88a8834&a ppId=PPGMS 100 A. Daou, C. Mallat, G. Chammas, N. Cerantola, S. Kayed, and N. A. Saliba, "The Ecocanvas as a Business Model Canvas for a Circular Economy," Journal of Cleaner Production, vol. 258, p. 120938, DOI:10.1016/j.jclepro.2020.120938 A2C – Deliverable D7.15v1.0 Page 69 І100 alternatives. 101 Despite these forces, in most sectors, the market penetration of the circular business model remains moderate (around 5-10%). 102 On the other hand, several barriers, both internal and external, influence the adoption and scale-up of circular businesses. According to Bianchini et al. (2019), challenges faced when implementing a circular business model span various areas, including internal processes (e.g., redefining business strategy), technical barriers (e.g., need for specialized expertise), market barriers (e.g., lack of supply network support), institutional, regulatory, and social barriers (e.g., misaligned incentives), and financial and economic barriers (e.g., need for long-term investment and costly management processes). The authors also highlight that the success of a circular business directly depends on a network of companies working together to close material loops. Since these stakeholders are interdependent but operate independently, an efficient exchange of information and feedback is essential to reduce uncertainties associated with circular business strategies. 103 Focusing on the agri-food sector, the Centre for European Policy Studies conducted an indepth analysis by interviewing 41 case-study companies involved in the EU-funded CIRC4Life project to identify the main challenges faced when implementing circular activities. According to the collected results, policy and regulation, along with financial and economic factors, were identified as the most significant obstacles by most of the surveyed companies. Policy-related barriers refer to difficulties arising from bureaucracy and administrative processes. For instance, obtaining official recognition for a circular process using food production leftovers may involve excessive administrative requirements, discouraging companies from utilizing these inputs. Financial and economic factors mainly concern two aspects: first, implementing more sustainable and circular approaches often entails higher 101 OECD, Business Models for the Circular Economy: Opportunities and Challenges for Policy, 2019. [Online]. Available: https://www.oecd.org/environment/business-models-for-the-circular-economy-g2g9dd62-en.htm ; I. Uvarova, D. Atstāja, and V. Korpa, "Challenges of the Introduction of Circular Business Models within Rural SMEs of EU," Economic Studies, vol. 9, no. 2, 2020. [Online]. Available: https://doi.org/10.20472/ES.2020.9.2.008 102 OECD, Business Models for the Circular Economy: Opportunities and Challenges for Policy, 2019. [Online]. Available: https://www.oecd.org/environment/business-models-for-the-circular-economy-g2g9dd62-en.htm 103 Ibid. A2C – Deliverable D7.15v1.0 Page 70 І100 costs, such as collection and treatment of side streams from food production; second, limited access to financial resources is a major obstacle for agri-food businesses, particularly in their early stages, when additional support is crucial to achieving financial sustainability. The financial support needed for a circular business varies depending on its development and implementation stage: R&D (pre-revenue), start-up (pre-profit), scale-up (pre-profit to profit), growth (profit), and maturity (stable income). Analysing the business and financial model of a circular solution is a useful approach to determining its funding and financing needs across these stages. 104 A business and financial analysis involve identifying the relevant costs and expenses associated with implementation, assessing expected cash flows and revenues, and evaluating overall financial sustainability. It also requires mapping available funding opportunities and financial schemes that can support development and implementation, considering both public and private sources. 104 CCRI, "Methodology for the implementation of a circular economy at the local and regional scale," European Union, LIFE Programme. [Online]. Available: https://cinea.ec.europa.eu/programmes/life_en A2C – Deliverable D7.15v1.0 Page 71 І100 8 Good Practices This chapter presents good practices of financing schemes for the circular economy. The good practices were selected in an effort to show the diversity of financing sources, methods and regional distribution in Europe. However, it should not be hidden that a key criterion for their selection was the availability of information. 8.1 CIRCWASTE (Finland) Demonstrating the collaboration between 20 partners, the “LIFE IP on waste - towards circular economy in Finland” (CIRCWASTE) 105 project running between 01 October 2016 and 31 December 2023, aims to position Finland as a forerunner in circular economy by implementing the country’s National Waste Management Plan. The project is recognised as a good practice by the European Circular Economy Stakeholder Platform “because of its intervention methodology, its collaborative capacity, and its results.” 106 Of particular interest is the involvement of 5 research institutes and universities, 12 municipalities and regions, as well as 8 private companies and public enterprises in carrying out 20 project actions across 6 themes, which include: ● Regional strategic development and networking projects, ● Resource efficiency in construction, ● Biodegradable waste and by-flows, ● Industrial waste and material flows, ● Utilising soils, and ● Digital solutions and logistics. 105 Circwaste, "Materiaallitkiertoon: Towards Circular Economy in Finland," [Online]. Available: https://www.materiaalitkiertoon.fi/en-US/Circwaste ; European Commission, LIFE IP on Waste - Towards Circular Economy in Finland, 2023. [Online]. Available: https://webgate.ec.europa.eu/life/publicWebsite/index.cfm?fuseaction=search.dspPage&n_proj_id=6098 106 European Union, "Financing the circular economy," [Online]. Available: https://circulareconomy.europa.eu/platform/en/financing-circular-economy A2C – Deliverable D7.15v1.0 Page 72 І100 All together, these partners have a total budget of €18,521,507 with an EU contribution of €11,112,904 from the EU LIFE Programme. Nine other Finnish institutions are co-financing the project. This collaborative approach not only in terms of project participants but also in funding, shows that greater success is achieved when multiple stakeholders are involved as the project has helped reach national and EU targets with regard to transitioning to a circular economy. 8.2 URBIOFIN (Greece) Composed of 15 partners from Spain, Denmark, Belgium, France, Greece and the Netherlands, the URBIOFIN project (Demonstration of an integrated innovative biorefinery for the transformation of Municipal Solid Waste (MSW) into new BioBased products) aims to transform urban solid waste into new bioproducts demonstrated through a biorefinery concept. 107 The project utilized three modules which resulted in the daily conversion of about 10 tonnes of the organic fraction of MSW into chemical building blocks, biopolymers, and additives. Throughout the process, the project utilized green technologies that resulted in an efficient, circular and zero-waste valorisation of what would have been typical organic waste products of a municipality. These project results can make a valuable contribution to raising awareness among potential consumers of the benefits of using biobased products. On one hand, the integrated biorefinery reflects the environmentally friendly image of the new biobased processes, while on the other hand, it also contributes to reducing the organic fraction of waste going to landfills and achieving the objectives of the Waste Framework Directive. The URBIOFIN project received funding under the Bio Based Industries Joint Undertaking (BBI JU) within the EU Horizon 2020 programme with a total budget of €15 million. The solutions were implemented from 01 June 2017 to 30 September 2022. 107 Urbiofin, "Home," [Online]. Available: https://www.urbiofin.eu/ A2C – Deliverable D7.15v1.0 Page 73 І100 8.3. Circular Economy for Businesses (Murcia, Spain) Murcia is an entrepreneurial Mediterranean region willing to progress towards a sustainable & resilient economic & social development model that creates jobs, wealth and well-being based on business innovation. At present, the competences in this matter in the region of Murcia pivot on two well-defined administrative arms: on the one hand, environmental circularity, responsibility of the Regional Ministry for environment and Climate and on the other hand, circular economy, which is the responsibility of the Regional Ministry for Business, through the Regional Development Agency (RDA), INFO Murcia. In order to raise awareness and provide services on sustainability & circular economy to the business ecosystem in the region, some particular initiatives have been carried out by INFO Murcia in cooperation with regional stakeholders over the last years: Firstly, in the framework of the regional monitoring dashboard, Circular Economy & Business Sustainability of the Murcia Region Observatory 108 , the circular economy is currently promoted for sectors identified as "tractors", as well as those with growth potential. In addition to the agro-food and water sectors, the dashboard targets sectors such as tourism, habitat, footwear, among others, also focusing on key areas such as energy, the maritime sector, the chemical sector and Key Enabling Technologies (KETs). Likewise, there are other tools consisting of webinars: on the one hand, CIRCULARMENTE consists of a Workshop on Circular Economy and opportunities for companies, held on 15/10/2024, conceived as an annual event to be organized in the frame of the EU Annual Circular Economy conference. Moreover, World Pact United Nations (UN) webinars explore business opportunities emerging from SDGs (one conference and 4 webinars from mid2023 up to October 2024). 108 Looparm, “Looparm.” [Online]. Available: https://looparm.es/ A2C – Deliverable D7.15v1.0 Page 80 І100 8.6.3. Promotion of Green Public Procurement by Providing Green Technical Specifications, Lithuania The Central Procurement Organisation (CPO LT) is the body in charge of procurement, both at the national and local level, on behalf of the contracting authorities. 122 Acquisitions are conducted through the CPO LT electronic catalogue, which minimizes the procurement procedure, optimizes the purchasing cycles, and reduce the costs of the process. This is structured into 49 different groups within the categories of services, goods and works. Through this methodology, it is possible to determine which technical specifications are necessary to qualify for green public procurement. This facilitates the process of green public procurement, as it is not necessary for the contracting organizations to establish the criteria themselves. In addition, these entities have the possibility to use these technical specifications as an example and carry out this process themselves. 99% of procurements are carried out using green specifications. There are 380 ecological specifications for categories such as office supplies, cleaning services, IT and office equipment, cell phones, furniture, and foodstuffs. During the first half of 2020, ecological goods and services acquired through the CPO LT ecatalogue achieved a total value of €18 million. 123 8.6.4. Good Practices in Green Public Procurement in Regional Waste Management, Spain The Consorcio para la Gestión de Residuos de Vinalopó (CREA) oversees waste management in the districts of Vinalopó, Spain. One of the main environmental problems is the huge amount of waste that is landfilled and cannot be recycled. 124 As a solution, CREA aims to reduce the amount of waste by recycling and classifying the waste generated for subsequent recovery or reintroduction into the value chain. This project is particularly 122 CPO Lithuania, "EU Support," [Online]. Available: https://www2.cpo.lt/en/eu-support/ 123 Interreg Europe, "Promotion of Green Public Procurement by Providing Green Technical Specifications," 2021. [Online]. Available: https://www.interregeurope.eu/good-practices/promotion-of-green-publicprocurement-by-providing-green-technical-specifications 124 Crea Consorci de Residus, "El reto del reciclaje," [Online]. Available: https://elretodelreciclaje.com/creaconsorci-de-residus/ A2C – Deliverable D7.15v1.0 Page 81 І100 essential in densely populated areas, where there are environmental problems related to poor waste management and uncontrolled landfills. All municipalities are required to have an environmental plan that includes green procurement measures tailored to the needs and reality of the municipality. 8.7. Good Financial Practices of Banks in the Region of Murcia The following analysis provides an overview of some financial practices adopted by five prominent banks in the Region of Murcia, Spain, with a particular focus on their contributions to the circular economy. These institutions have demonstrated a strong commitment to sustainable finance by developing innovative products and services that promote environmental stewardship and resource efficiency. While the data presented is derived from publicly available sources, it is essential to note that the banking landscape is dynamic, and specific initiatives may evolve over time. 8.7.1. Cajamar Cooperative Group Cajamar Cooperative Group 125 , a cornerstone of the agricultural community, has demonstrated a strong commitment to sustainability. By offering innovative financial solutions, the group is fostering a greener future and aligning its practices with the principles of the circular economy. The group has several key initiatives, from which it is worthy to highlight the following: • Financing Sustainable Projects: Cajamar is actively funding projects that promote sustainable practices, such as organic farming, precision agriculture, and renewable energy. The bank has also made significant investments in modernizing irrigation systems, thereby contributing to water efficiency. 125 Cajamar, Sustainability Report. [Online]. Available: https://www.bcc.es/es/responsabilidadcorporativa/memoria-anual-rsc/ A2C – Deliverable D7.15v1.0 Page 82 І100 • Supporting SMEs and Mid-caps: The group provides financing to SMEs and mid-cap companies, particularly those operating in rural areas and the agri-food sector. This support fosters the development of a more sustainable and resilient economy. • International Partnerships: Cajamar's collaboration with the EIB signifies a commitment to international cooperation and best practices in sustainable finance. In 2023, a €350 million covered bond issuance, facilitated by the EIB, enabled Cajamar to allocate up to €784 million to support investments by SMEs and mid-caps in rural areas, and an additional €196 million to accelerate the green transition. Moreover, Cajamar has also established a comprehensive framework that encompasses best practices across the following key areas: • Project Evaluation and Selection: The bank has implemented a rigorous evaluation process involving qualified experts to ensure that projects align with sustainability goals. Moreover, projects are continuously monitored and adapted to maintain their sustainability over time. • Risk Management: Cajamar proactively identifies and mitigates environmental and social risks, ensuring that its financing activities contribute to a more sustainable future. • Management of Proceeds: The bank has established a clear policy for managing the proceeds from sustainable finance initiatives, ensuring that funds are allocated to projects that generate positive environmental and social impacts. • Transparency and Reporting: Cajamar is committed to transparency and accountability, publishing annual reports on the allocation of proceeds and the impact of its sustainable finance initiatives. By adopting these best practices, Cajamar Cooperative Group has solidified its position as a leader in sustainable finance. The group's commitment to the circular economy, combined with its innovative financial solutions and international partnerships, is driving positive change and contributing to a more sustainable future. A2C – Deliverable D7.15v1.0 Page 83 І100 8.7.2. CaixaBank A pioneer in sustainable finance in Spain, CaixaBank 126 is leading the charge in the Region of Murcia with a wide range of green financial products and services: • Energy Efficiency Loans: CaixaBank offers preferential interest rates for loans to businesses and individuals investing in energy efficiency improvements. • Sustainable Investment Funds: Beyond the "CaixaBank Sostenible" fund, the bank has a range of options focused on sectors like renewable energy, green buildings, and sustainable water management. • Circular Economy Advisory Services: CaixaBank provides consulting services to help companies identify circular economy opportunities and develop sustainable business models. 8.7.3. BBVA With a global reach and a strong local presence, BBVA 127 is empowering businesses and individuals in Murcia to make sustainable choices through its comprehensive suite of green financial solutions. The next specific financial products represent clear examples of how BBVA is supporting the transition to a circular economy in the Region of Murcia. 128 • Green Mortgages: BBVA offers green mortgages with preferential conditions for purchasing or renovating energy-efficient homes. • Circular Economy Partnerships: The bank has partnered with local governments and universities to promote circular economy initiatives, such as waste reduction and recycling programs. • Sustainable Supply Chain Financing: BBVA supports businesses in developing more sustainable supply chains through financing and advisory services. 126 Caixabank, “Caixabank.” [Online]. Available: https://www.caixabank.es/particular/home/particulares_es.html 127 BBVA, “BBVA Compass.” [Online]. Available: https://www.bbva.com/en/specials/bbva-compass/ 128 Ibid. A2C – Deliverable D7.15v1.0 Page 84 І100 8.7.4. Unicaja Banco Committed to a greener tomorrow, Unicaja Banco is supporting businesses and individuals in Murcia to adopt eco-friendly practices through its innovative financial products and initiatives. The subsequent products and initiatives will showcase the bank's commitment to sustainability and its impact on the region. • Eco-Efficiency Loans: Unicaja Banco offers competitive interest rates for businesses investing in energy-efficient technologies, such as LED lighting, insulation, and renewable energy systems. • Sustainable Investment Funds: The bank has a range of investment funds focused on ESG factors, aligning with the principles of the circular economy. • Carbon Footprint Reduction Initiatives: Unicaja Banco is committed to reducing its own carbon footprint through measures such as paperless offices and energyefficient buildings. A2C – Deliverable D7.15v1.0 Page 85 І100 9 Financing Recommendations 9.1. Circular Economy Overview & Challenges • It must be noted that according to the Circularity Gap Report 2024, the world economy is currently just 7.2% circular, a number that has been declining annually. Even though the circular economy has become a "megatrend," lofty ideals and objectives are still not being translated into tangible actions and quantifiable effects on the ground. For that reason, a well-executed circular economy, on the other hand, could drastically lessen this effect by using 70% fewer resources to meet human needs than we do now. • The circular economy concept is inherently a multi-stakeholder approach that involves many processes. Therefore, giving high priority to stakeholder participation and collective collaboration in the formulation of projects will help them gain clout and attract more funding. • Cooperation between actors in the field of the environment or circular economy is called to be a line of work for the present and for the future. Companies can use the sub-products of other firms, which will enable cooperation between companies that had always presented cultural barriers, at least in Spain (win-win approach). • The private sector should not be forced to share or promote sustainability but rather reinforce the idea that it should be based above all on business opportunities rather than just legal obligation or conviction. Not harming the environment or the climate is not just a matter of corporate social responsibility but also a business opportunity for the private sector. 9.2. Financing & Investment for Circular Economy • Given the intricate nature of securing financing for circular business models, engaging a specialized advisory service is strongly recommended to navigate the complexities of the current financial landscape. A2C – Deliverable D7.15v1.0 Page 86 І100 • The creation of reporting standards for circular businesses and the adoption of some standardised reporting measures would reduce asymmetric information and distortions that hinder the growth of circular investments. • The search for financing opportunities for the circular economy should not be limited to government support or incentives but should also consider different business models, loans, and private sector support. Although public funding is widely available in this area, it is not possible to finance all projects. Business models with a high sustainability contribution can receive funding from the private sector through a winwin relationship. • It is also possible to find investments in innovative ideas with alternative mechanisms such as crowdfunding, as small investors can use such mechanisms to make all their investments. Moreover, a business idea can be promoted at the same time thanks to the large audience it reaches. • If there are no grant opportunities for investments in the circular economy or if there is no suitable programme at regular intervals, the loans granted by investment banks or private banks should be considered. Since such loans are supported by certain consortia or the public sector, they offer the chance to find financing that is more suitable than the market conditions. • When looking for funding for projects, it is useful for companies to find the right fund if they first define the focus of their activities. This is because each programme has its own priorities and funding mechanisms. For example, if the project idea is more of a research and modelling project or a pilot application, it would make sense to use the tendering opportunities of the Horizon Europe programme. • The legal status of a project organisation can affect the use of the programmes. Some programmes are only suitable for public institutions or non-governmental organisations, while others are suitable for for-profit organisations. When applying for the programmes, those criteria need to be checked. • The lack of credible commitments from the public sector poses a risk to long-term investment decisions by private sector actors that need to be addressed. A2C – Deliverable D7.15v1.0 Page 87 І100 • To redirect financial resources from linear to circular solutions, negative externalities need to be systematically priced in as circular businesses would benefit from corresponding price signals. 9.3. Business Models & Market Considerations • When developing business models for the circular economy, the positive and negative effects of incentives in the market and financial analysis need to be considered. The reason behind that lies in the additional support received for transactions during the operational process, which may shorten the return on investments. On the contrary, business models may become less profitable due to additional obstacles they encounter. • The recycling and upcycling rate of organic products is still very low, which means that there is still a long way to go in this area, which holds investment potential. If considering the principles of waste prevention, sharing systems, and the win-win principle when developing business models, they will have a high chance of success and minimize harm to nature. 9.4. Role of Technology & Innovation in Circular Economy • The importance of technological partners (i.e., technological centres and other research and technology organisations) promoting technology and knowledge transfer and the implementation of new methods, advanced materials, and improved processes in enterprises, in order to accelerate industrial transition towards a green economy. 9.5. Investment Priorities for Sustainability • Investments should contribute to the extension of product life cycles and the reuse of waste and the valorisation of sub-products in line with EU regulations to support the transition to a circular economy. A2C – Deliverable D7.15v1.0 Page 88 І100 • Investments should contribute to reducing and optimising water resources so that adequate ecological levels are maintained in aquifers and basins. • Investments should contribute to reducing all forms of pollution that negatively impact ecosystems and human health. • Investments should contribute to protecting or restoring biodiversity and achieving good ecosystem status. 9.6. Green Public Procurement (GPP) & Sustainable Procurement • GPP is also a kind of incentive and an important tool for actors to achieve a positive external impact on nature. Public institutions can use their purchasing power to put pressure on suppliers to achieve positive environmental impacts through GPP. • Suppliers should comply with GPP criteria as soon as possible to stay ahead of the competition because the number of institutions requiring these criteria is increasing by the day. Many environmentally friendly applications that are preferred today will be mandatory tomorrow. • Environmental aspects and opportunities to apply green procurement criteria should be considered in all procurement processes, especially in terms of reducing energy consumption (electricity, heat, and water) and emissions (CO2 emissions and particulates), recyclability, life extension, material selection, use of recycled materials, and waste prevention. • Possibilities for buying used products and products made from recycled materials should be considered. • The products procured should be recyclable and sent for reuse or recycling after use. • Life-cycle costs should be taken into account in procurement. This allows procurers to choose the most economically advantageous option on a life-cycle basis. A2C – Deliverable D7.15v1.0 Page 89 І100 • Resource-efficient procurement options should be considered. These include the procurement of services instead of products, optional forms of ownership, and the reuse of products. • Eco-label criteria can be used when formulating tenders. A2C – Deliverable D7.15v1.0 Page 96 І100 https://webgate.ec.europa.eu/life/publicWebsite/index.cfm?fuseaction=search.dspPage&n _proj_id=6098 European Council, "Long-term EU budget 2021–2027," [Online]. Available: https://www.consilium.europa.eu/en/policies/the-eu-budget/long-term-eu-budget-20212027/ European Investment Bank, "Advisory Services – InnovFin Advisory," [Online]. Available: https://www.eib.org/en/products/advisory-services/innovfin-advisory/index.htm European Investment Bank, "EUR 10 Billion to Support the Circular Economy in the EU," 2019. [Online]. Available: https://www.eib.org/en/press/all/2019-191-eur-10-billion-tosupport-the-circular-economy-in-the-eu European Investment Bank, "IREN Climate Action & Circular Economy Loan," 2019. [Online]. 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