We spoke with Triodos researcher Matija Kajić about the resource transition, the circular economy and the role of the financial sector. ‘We need to let go of our never-ending ambition to achieve maximum growth and profit, and instead ask ourselves: do we even need this product?’ 

One of Triodos Bank's strategic priorities is to promote the resource transition. Why is this so important? 
We need to reconsider our practices around resource use, since our growing demand for natural resources is exhausting the planet’s reserves, leading to both resource depletion and damage to people and natural environments.  

Currently, more than 100 billion tonnes of resources enter the economy every year, yet only a very small fraction (7.2%) gets recycled and used again. The resources entering the economy are not used to simply cover our basic needs but are instead fed into a system of over-consumption and over-production fueled by an expectation of cheap, short-lived, non-reusable products, quickly available at our doorstep. The current system sees no value in the waste it incinerates or sends to landfill. 

We should see waste as valuable
We have a very poor approach to pollution and waste management. Most products and materials come to an early end-of-life, usually in a landfill without previous recycling or recovery of materials. This is a waste of the resources and has damaging effects on the surrounding environment and biodiversity.  

Our failure to use resources efficiently is making other environmental goals, including our climate targets, increasingly difficult to achieve. Since natural resource extraction, processing and product-manufacture make up approximately 50% of our total greenhouse gas emissions.

In our vision document we address these concerns through the three focus areas: 1) sustain & restore nature; 2) extend the life of products; 3) prevent waste and downcycling.

What needs to happen? 
Society needs a mindset shift: Why do we need all these products? We are so focused on more, more, more, while this ultimately neither makes us happier nor creates the desired positive impacts in our societies and environment. We need to not only think about how to make a product more sustainable and what kind of energy and materials to best produce it with, but also ask ourselves if the products themselves are even necessary.  

This mindset shift is focused on fundamental choices. When a new company is looking to build an office space it should contemplate whether its needs an office space at all. And if it does, it should look into refurbishing an existing building first before considering constructing a new one.    

The same is true if Triodos Bank is asked to finance a company producing coffee makers and compostable, brand-specific coffee pods. We should consider not only whether a coffee pod made of compostable materials is more resource-efficient and circular than a coffee pod made from plastic or aluminum. But we should also assess whether a coffee maker compatible with only one type of coffee pod is a redundant product in the first place. Especially when consumers already have more than enough options to make coffee without brand-specific pods and without any waste at all.  

We need to let go of our never-ending ambition to achieve maximum growth and profit, and instead ask ourselves: do we even need this product? This is perhaps the most ambitious action of all. 

Actions to make products and production methods more sustainable and circular only make sense when happening parallel to this mind set shift. Only then can we truly reap the benefits of circularity and resource efficiency.  

How does this translate into the financing of Triodos Bank?
We have identified the most impactful sectors from Triodos Bank's perspective, which have the most negative impact on resource scarcity, waste, pollution and nature degradation. And which also have vast potential for positive impact. These sectors are: construction, nature-based solutions, ICT, renewable energy, and manufacturing. 

We have financing activities in these sectors – where a transition would entail replacing fossil fuels with renewable energy, minimizing waste in all parts of the relevant supply chains and becoming more efficient with material. Using products for as long as possible by designing them with a view to repair, by refurbishing them and by creating second-hand markets and sharing platforms.  

For example, in the construction sector this means focusing on refurbishment rather than new builds, considering surrounding environments and land-use change. It also means using renewable energy both in material production and in construction activities, avoiding CO2 intensive materials; focusing on secondary, reclaimed or renewable materials, requiring product passports, as well as designing for longevity, modularity and repairability. 

How do you see the role of the financial sector? 
The financial sector plays a crucial role in stimulating transitions through loans and investments. It needs to create positive impact through its financial activities. Stimulating ambition and courage in looking beyond the current economic system by working with clients to re-think business models, encourage changes in product design and manufacturing (where most circularity potential is currently lost), and playing the linchpin role between actors in different supply chains. 

At Triodos Bank, our first step is to minimize any negative impacts by excluding projects that are unethical or harmful to people and nature. An important topic related to the use of resources is deforestation. We require the companies we invest in to preserve forest areas. Another one is water scarcity, so we ask companies to address their freshwater use. This is something other financial institutions could also quite easily implement. 

We also see a major role for financial institutions as thought leaders, engaging with consumers and changing the way societies make decisions around product purchases. Because ultimately, we believe the financial sector is key to tackling the tremendous challenge we are all facing: moving away from damaging people and ecosystems and build a society that allows people to live prosperous lives on a thriving planet.