A recent blog from IDB Invest states that the concept of circular economy (CE) has gained significant strength in recent years given its sustainable approach to promote the transition to models with practices that generate economic development without harming the environment and rather seek its regeneration. However, its application in small and medium-sized enterprises (SMEs) still presents many challenges and in some cases it tends to go unnoticed.

The post also deep-dives in examples from IDB Group’s partnerships with three leading Colombian banks (Bancóldex, Bancolombia and Banco de Bogotá) to develop a common language that would drive CE financing at scale through a practical tool that enables comparability and transparency among financing institutions.

Finally the authors suggest that the financial sector should perform a coordination role, providing the resources to support the transition of businesses and SMEs beyond waste recovery practices can, in fact, be described as “low-hanging fruit”. Creating a common language, namely a categorization system, needs to be an ongoing process that can keep up with evolving technologies and CE trends.