IFC and Partners Release New Harmonized Circular Economy Finance Guidelines

Sao Paolo, 15 May 2025 — International Finance Corporation (IFC) released today new Harmonized Circular Economy Finance Guidelines at the World Circular Economy Forum in Brazil. The guidelines are designed to assist investors, financial institutions, and private companies in identifying and quantifying opportunities to channel financing towards projects that support a circular economy. By providing clear guidance on eligible activities and qualifying transactions, the Guidelines aim to promote market convergence and are intended to be applicable globally.

Most businesses underestimate the real potential of circular economy activities to boost profitability and secure financing. At the same time, financial institutions are eager to fund the sector — but both sides often struggle with clarity on what qualifies for investment beyond traditional recycling models.

“The circular economy is a multi-trillion-dollar global economic opportunity with the potential to create millions of jobs, especially in small and medium enterprises across the product lifecycle,” said Jamie Fergusson, Global Director for Climate Business at IFC. “By equipping financial institutions, corporates, and SMEs to recognize qualifying activities, the guidelines can help companies to adapt projects and unlock new financing opportunities for the circular economy, while building investor confidence in these innovative financial products.”

Building on the success of sustainable finance taxonomies for biodiversity, blue finance, and green bonds, the Guidelines seek to expand eligible asset classes and mobilize private capital to support sustainable development. They align with the European Union’s Categorization System and the International Capital Markets Association’s (ICMA) Green Bond Principles, ensuring they are sector agnostic and fit for purpose worldwide. They are the first to both define and quantify eligible transaction amounts.

The Guidelines serve as a practical tool for financial institutions and corporations to identify, evaluate, and quantify financial flows for circular economy projects. Illustrative examples of project and financing types are included across six sectors: electronics and appliances, packaging, textiles, construction and built environment, automotive and transportation, and agribusiness. These Guidelines will help to accelerate the transition to a circular economy by improving the enabling environment, catalyzing the private sector, and mobilizing private capital. Over the next year, IFC will work with partners to foster convergence of harmonized guidelines and learn through implementation, with the potential for updates as lessons are learned.

“The circular economy represents a transformative economic model for achieving sustainable development while reducing resource dependence and promoting the regeneration of natural ecosystems,” said Lisa Da Silva, Global Lead for Circular Economy Finance at IFC. “Circular economy models can lower operating costs by reducing inputs and waste while enhancing national economic resilience by reducing vulnerability to shortages of critical raw materials, volatile pricing, and supply chain disruptions.”

Despite the promise of circularity, the lack of accepted definitions and standards, along with knowledge and data gaps, continue to impede large-scale investment. The new Guidelines aim to address these challenges by providing a harmonized framework that fosters confidence among investors seeking transparent, comparable, and verifiable investment opportunities.

These guidelines were developed by a core working group that includes IFC, Circle Economy, The Circulate Initiative, Ellen MacArthur Foundation, and Intesa Sanpaolo. Contributions were also made by UNEP-FI, the MDB Circular Economy Working Group, private financial institutions, and IFC’s industry focus groups and specialists.