Leasing aims to support the circular economy
9 May 2019 - 4 min Reading time
Financial sector asks to remove obstacles
The circular economy is gaining importance and that is no surprise. If there is one economy that has everything it takes to help achieve the climate goals, it is the circular economy. The financial sector wants to play an active role in this economic transformation, especially through leasing.
The sector is currently drawing up the outlines of this commitment, but is also counting on the government to remove some obstacles. This mainly concerns the development of good guarantee schemes, the introduction of a private right of superficies that is opposable to third parties and the expansion of investment support to shared or rented products and second-hand equipment.
Because products from the circular economy are used for as long as possible and are not discarded after their life cycle, but are repaired, reused, repurposed or recycled, their impact on the environment and society is much smaller.
Through leasing - and more specifically vendor leasing - the financial sector wants to support the circular economy.
The advantages of vendor leasing within the circular economy
Specific to vendor leasing is that three parties are involved: the leasing company, the customer and the supplier of the asset (vendor).
With vendor leasing, a customer leases a movable investment property (such as a car, forklift truck, photocopier, ...) directly from the vendor. It offers leasing as part of its commercial model. Often other services are also linked to it, such as insurance or maintenance of the property.
Vendor leasing therefore has two crucial features that make it very suitable for financing circular projects:
- The involvement of the supplier: this makes it easier to extend the life of a leased product and to give it a second life more quickly.
- The ownership of the leasing company: this makes it easier to offer a pay-per-use model or product as a service model.
The financial sector is committed to financing the circular economy
The leasing sector is currently setting out a deal structure: a series of guidelines that determine which criteria a circular project must meet in order to be easily financed via leasing.
This should encourage the various parties within leasing (leasing company, customer and supplier) to choose products that are modular, repairable and recyclable. Or products that can be reused after their life cycle.
Once the contours of the deal are clear, the way is open to effectively finance circular projects through vendor leasing. In the long term, the financial sector therefore wants to realize part of its leasing production in the circular domain.
However, for the project to succeed, a number of obstacles still need to be overcome. The financial sector is calling on the government to adjust the regulatory framework.
With its commitment and its demand to the government, the financial sector wants to work on financing the circular economy. Not alone, but together with all stakeholders!
