The emergence of the "circular economy" could result in a new ESG rating system that measures a company's ability to reuse, reduce and recycle waste, according to experts. “We can no longer have business models where we make waste,” said Anne van Riel, head of ING Sustainable Finance Americas, who notes that an estimated 8 million tons of plastic enters the world’s oceans each year.

Circularity includes business models, such as recyclable plastic alternatives, blockchain technology and sharing platforms, featuring reuse and reduce methods like Airbnb and ZipCar. “We must maintain more of a circular business model in which we reduce, reuse and recycle,” Riel said. “Circularity is the economy of the future.”

Riel was the opening speaker at a panel discussion called the "Building Blocks of the Circular Economy" on Thursday at Columbia University in Manhattan.

Other panelists included Steve Cohen, director of the Earth Institute’s Research Program on Sustainability Policy and Management, and Faith LeGendre, circular economy solutions strategist with Cisco Systems, who said that an investment scoring system based on circularity is only a matter of time.

"Currently, the circular economy is factored into the 'E' of ESG because it includes impact on waste management or Co2 emissions," Riel told Financial Advisor following the lecture. "If there were a scoring model for circular economics, it would likely develop from the environmental sector of ESG."

Focus areas at ING include innovation and sustainability and where they intersect in the supply chain. “Blockchain is a technology to make trade flows more efficient and transparent,” said Riel. “We have initiatives on blockchain to look at trading companies of commodities and how they sell.”

For example, ING is among 15 of the world’s largest banks, trading companies and energy companies that have formed a new venture known as komgo SA, a blockchain-based open platform that is part of an emerging global ecosystem aiming to optimize the flow of physical commodity operations.

“With blockchain, we can trace where a product started in the supply chain, where it went, through which hands it passed and where it landed,” said Riel. “This has everything to do with sustainability because it helps consumers make choices and ensures that the gold or cobalt a company is sourcing is not coming from child labor, for example.”

ING maintains a lending portfolio of more than 500 billion euros that is geared towards combating climate change. As an incentive for companies to improve their overall sustainable performance, ING offers a sustainable improvement loan to certain eligible companies. “It provides a discount to the margin if certain targets on sustainable performance are met,” Riel said.

ING has made sustainability the core of its corporate strategy, according to Riel, and wants to double its Sustainable Finance portfolio by 2022 with sectors, for example, that are working towards a low-carbon society.

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