Cities, businesses and finance en route to the Circular Economy

Published on Monday, 2 December 2019

From industry to finance, there is not a single sector now untouched by the transition to the circular economy. In Italy, the subject was at the centre of three recent events that involved experts, managers, businesspeople and representatives of the institutions, in the very days in which the new European Commission, presided over by Ursula von der Leyen, took office and put the circular economy model at the heart of its development programme for Europe.

On November 26, the fifth edition of “Motore Italia”, organised in Milan by Milano Finanza with Class CNBC and Capital, discussed SMEs and opportunities to provide new impetus for the nation. The circular economy, declared our Group’s Head of Circular Economy Luca Meini, represents a key to becoming even more competitive. Aside from the well-known approaches of recycling and reuse, the circular economy is also founded on innovative business models that demand a rethink of the current way of doing business, not least through sustainable inputs (renewable, recyclable, biodegradable raw materials), products as services (the possibility of using products without actually buying them to own), sharing platforms, and extending product life cycles. The ability to rethink the value chain from the very first phase of designing and choosing materials, to focus on extending the useful life of products and on related services,” Meini reminded those present, “is a particular feature of the Made in Italy identity. This is why the transition currently underway could well be a major opportunity for Italian SMEs.”

Another event was the second annual ICESP (Italian Circular Economy Stakeholder Platform) conference that took place in Rome on November 27 and 28, and dealt with, amongst other issues, the subject of financing the circular economy. “In recent months, we have witnessed a rapid acceleration by banks and funds,” Meini pointed out as he explained the main findings of the report published this year by the EU’s Expert Group for Financing Circular Economy of which he is a member. The aspects of the circular economy of interest to the world of finance are several, ranging from de-risking to a focussing on innovation and greater sustainability in terms of environmental and social impact. If financing of the circular economy is to really gather momentum, Meini stressed, existing barriers must be removed, including a system of norms and incentives that have taken root over the years and foster a linear approach, a reluctance to in-sector collaboration, hesitation on the part of many large businesses to become first movers in a still-shifting context. Financing the circular economy means “beginning to take into account the risk factors involved in linear models in the current context, seeing innovation as potential, acquiring knowledge in new spheres and developing more quantitative specific financial instruments.” Meini continued: “To this end, the issue of taxonomy and metrics is pivotal: it helps clearly define what the circular economy is in the world of finance and also how it is measured and the relationship between circularity and, for example, finance conditions.”

Lastly, the circular model applied to urban contexts was the central focus of the Circular Cities conference organised by Legambiente and the Kyoto Club in Palermo on November 29, which was also attended by Fernanda Panvini, our Head of Environmental Associations. The event provided an opportunity to represent the Group’s vision of the city of tomorrow, also laid out in our position paper. It is a place, explained Meini, in which circular business models, new technologies, open governance and a holistic approach to all urban environments are taken full advantage of in order to achieve the goals of economic, development, environmental sustainability and social inclusion. An approach that puts the needs of people first in order to transform our big cities into human-sized urban spaces.

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