The circular economy, Europe and Italy’s future

Published on Monday, 7 September 2020

It is possible to guarantee long-term sustainable growth, thanks to the circular economy and the economic, social and environmental benefits associated with the transition towards that development model.

This is confirmed by “Circular Europe. How to Successfully Manage the Transition from Linear World to a Circular One,” a report presented on September 5th at Forum The European House - Ambrosetti, in Cernobbio. The report offers a very broad-ranging analysis of the level of circularity in the 27 EU nations and the United Kingdom with a focus on Italy, Spain and Romania, and is the work of the Enel Foundation and The European House – Ambrosetti, the think tank that has been organising the annual conference at Villa D’Este on Lake Como for almost half a century.

According to the study, on which both Enel and Enel X also collaborated, in 2018, the circular economy was worth 300-380 billion euros in GDP in Europe and provided an extra 2.5 million jobs. In Italy the figure stands at between 27 and 29 billion euros (1-2% of GDP) with around 200,000 extra jobs created.

It is also estimated that the circular economy resulted in significant benefits to productivity at work - around 560-590 euros per worker per year in Italy – and a positive impact on investment to the tune of 90-110 billion in the EU27+UK, 8-9 billion of which was in Italy.

This confirms once again that the circular approach is an extraordinary opportunity not only for the environment but also to make Europe more competitive and create jobs through sustainable, long-term growth.

Nonetheless, circular economy development isn’t homogenous and many EU countries do not yet have a national strategic roadmap to incorporate the European directives into a practical plan. This could also turn the circular economy into a driver of the transition “that views the circular paradigm as a revolutionary factor and not just an environmental issue,” as the study confirms.

The first ever Circular Economy Scoreboard was also created to measure the penetration level of the circular economy. This introduces 32 identical metrics and 20 main indicators for all the EU states and the UK regarding the circular economy’s 4 pillars: sustainable input (use of energy from renewables and materials that are renewable, recyclable and biodegradable), end of life (the reuse, regeneration and recycling of goods, products and materials at end of life), extension of useful life (the ability to increase the useful life of a product or its components compared to the average), increasing intensity of use (increase the use of an individual product, for instance, through product-as-a-service or sharing services models).

Italy is in the best performer group in terms of the end of life pillar and is in the medium-high group for both sustainable input and extension of useful life. It still has some room for improvement in terms of increasing intensity of use of products and services, however. “The circular economy is an opportunity to boost businesses’ competitivity – commented our Chairman Michele Crisostomo who spoke at the Forum – A business like ours with a very large supply chain can become a cultural driver in terms of passing on these new development models.”

“Italy was able to turn its relative lack of natural resources into one of its strengths and is now one of the world leaders in the manufacturing sector in terms of the efficiency with which it uses resources,” explains Enel CEO and General Manager Francesco Starace in the preface. “This report confirms how well positioned Italy is in terms of ‘sustainable inputs’ and ‘end of life,’ which highlights further opportunities to be embraced, such as, for example, ‘increasing intensity of use’ through making services more widespread in the context of the sharing economy.”

“The lack of clarity about what it means to be circular and the consequent lack of tools capable of measuring and monitoring the circular economy have been two of the main obstacles in the way of the circular transition. This study, however, allows us to move towards a clear vision and strategy with measurable goals,” adds Enel X CEO Francesco Venturini.

The analysis of the level of circularity in EU countries was supplemented with a survey of sentiment among 300 European business leaders: almost all (95%, 90% of SMEs) felt that the circular economy is a strategic priority and a useful tool for achieving a competitive advantage for diversification, broadening the market or cost reduction. Nonetheless, most of the business leaders also felt that their own country is not yet ready to tackle the challenge of the circular economy. That said, 62% of Italian business leaders held that belief, compared to a European average of 75%.

In an effort to improve this perception and turn the trend around, the report does not stop at analysis but also establishes 10 areas of intervention, with specific actions to accelerate the transition from the linear to circular model. This is a guide or manual of sorts that will ensure this opportunity is not missed out on. That is because, according to Valerio De Molli, Managing Partner & CEO at The European House – Ambrosetti, “the circular economy ticks all the boxes to become a catalyst for the common good and around which we can develop a truly great vision for the Europe of the future."

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