Bocconi University investigates finance and sustainability
A research by Bocconi University has found a positive relationship between circular economy practices and higher risk-adjusted returns in shares. Listen to the podcast.
“The higher the degree of real circularity, the lower the risk for investors”
Claudio Zara, Bocconi University
Intesa Sanpaolo has long been committed to the circular economy (CE) transition, as manifested by its distinctive partnership with the Ellen MacArthur foundation over the past six years and for the next three.
The bank aims to achieve carbon neutrality within its operations by 2030 and net zero emissions within its own business by 2050, and it is committed to contribute €90m towards a green transition between now and 2025.
But while commitment to change is crucial, the bank is also concerned with measuring the impact being made. How does it quantify the effects of transitioning to a circular economy on its goal to make progress from an economic, social and environmental perspective?
A study in close collaboration with Bocconi University aims to investigate the kind of impact the transition can have on the financial industry’s value-creation drivers. The research project aims to define the relationship between the circular economy and the financial industry, and to map out how finance is transforming along the lines of circular principles while providing a bridge for the transformation of other industries.
A team at Bocconi – led by Claudio Zara with the backing of Intesa Sanpaolo – has produced a report on the relationship with a dedicated focus on its de-risking effect. “The partnership with Intesa Sanpaolo Group and the Intesa Sanpaolo Innovation Center offers a lot of stimuli and an opportunity to share ideas and stay at the edge of this topic,” says Zara.
“At the same time, the partnership with the Ellen MacArthur Foundation offers us an international perspective, keeping in touch with an international network.”
The key findings deriving from the collaboration between Bocconi University, Intesa Sanpaolo Group and the EMF have been substantiated in a white paper, published jointly in the summer of 2021. One of the main findings is that implementing the circular economic paradigm can help reduce a company’s financial risk. “The higher the degree of real circularity, the lower the risk for investors,” says Zara.
Moreover, the research found that there is a positive relationship between circular economy business practices and higher risk-adjusted returns in shares. The team also found evidence that adopting CE business models can make the economy overall more resilient to external shocks.
“During the Covid-19 pandemic, companies that are more circular suffered lower negative aspects during the main window of the pandemic – and regained their original conditions more quickly in the post-pandemic window,”
Once, the idea was to see what finance could do to help the circular economy. Now, research is telling us that the relationship between the two is emerging as mutually beneficial: the circular economy is showing finance how it is a key lever for the industry to invest in and move forward into a more resilient future.
Last updated 10 August 2022