Circular economy: the key role of finance

“We are proud to be a partner of the Ellen MacArthur Foundation, driving the conversation to scale finance globally for the advancement of the circular economy.”- Carlo Messina, CEO Intesa Sanpaolo

The Ellen MacArthur Foundation’s Annual Summit is the world’s leading circular economy event, bringing together leaders and innovators. Intesa Sanpaolo is a Global Strategic Partner of the Foundation.

On the occasion of the 2020 Summit (9-10 September), the Ellen MacArthur Foundation launched position paper Financing the Circular Economy - Capturing the Opportunity, outlining why finance is vital to enabling businesses and governments, speeding up and scaling the transition to a circular economy.

The paper’s key points are:

• The circular economy is crucial to deliver on climate change and other ESG issues, while going far beyond as a source of growth and long-term value creation
• With companies and governments increasingly adopting its principles, the circular economy is fast emerging globally
• The market for financing the circular economy is taking off rapidly, with early examples demonstrating the opportunity across asset classes and economic sectors
• Now is the moment for the financial services sector to capitalize on this new growth opportunity, and, along with public and blended finance, help bring forward the transition to the circular economy.
  

Intesa Sanpaolo has for many years been actively working to promote and finance the circular economy, including contributing through the Foundation's network of global thought leaders on circular economy issues.

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The circular economy is crucial to deliver on climate change and other ESG issues, while going far beyond as a source of growth and long-term value creation

In the last two years, climate change and environmental, social and governance (ESG) issues are increasingly recognized as an investment risk and thus are key issues for the financial sector.

The ability of companies to respond to climate change is becoming an important competitive factor. This is why Intesa Sanpaolo created a €5 billion credit facility dedicated to the circular economy – in close partnership with the Ellen MacArthur Foundation – to support SMEs and corporates with innovative and transformational projects that incorporate the principles of the circular economy and tracks relevant targets and progress towards KPIs (e.g. plastic recycling targets). Intesa Sanpaolo also supports its customers through loans and investments dedicated to circular economy. 

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With companies and governments increasingly adopting its principles, the circular economy is fast emerging globally

Megatrends linked to climate change, resource scarcity and rapid urbanization are showing that the take-make-waste model is increasingly uneconomical for consumers, producers and the environment. The continuous increase in global emissions has intensified the search for solutions that reduce energy consumption, food waste and an understanding of the advantages and challenges posed by the cities of the future.

Intesa Sanpaolo is committed in supporting R&D and innovation activities in the Smart Mobility sector and open innovation with initiatives such as "circularity goes digital" dedicated to the development of "design out waste & pollution", "supply chain optimization" and "products & materials life extension" products and processes.

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The market for financing the circular economy is taking off rapidly, with early examples demonstrating the opportunity across asset classes and economic sectors

The past three years have seen significant growth in capital market activity related to the circular economy. Tthe number of equity funds investing in the circular economy grew from one in 2018 to eight by mid-2020, including funds by some of the largest global asset managers, including BlackRock and Goldman Sachs.

Intesa Sanpaolo promotes the transition to a circular production model with loans such the one signed with Pirelli and its “Sustainability Loan” which represents a new credit solution dedicated to SMEs.

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Now is the moment for the financial services sector to capitalize on this new growth opportunity, and, along with public and blended finance, help bring forward the transition to the circular economy

An early track record of circular economy financing is driven by pioneering institutions. In June 2017, Intesa Sanpaolo became the first Italian bank to issue a Green Bond, raising €500 million to finance renewable energy and energy efficiency projects. Green Bond proceeds financed 75 projects and brought annual savings of more than 353,000 tons of CO2 emissions (equivalent to the annual emissions of approximately 66,000 inhabitants).

In addition, in 2018 Eurizon (the Intesa Sanpaolo Group’s asset management company) became the first Italian asset manager to launch a specialized fund focused on international bond markets to finance environmental projects, through its Absolute Green Bond Fund.

Also in 2018, Intesa Sanpaolo established the Circular Economy Lab in partnership with Fondazione Cariplo. The Lab’s aim is to create value for the Group’s client companies by developing circular research and innovation programs.