The bank for a changing world

The circular economy: emphasis on environment

  • 26.09.2016

The circular economy turns the waste of some into the raw materials of others. Taking its inspiration from nature, it is a virtuous cycle that aims to prevent the depletion of natural resources, reduce energy consumption, and fight climate change. In the circular economy, we all have a role to play.

When the economy goes in circles…

Traditionally, most economic systems throughout the world have been based on a linear system, which moves in one direction. It goes something like this: 

  • Extract raw materials

  • Discard waste

  • Consume products

  • Process goods

The circular economy suggests a decidedly more virtuous alternative route: it introduces a new life cycle, which does not end by simply tossing used items in the trash. Instead, it incorporates an optimized use of goods, including reuse or recycling.

Though we may think of the circular economy as a new concept, its basic principles have been around for centuries. Antoine Lavoisier, considered the father of modern chemistry, observed how natural ecosystems endlessly recombine elements. In his 1789 Elementary Treatise on Chemistry, he stated, “Nothing is lost, nothing is created, everything is transformed.” The circular economy takes inspiration from this idea, where wastes produced by one process become a resource for another.

Beyond altering product life cycles, the circular economy also helps reinvent human relationships, work methods and financing means. In fact, it often goes hand in hand with concepts like social entrepreneurship, crowdfunding, microcredits and more. And in BNP Paribas, the circular economy has found a committed partner.  

The  4 R's of the circular economy

In concrete terms, the circular economy relies on the following tenets:

  •  Reducing consumption of raw materials when designing products

  • Reusing or Recycling used products, for a “looped” use of a portion of materials – in a broad sense, as the circular economy intends to “complete the life cycle” of products, services, waste, materials, water and energy
  • Repairing goods whenever possible, instead of replacing them

Together with reuse and recycling, the circular economy also promotes new ways of consuming. This is notably demonstrated through collaborative consumption. Examples include car sharing, buying used items from peers, and group purchases. These actions represent new behaviors springing up around the circular economy, as well as the sharing economy.

The circular economy can indeed take many different forms. BNP Paribas is working hard to circulate, promote and support new ideas and concepts, particularly through the Atelier BNP Paribas studio and occasional projects such as ‘Wave.’

Writing the circular economy into law

Thanks to the French energy transition law promoting green growth, the circular economy has now achieved a certain legal status. The law comprises several different measures – which gradually came into effect in recent months – aiming to reduce consumption of resources and waste. Of great note are the ban on non-biodegradable plastic bags and the legalization of donations of unsold food items to charity organizations.

The related consumption law – which requires retailers to announce how long they will carry replacement parts for a given device – helps reduce planned obsolescence and encourages consumers to repair their devices. 

Everyone on board!

Implementing a circular economy can only come about if everyone involved is on board: 

Consumers are invited to sort and recycle their waste. That effort has proved essential: in Europe, 80% of manufactured goods end up in landfills within six months! In 2012, the World Bank projected a 70% rise in the volume of urban waste by 2025.
Individuals can also take part in the sharing economy: trading or sharing goods reduces consumption, thus using fewer natural resources.

  • Distributors can fight against waste and get involved in recycling (by collecting old products as they are replaced) by favoring eco-design products.
  • Manufacturers should aim to apply eco-design principles and conceive new processes to use more recycled materials.
  • Service sector players, like banks, can also get involved, even though they do not work with raw materials or produce material goods. Banks can notably finance circular economy initiatives and support innovation – which BNP Paribas does through numerous dedicated programs.

Each company in this sector can change the way it operates to reduce its consumption of paper or energy, by favoring recycled supplies and equipment.

  • Farmers can use their wastes and by-products to produce energy through methanation. This is a solution that is being adopted worldwide, from Germany to India and the United States to Brazil, on such a wide scale that global biogas production is set to rise 7.6% every year from 2012 to 2025, when it will reach 130,321 GWh. 

BNP Paribas: contributing to the circular economy

BNP Paribas supports the transition towards a circular economy in three ways: 

  • The Group finances the leaders within the circular economy, notably by funding businesses that offer disruptive models connected to the circular economy, such as Blablacar. Additionally, BNP Paribas’s Innovation Hub in France aims to support the development of pioneering startups (e.g., Terradona, which developed an innovative model to encourage people to improve the way they sort their trash; and Alpha Recycling, which collects and processes used tires). 
  • The Group develops the functional economy through leasing, BNP Paribas Leasing Solutions enables businesses to lease assets like professional equipment, vehicles and IT equipment. A fully owned subsidiary of BNP Paribas, Arval markets dedicated solutions to professional customers, SMEs and major international groups to help them optimize their employee mobility and outsource risks tied to fleet management. The business models offered by Arval and Leasing Solutions belong to the functional economy, since they provide a service by means of an asset, instead of simply providing the asset itself. 
  • BNP Paribas sets an example through its own operation. The Group endeavors to reduce its material inputs, notably paper. In fact, it largely exceeded its target for 2015 of reducing paper use by 15% per employee compared with its 2012 level. Group-wide, its activities in 2015 generated 175 kg of waste per employee. 44.9% of the tonnage was later recycled, compared with 38.9% of waste in 2014.