By promoting “green consumption” through business models based on the recovery and reconditioning of end-of-life products, the circular economy reduces the use of non-renewable resources and the production of waste.
The circular economy, an essential component of sustainable finance, is based on a simple idea: instead of extracting, manufacturing, consuming and then throwing away - the linear economy - we should now think in terms of “R”: recycle, reuse, reduce. What does this mean in concrete terms? Favouring recycled materials, preferring recondited articles to new purchases, acquiring the use of an item rather than the item itself, ensuring waste reduction... By placing product life cycles at the at the core of our approaches to reducing the use of limited natural resources, it is possible to make tangible progress towards the ecological transition.
In recent years, the circular economy has appeared in official texts. It is the twelfth of the 17 UN Sustainable Development Goals (SDGs) (“Responsible Consumption and Production”) and is also supported by an increasing number of public policies. Countries such as China or Japan have included circular economy in their national development goals; the United States passed the “Save Our Seas 2.0” law in December 2020... In March 2020, the European Commission adopted the “Circular Economy Action Plan”, which is defined as follows: “The new Circular Economy Action Plan shows the way forward to a climate-neutral and competitive economy in which consumers have a voice.” This was followed in July by the UK and its Circular Economy Package.
France drew up its roadmap for the circular economy in 2018, before enacting a law on the fight against waste, and about circular economy in February 2020. Among its targets: to create 300,000 jobs, to generalise the recycling of plastics with an aim for 100% by 2025, and to achieve a 60% repair rate for electrical and electronic products within five years.
More and more citizens are now keen to take the step from consumers to actors. In the face of climate change and global epidemics such as Covid-19, mobilisation - particularly among young people - is growing, and calls on both public and private decision-makers to assume their responsibilities. The least virtuous companies from an environmental or societal point of view (according to ESG criteria) may already be experiencing a loss of financial value, whereas funds with a sustainable label seem to perform more stably in a crisis. Civil society is thus a major driving force in the implementation of the circular economy, such as the Ellen MacArthur Foundation. Since its launch in 2010, this influential think tank and initiative platform has been carrying out extensive work on the circular economy.
Initiatives to change the current consumption model are flourishing, including in the banking sector. As part of its partnership with Ulule - France’s leading crowdfunding platform - BNP Paribas is supporting SoGood, the first French magazine dedicated exclusively to impact. It addresses the major issues facing society and in particular the theme of the circular economy.
A special edition of SoGood details the circular economy initiatives of some BNP Paribas business lines.
All sectors, from industry to agri-food or textile groups, and including the banking sector through its financing capacity, are directly concerned. Within BNP Paribas’ business lines, the desire to have a positive impact on the environment is reflected in innovative and complementary offers: financing or leasing of equipment, support for social entrepreneurs, investment and financial products, etc.
“The BNP Paribas Group aims to finance a carbon-neutral economy by 2050, to contribute to the preservation of biodiversity and to achieve the United Nations’ SDGs. To achieve this, the massive and rapid development of the circular economy is crucial.”
For individuals, the issue is different: in addition to the environmental aspect, the circular economy can also promote financial inclusion, by making products that would not necessarily be accessible to everyone. BNP Paribas Personal Finance has therefore included the theme in its strategic plan, in order to consider the opportunities that the circular economy could offer for consumer credit. One of BNP Paribas Personal Finance’s first projects along these lines is the game console rental partnership with Micromania-Zing and BNP Paribas Cardif, which allows individuals to rent sought-after consoles, which are then brought back and reconditioned at the end of the contract.
The shift from an economy of ownership to an economy of use therefore allows owners of capital goods to extend the useful life of goods and to be implicated in their re-use or recycling. By refurbishing and reselling 97% of its technology equipment at the end of a contract, BNP Paribas 3 Step IT enables its corporate clients to reduce their carbon footprint by 36% and thus provides a complete and sustainable solution for managing IT assets without waste.
Similarly, the partnership signed in May 2021 between the insurer BNP Paribas Cardif and Back Market, the first marketplace dedicated to reconditioned products, is driven by the same objective to reduce waste. Launched in several European countries with insurtech bolttech, this offer makes it possible to insure reconditioned mobile phones, tablets and laptops, to encourage an eco-responsible approach.
In the real estate sector, the subject is also crucial. Reuse Booster is the largest circular economy initiative on construction sites. Each participant - including BNP Paribas Real Estate - undertakes to massively reuse materials from demolished buildings that do not need to be transformed (floors, windows, doors) for its real estate projects. In Frankfurt, the BNP Paribas Group’s real estate subsidiary is building the Senckenberg Tower in recycled aluminium, saving over 2,600 tonnes of CO2. And for its future head office, Métal57 in Boulogne, it turned to heritage reconversion, which makes it possible to build on an existing structure (here a former Renault workshop).
The same approach was taken by the insurer BNP Paribas Cardif (on behalf of SCI Cardimmo), which decided in March 2021 to entrust OGIC with the conversion of 6,400 sqm of office space into housing, thereby extending the building’s sustainability while reducing its ecological footprint.
At the heart of the support that the banking sector can provide to the circular economy are of course financial products. BNP Paribas Wealth Management has made the circular economy one of its five investment themes for 2022; as a precursor, in May 2019, BNP Paribas Asset Management launched an ETF index-linked fund dedicated to circular economy, which now has €578 million in assets under management: a great success for this first circular economy ETF in the world.
In 2021, BNP Paribas also contributed towards reducing food waste by participating in emitting SLBs (sustainability linked bonds) for two actors in the food distribution sector: the European group Ahold Delhaize and Tesco, the UK supermarket chain.
BNP Paribas also supports, with its own funds, numerous companies active in the field of the circular economy. The BNP Paribas Solar Impulse Venture Fund, launched in May 2021 with the Solar Impulse Foundation (created by Bertrand Piccard), is managed by BNP Paribas Agility Capital. To accelerate the development and scaling up of high-potential start-ups committed to the ecological transition and in particular the circular economy, this fund will initially invest €150 million, half of which will come from BNP Paribas.
Another of the Group’s commitments is to support social entrepreneurship, which is crucial for the social and solidarity economy and is inseparable from the circular economy. In France, the dedicated “Act For Impact” scheme was launched in 2014. BNP Paribas is also providing €23 million to seven winners selected by ADEME and the Ministry of the Economy, Finance and Recovery to develop new social impact contracts for circular economy.
“It's a bold gamble led by the Ademe to address the challenges of the circular economy through impact contracts! Some remarkable, innovative projects will grow thanks to this pioneering initiative. They will help fight against food waste (Linkee and Andes) or provide a response to unfilled needs for medical equipment at solidarity prices (Envie Autonomy). We are delighted to be part of the adventure and to support the creation of contracts with an environmental impact!”
Photo credits: Philippe Marchand, fotostudiocolor24, Joshua Resnick
