Circular economy and sustainable innovation: imperatives for the companies of the future

We all kn

ow the “Fridays for future”, initiatives that periodically gather people in several town squares worldwide with a defined goal: asking the government a more impactful effort against climate change, a more attentive economic policy toward the environment and the usage of natural resources, a drastic change for the future.

The changeover begins with everyday activities, it origins from citizens’ conscience, but, above all, it requires a transformation in global economy, through the transition from a linear model to a circular one. Adopting a circular approach means revising all production phases and paying attention to the entire supply chain involved in the productive cycle; in this regard, the industrial sector cannot be exempted from committing itself. Therefore, embarking on a path of sustainable development has become an increasingly pressing urgency.

As a result, the green economy, based on low (or zero) emission and circular usage of resources, represents a good opportunity for investors generating new financial activities and requalifying ongoing ones.

The Theory

Circular economy is a theoretic model of development which, beyond the economic benefit (GDP growth), takes into account the environmental impact, that is to say the potential damages inflicted to the environment by the processing of raw material, its transportation, transformation into energy or final product and its digestion.

This bioeconomic analysis offers as a solution new legislative, technological, educational measures able to reduce energy consumption, waste, natural resources and environmental damages. The solution promotes a more sustainable development process through the shift to renewable resources (e.g. biomasses, wind energy, solar and hydraulic power) and a deeper, radical recycling of any kind of industrial (and domestic) discard.

The Practice

Now the question is: are green and circular economies convenient for a company? The answer is yes. Sustainable economy is worth an investment, it stimulates innovation, opens the doors of more exigent and sensitive markets, enhances firm’s competitivity. Moreover, the pandemic and its backlash are forcing us to find alternative solutions to our crisis and to redraw our production-consumption mechanism.

Sustainable economy can be an answer not only to fight against economic recession, but also to favour employment: according to Eurostat, EU green economy has seen a 3.4% annual growth in the last decade, outperforming the overall economy (2.1%). In terms of green jobs, in 2017, top EU-27 green employers were France and Germany (both over 500.000), followed by Italy and Spain (both between 300.000 and 400.000). These numbers have been increasing in the last years among all EU countries: for instance, the Italian estimate is to reach almost 3 million of green jobs by 2030, that figure would count for the 13% of the whole national employment.

On the firm’s side, a report from the European Commission highlights that the activities related to eco-friendliness (eco-design, eco-innovation, prevention and reuse) can lead to net savings up to more than 600 billion for EU businesses; as a matter of fact, improvements in resource usage by 30% could increase GDP by 1%.

Differentiators of eco-friendly firms

The main common denominator among successful sustainable companies is their dynamism on foreign markets. Indeed, their vitality in terms of international presence and exchange is extremely higher than the one of the rest of production system. More specifically, looking at European manufacturing firms, in 2019, the ones who invested in circular economy had 32% more chances to experience an increase in export activities than their equivalent who did not trust the green emergence.

Furthermore, green companies are also the most innovative: 80% of them developed innovation activities, while only 43% of the less green ones. It is important to note that innovation is complemented by high technology: 26% of green companies adopted (or is adopting) hi-tech solutions and “industry 4.0” implementations for their daily operations, this figure is limited to 11% among the other enterprises.

Three virtuous examples of circular economy

1. Orange Fiber

Italy-based company which makes sustainable silk from citrus residues. Every year, Italy alone produces 700.000 tons of waste deriving from citruses’ processing and consumption; two young entrepreneurs decided to leverage the so-called “upcycling” (the process or reuse and conversion of waste materials) in order to obtain a resistant

and useful fiber for clothes. In less than 4 years of activity, the firm has reached remarkable results in terms of awareness and growth. In 2019, Orange Fiber collaborated with H&M for the “Conscious Exclusive”, an H&M project dedicated to sustainable and innovative materials. Now they are entering also the high end of the fashion industry and, by partnering with Salvatore Ferragamo, they launched the “Ferragamo Orange Fiber Collection”.

2.Ecoplasteam

How many times a tetra pack has caused difficulties when we had to do the separate waste collection? Where should we put it? In the paper section, or is it plastic? There is no univocal answer, different countries (or even cities of the some country) treat it differently. This ambiguity in the collection is reflected in the digestion phase also: most of the times tetra pack ends up in the incinerator plant. Ecoplasteam is a company that created the first European plant to recycle tetra pack and turn it into a particular plastic, called “Ecoallene”, which can be reused and recycled repeatedly (ideally infinite times). In Europe are produced 350.000 tons of tetra pack waste every year, the reason why it is so hard to recycle is due to the fact that it is composed by three different materials: cardboard, plastic and aluminium, and each of them requires a specific disposal process. The revolutionary intuition of Ecoplasteam makes it possible to recycle it all together and obtain a reusable material. The project won the European “Call for Ideas” competition, and it has been appreciated and funded by various investors.

3.Aquafil

According to a study of the United Nations, every year humans disperse 600.000 tons of fishing net, this representing 12% of all plastic waste on the sea floor. Aquafil is the main producer in the world of Econyl (eco-nylon), this nylon is not produced from petroleum, but from recycling waste material. Aquafil reuses fishing nets to make carpets, moquettes and technical clothing. The company has invested €140 million in the last 10 years to develop the technology to regenerate the nylon fiber. Nowadays, with more than 3000 employees and 16 plants across three continents, Aquafil is the ninth Nylon producer in the world.

Final Takeaway

Embracing circular economy and sustainable innovation is a courageous choice, but it is imperative.

“The initial phases of the conversation are not easy, they cost effort and money” explains Giulio Bonazzi, CEO of Aquafil, “at the beginning, products are more expensive than conventional ones, but once you build up competences and plants become efficient, economies of scale and competitiveness increase, and at that stage profit is a natural consequence”.

Changing is risky, but the entrepreneur who does not change, the one who does not understand that the world is inevitably shifting towards sustainable economy, is the one who risks the most.

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