The Circular Economy: A revolution in the making

At InspiringTrend, we are passionate about the Circular Economy, convinced that it presages a true economic and societal revolution.

The circular economy: An economic revolution ahead of us

In any movie, there are scenes that cannot not be missed if you don't want to lose the thread of the story. And just like that, the circular economy will force an aggiornamento of all professions that nobody will be able to ignore.

Why is this strategic?

Europe and European governments have made ecological transformation a major axis of economic recovery by defining a regulatory, fiscal and incentive framework. The European Commission has just published a taxonomy to define the activities that are to be included under the umbrella of green finance.

More and more companies such as Adidas, Henkel or Tarkett are already deeply engaged all of their sub-contractors in a complete reengineering of their value chains. Greater Paris and many other global metropolises are launching calls for projects to accelerate the deployment of circular economy solutions.

Contrary to what is often imagined, the challenge of the circular economy is not the recovery or elimination of waste at the end of the chain. The challenge of the circular economy is to preserve our stock of resources and only to do so, succeed in not creating any additional waste. The circular economy allows us to decouple economic growth and the depletion of natural resources that results from the linear economy.

With the circular economy, all industries will have to revisit their offers, their production processes and their performance criteria to take into account the extra-financial value it creates. The European Commission has estimated the annual financing need for the ecological transition at 240 billion euros.

It is therefore impossible to miss this extraordinary growth-driver.

Why do we need to get involved now?

About 500 reports (of which only 150 revolved around green finance) having been published on circular economy in recent years, showing us clearly how much there is left for us to do. We are at a tipping point where everything is accelerating.

Management companies such as Mirova and Banque Postale Asset Management are committed to having all their assets under management in socially responsible investment (SRI). Although the volume of green bond issuance has increased 100-fold between 2012 and 2019, green bonds represent only 1% of the assets under management worldwide, and 2.5% in Europe.

Developing a business that has positive effects on the environment and on human beings implies questioning the entire life cycle of a product, from design to production and consumption methods. It is a paradigm shift with a domino effect on the relationships between principals, subcontractors and service providers.

At the territorial level, the circular economy will require the implementation of new business ecosystems by securing profitable business models for all players, and by building complex financial packages involving public, local, national, and often, European funding.

The financial and legal functions will be at the heart of the action.

They will play a major role in the application of Environment-Social-Governance (ESG) criteria on investments, tax optimization linked to ecological bonus-malus and financial simulations linked to new business models. They should also contribute to the effective implementation of a new environmental accounting system and the emergence of new contractual schemes between companies in ecosystems yet to be invented.

Fabrice Lepeltier, Director at Grant Thornton and Laurent Hassid CEO at InspiringTrend

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