UK-based Ellen McArthur Foundation recently published a white paper in collaboration with Milan-based Bocconi University and Italian international banking group Intesa Sanpaolo that showcases new evidence demonstrating how circular economy strategies can de-risk investments and drive superior risk-adjusted returns for investors and financial institutions.
The university’s analysis of over 200 European, publicly listed companies across 14 industries shows that the higher the circularity of a company, the lower its risk of defaulting on debt, and the higher the risk-adjusted returns on its stock.
The paper reveals how circular economy strategies can reduce investment risk by decoupling economic growth from resource consumption, diversifying business models, and allowing businesses to better anticipate stricter regulation and changing customer preferences, the foundation said in a release.
Embedding circular economy principles also reduces exposure to supply chain disruptions and volatility of resource prices, the analysis showed.
The circular economy is increasingly recognized by the financial sector as a value creation opportunity that delivers on goals related to climate and other global challenges
Recognizing the circular economy as an innovative and strategic challenge, Intesa Sanpaolo has embedded circular economy in the group’s business planning since 2018. In this paper, Intesa Sanpaolo, with expertise provided by Intesa Sanpaolo Innovation Centre, offers a case study on how financial institutions can seize the circular economy opportunity.
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