Investors believe in circularity. And they have many good reasons (not just ethical) for doing so. In conversation with Massimiano Tellini, Global Head - Circular Economy of Intesa SanPaolo Innovation Center

Talking to Massimiano Tellini is like opening a window on a future that should already be present, and in part fortunately is. Economist by training, corporate banker by profession, Tellini is the Global Head - Circular Economy at the Intesa Sanpaolo Innovation Center, a Group company that works on the frontier of innovation and supports the business units of the bank to accelerate the development of Italian companies active in circular economy. The right man, therefore, to understand how much, how and why finance has decided to focus on the circular economy, offering new opportunities (also) to design. Or, better, to re-design, and to those who work to re-design the world in a sustainable way thanks to innovation.

What is the circular economy for a professional who chooses which projects to support while looking at sustainability?

A strategic choice for future-proof competitiveness.

Since 2015,  Intesa Sanpaolo, the first bank in the world, has been a Strategic Partner of the Fondazione Ellen MacArthur, the main and most authoritative international player dedicated to spreading and accelerating the transition to the circular economy.

So for us CircularEconomy is that system defined by the Foundation in which the creation of value is disconnected from the exploitation of exhaustible natural resources. In which, for example, renewable energies or resources are used for processes, new reusable materials are designed and produced, innovative and digital technologies are adopted to optimize the consumption of resources in production cycles, also enhancing waste, and reverse logistics programs are created for recover products from the market, regenerate them and put them back on the market.

Circular economy and market competitiveness. Is there a connection?

As a bank, we support companies that work in this direction by imagining and building a different future today, which invest in innovation and training, because it is essential to build new skills and disseminate them in the company at various levels. CircularEconomy therefore, it is not so much collecting yet another green certification that certifies a cut in CO2 emissions (although still important of course), but rather a real change of cultural paradigm that leads to generating value by emancipating the business from the generation of significant negative externalities, also a harbinger of financial problems. Sustainability is a tool, not the goal. In fact, the goal is to help companies remain competitive in the long term with a lower risk profile, not simply be (more) green.

What does design have to do with this vision?

In the words of Ellen MacArthur, rejection is nothing more than a design problem! There are 160 million active individuals around the world, according to research by IDEO, who in some way make design, and all of them can and must be engaged in redesigning the world, overturning the still prevailing paradigms.

Let's talk about resources and investments: how much is the world of finance putting on the plate for the circular economy?

First of all, we at Intesa Sanpaolo have made 5 billion euros available. Of these, 1.2 have already been disbursed in the form of subsidized loans to Italian and international companies active in the direction of circularity. The € 750 million Sustainability Bond focused on the EC and placed on the market in November 2019 received 4 times as much demand from investors.

At the beginning of this journey, we asked ourselves what sense it had to be one of the most sustainable banks in the world, included in all the main sustainability indexes, and to work with customers who were not. Today our 2018-21 business plan has circularity as a real pillar: we want to become the first impact bank in the world and the commitment in the EC is part of this strategy.

The more customers we will be able to accompany in a switch to a circular system, the closer this transition can be to being systemic. But luckily it's not just us. To measure the attractiveness of the circular economy, just think that in October 2019 BlackRock, the largest global asset management company, was added as the new Strategic Partner of the Ellen MacArthur Foundation. This means that it is finance itself that wants to become circular by supporting those who adopt circularity. I would not forget some important data: since 2016 the number of funds investing in circularity has grown tenfold, from private equity to venture capital. And in the first eight months of 2020, there was an increase from $ 0.3 billion to $ 2 billion in the value of assets managed by the public equity funds that have bet on this world.

The Italian system and the Italian government are also doing their part, providing for example 5 billion and 200 million of the recovery fund for the circular economy, imagining, among other things, a dedicated national hub and a series of territorial districts.

So can the pandemic crisis be and is it already an opportunity to attract financial resources in the circular economy?

The shock generated by the health emergency represented a very strong accelerator of a transition that was already underway. The crisis is pushing to radically rethink the classic linear production model, based on the exploitation of resources-generation of waste. Just as in his small way every human being has had to rethink coexistence with others, a new relationship with space and technology, in the same way companies have pushed on a reflection that had already started.

Circular’ start-ups are born every day: how can we make sure that more than a support for single virtuous cases, a systemic supply chain is developed that is able to make a difference more than single cases that remain, however, fundamental?

First of all, by facilitating open innovation paths and strengthening systemic thinking. Some circular supply chain models in Italy already exist. I am thinking, for example, of Gucci (Gucci Circular Lines) which required an effort at the level of the entire project and production chain, from fashion designers to suppliers. The effort must be, from the outset, to design and design so that the product, once used, returns to the company to be recovered, disassembled, reconditioned’.

I also like to mention the virtuous case of Renault which since 2015 in a plant on the outskirts of Paris has been regenerating the engines of used cars by reducing energy and water consumption. And, more recently, the idea of ​​Dutch architects Thomas Rau and Sabine Oberhuber who conceived the Turntoo model: the product becomes a service, the good is used by the consumer, but remaining the property of the manufacturer, who will therefore have an interest in guaranteeing its maximum durability and to reuse the materials used to manufacture it. Exactly the opposite of what happens with current smartphones, destined to be thrown away if a piece is broken.

Is there already a date beyond which we will either do business in a circular way or will we stay out of the loop?

We support the acceleration of the transition, which must be guided, not endured. Clearly, no one has a crystal ball, even if there is already a watershed moment by convention: 2030 is the year by which we will have had to achieve a series of objectives at the national level, not just at European level. But a strong sign of change is these days: the release of the Exxon stock from the DowJones index after almost a century of permanence.

Cover photo: Sovrappensiero's art direction project for Rampinelli Edizioni, furniture brand of Rampinelli, company in the metalworking manufacturing sector since 1913. Ph. Stefania Zanetti; styling Sarah Richiuso.