Circular economy: paving the way for a more sustainable future

The circular economy will be key to implementing net zero. How can corporates reinvent their business to forge the models of the future?


The circular economy balances extraction, usage and consumption of finite resources. This entails adapting economic activity to usage, managing supply chains, embracing reuse and recycling, prolonging life of goods, to build long-term resilience and a sustainable future. Corporates are reacting, reinventing their business models.   

At the recent BNP Paribas-hosted ESG Expert Forum, we heard from experts in the building materials and food retail sectors, as well as an investor viewpoint from Cassa Depositi e Prestiti, how they are addressing the challenges and opportunities in the transition to a more circular economy. In a discussion moderated by award-winning filmmaker and sustainability partner of BNP Paribas, Craig Leeson (A Plastic Ocean and The Last Glaciers), experts raised the questions of how we decarbonise, introduce energy efficiency and move towards a circular economy. 

Building a sustainable future 

The building materials and construction sectors are responsible for approximately 40% of CO2 emissions annually, with the majority coming from the buildings’ energy use for lighting, heating and air conditioning. This means that the materials used in both construction and renovation can play a crucial role in enhancing energy efficiency to reduce the environmental footprint. According to Fabienne Grall, Director of Corporate Social Responsibility and Foundation at Saint-Gobain, adopting a circular economy mindset is key to decarbonising the industry. For Saint-Gobain, this translates into a commitment to optimise its resource use and eliminate non-recyclable raw materials to promote a business model that is respectful of natural resources and biodiversity. 

Transforming the way buildings are designed and built will be vital in the new net-zero circular economy. The French construction group is leading the innovation by reducing the dependence on virgin raw materials in all products, decreasing the resource intensity of solutions, and working with suppliers and stakeholders to develop sustainable manufacturing and value chains across its footprint.  Initiatives include fostering net-zero carbon construction, developing eco-designed glass, new low-carbon formulations replacing cement and sand in concrete, and developing lighter-weight constructions.  

As part of its sustainability-linked financing framework, Saint-Gobain has set its sights on an ambitious goal – zero non-recovered waste. This comprises one of the four key performance indicators (KPIs) set in this framework, contributing to United Nations Sustainable Development Goals 6, 12 and 13, and to the EU environmental objective “Transition to a Circular Economy”. 

“The circular economy is crucial for our sector and a key priority for us, so we are evolving our products and solutions. This year we hit a major milestone – the launch of our first net-zero Scope 1 and 2 production of glass. This means a shift right across the value chain, evolving our network to make sure that glass is collected and then directed to the right treatment process, recycling to a high level to create new raw materials” explained Fabienne Grall. 

BNP Paribas provided a sustainability-linked five-year loan for Saint-Gobain in 2022, the first financing of its kind for the group. 

Households at the core 

With 85% of the 220 million residential dwellings across Europe dating from before 2000, Saint-Gobain has made renovation a major lever for achieving its 2050 goals and the group’s CEO Benoit Bazin has called for a “Marshall plan” to accelerate renovation across residential, office and administrative buildings. With the EU energy efficiency directive requiring all Member States to reduce their energy consumption and new restrictions on renting out homes that do not meet energy efficiency standards in France, Bazin called on authorities and banks to take a more comprehensive approach. He advocates a full programme of measures on insulation, heating sources and windows, reducing buildings’ carbon footprint, cutting back costs for households and improving energy independence.  

The recent energy crisis fuelled greater realisation of the importance of insulation in reducing households’ energy use. Involvement from all stakeholders across the construction value chain will be pivotal in this respect, according to Fabienne Grall. Artisans will have a key role to play in explaining the value of insulation and energy-efficient materials, guiding households in their choices: “Craftsmen are vital in fuelling our progress towards a circular economy – they can explain the benefits to the end customer. It is important to attract talent to the building sector and train these future generations of artisans in new methods so they can help accelerate the transition to a sustainable construction model.”  

Food retail groups play a crucial role 

The global food system accounts for around 30% of greenhouse gas emissions worldwide. The food retail industry has a particular role to play in the transition to net zero. As a European-based food retail group with a strong footprint in the US, Ahold-Delhaize is tackling the sector’s challenges head-on.  

The group has rolled out ambitious food waste reduction targets across its own operations. A founding member of the 10x20x30 Food Loss and Waste Initiative, it has already achieved a 33% reduction in food waste since 2016 and pledged to a series of sustainability performance targets.  

Harm-Jan Pietersen, Director of ESG Strategy and Engagement at Ahold-Delhaize explained: “At Ahold-Delhaize, our approach focuses on two priorities – healthier people and a healthier planet. To achieve our ambitions we take a traditional reduce, reuse, recycle approach, supported with a series of ambitious plastic packaging and food waste reduction targets. This means reducing waste as much as possible, for example through discount programmes and dry misting technology at our shelves to extend the shelf life of fruit and vegetables. Our brands donate as much as possible food to food banks to ensure food is still consumed by people. If that is not possible we follow the food hierarchy from the Food Loss and Waste protocol which includes animal feed, industrial use, composting and incineration/landfill. ” 

BNP Paribas acted as joint bookrunner for a series of bond issues by Ahold-Delhaize, including its inaugural SLB with a KPI to reduce food waste by 32% in 2025 from a 2016 baseline. Its recent €500m inaugural green EUR senior unsecured 5-year bond reinforced the continued alignment of the company’s funding strategy to its sustainability strategy.  

Supporting small- and medium-sized businesses 

In November 2021 Cassa Depositi e Prestiti, the Italian National Promotional Institution, announced a new strategic plan to support the relaunch of the Italian economy with initiatives focused on local areas and enterprises with significant economic, social and environmental impact, while introducing ESG as a key component in their investment and funding criteria. Small and medium-sized enterprises are crucial to the Italian economy. Comprising c.80% of the Italian industrial and service labour force, smaller firms will require support from both the public and private sectors to stage their transition, comply with sustainability targets and ensure their operations remain relevant for the future. As of 2022, Cassa Depositi e Prestiti provided more than €120 billion of loans, and invested more than €27 billion in equity. Going forward, with its new mission “to play a decisive role in the growth and sustainable development of Italy”, it has committed to invest €65 billion alongside an equivalent amount from third parties over the 2022-24 period.  

Fabio Massoli, CFO of Cassa Depositi e Prestiti, explains: “Small and medium-sized enterprises form the backbone of the Italian economy, so while large corporations have already embarked on their ESG journey towards a circular economy, smaller companies will need support in managing their supply – this is where we come in. Within its mission to promote Italy’s sustainable development, Cassa Depositi e Prestiti can play a pivotal role in driving the circular economy, while attracting additional capital from third parties and co-financiers and engaging all stakeholders in this movement.” 

BNP Paribas acted as lead structurer and sole arranger for Cassa Depositi e Prestiti’s inaugural repo transaction linked to sustainability targets. The Bank has also acted for Cassa Depositi e Prestiti in other issuances, notably its latest sustainability bond issue