“Definitely has potential”: top financial professionals curiosity is piqued by new economic concept at KPMG Luxembourg and EcoInnovation Cluster workshop
On 9 October 2014, KPMG Luxembourg and the EcoInnovation Cluster held a workshop to gauge interest in a new economic concept, the Circular Economy, and explore how this innovative model could bring significant gains for the financial sector.
The concept challenges companies to put materials and design at the heart of their business model, so as to create products and services allowing for easy disassembly of parts or recovery of materials at the end of the product lifecycle. Materials can then be re-used or re-sold, creating huge potential for cost efficiencies with value retained for longer.
KPMG Luxembourg Partner Patrick Wies commented:
"This smarter means of production and consumption is especially important at a time when competition for materials is growing. Countries rich in raw materials – notably China and other Asian countries – are consuming more and more of the materials they produce and supplying less. When Europe can no longer find the materials it needs on the market – a real possibility in the future – recovering materials will become a necessity. The objective of our workshops was to get the financial sector on board as their involvement is crucial."
Circular economy business models are often held back by a lack of access to finance. Luxembourg, as a financial center, may be well positioned to fill this rising need. A representative from EPEA International, a European agency involved in researching the concept, cited Luxembourg’s “agility, multiculturalism, location and drive” as key advantages, in addition to existing initiatives that could “act as a springboard.”
Initial reactions from the Luxembourg financial representatives present at the workshop appeared to be positive. Shiva Dustdar, Head of Research, Development and Innovation Advisory at the European Investment Bank, commented:
"We would be interested in exploring how the EIB Group’s current existing financing instruments could support the circular economy, in particular the recently launched InnovFin financial products under Horizon 2020 to finance investment in innovation."
Yves Cacclin, Head of Structured Finance and Corporate Financial Engineering for Société Générale Bank & Trust joined Dustdar in expressing his interest in the concept:
"It definitely has potential and we can support our customers who want to move in this direction. To consider it as a market, however, there would need to be standardization. The move can come from Luxembourg, but there should also be an international dimension."
Romain Poulles, President of the Luxembourg EcoInnovation Cluster, was delighted with the outcome of the workshop:
"Representatives from both the banking and fund sectors showed a genuine interest in the concept, giving constructive feedback and sharing tangible ideas on how best to move forward. The positive reaction has further increased our commitment to continuing along this path."
The Luxembourg government has already confirmed their intention to support the development of a circular economy in the coalition program. The EcoInnovation Cluster will take the lead in rolling out the concept in Luxembourg and has sought the support of KPMG to connect with the financial sector. Further workshops and conferences will follow next year to further explore the subject and set out a roadmap for implementation.