ITALIAN BANK MAKES FIRST INTERNATIONAL CIRCULAR ECONOMY INVESTMENT
– WITH THAMES WATER -
I was very interested to read of Intesa Sanpaolo making the first international circular economy investment in deal — with Thames Water.
The Italian banking group agreed a £175 million (€200 million) finance agreement with the British utility, the UK’s largest water and wastewater company. Thames Water is one of the first to use the banking group’s €5 billion fund dedicated to developing the circular economy.
This is big thinking, it is enlightened thinking, and has won solid financial backing. It is a huge step in the right direction.
Thames Water will be incentivised to meet targets based around adopting circular economy principles which, if met, will unlock improved finance terms. So there is a bigger investment here from the Italian banking group — a group willing to forfeit a percentage of profit to back better ecological performance.
The transaction was led by the London Hub of Intesa Sanpaolo’s corporate and investment banking division and structured by Banca IMI.
The banking group has a circular economy team within its Innovation Centre. As its name suggests it is focused on innovation and promoting the circular economy.
This Italian bank has publicly expressed its global commitment to environmental improvements — and it is leading by example. It has a place on the Dow Jones Sustainability Index Europe and Dow Jones Sustainability Index World, which are among the most important global stock exchange sustainability indices.
Since 2015, the bank has been the sole financial services global partner of the Ellen MacArthur Foundation, the leading organisation promoting the circular economy.
The Ellen MacArthur Foundation exists to encourage looking beyond the current take-make-waste extractive industrial model.
The Foundation stresses that a circular economy aims to redefine growth, focusing on positive society-wide benefits. It entails gradually decoupling economic activity from the consumption of finite resources and designing waste out of the system. Underpinned by a transition to renewable energy sources, the circular model builds economic, natural, and social capital. It is based on three principles:
- Design out waste and pollution
- Keep products and materials in use
- Regenerate natural systems
The circular economy is a new economic model aimed at separating business growth from reliance on using an ever-increasing amount of finite natural resources; instead, the focus is on redesigning the industrial system to prioritise sustainability, reuse and recycling.
The head of Intesa Sanpaolo’s corporate investment banking division and chief executive officer of Banca IMI, Mauro Micillo, noted that his division was providing financing that goes beyond just the economic dimension. Instead the agreement foresees regular checks based on circular economy metrics, linking these indicators to certain economic incentives that can improve the loan conditions.
This thinking is significant. It ties financial results firmly to sustainability ones.
Thames Water is the UK’s largest water and wastewater company, supplying around one quarter of the population of England and Wales. Each day, it supplies 2.7 billion litres of drinking water to 9 million people and removes 4.4 billion litres of wastewater from the homes of 15 million people, through a network of 109,000km of pipes and sewers.
To both parties I offer my congratulations and admiration.
