The benefits of a circular society

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Finance for Good 9/14/2022

The benefits of a circular society

ODDO BHF1 Minute

Christian Wondratsch, Senior Advisor Private Wealth Management at ODDO BHF, is a huge proponent of moving away from a throwaway society to a circular one. He believes with the right knowledge and motivation consumers can help to push this change.

 

1. Why does this topic have to be on the agenda of every company? Or to put it another way: Why is it worthwhile?

We need to move away from a throwaway society to an efficient, repeatable use of resources. In this way, the life cycle of a product can be redefined from linear to circular in order to achieve more output with less input and thus increase sustainability. This also benefits manufacturers via efficiency gains and improved profit margins. Circular Economy concepts rely on  innovation, which is always a driver of growth: Think of new product and process development and job creation. Customer loyalty increases : customers evolve from passive (in a linear economy) to active consumers. Finally, recycled products can be more valuable than new products, as consumers are willing to pay more for better environmental awareness. Example: the price development of new and recycled PET in comparison.

 

2. What are the biggest challenges?

Technology, processes, knowledge, and motivation are the core drivers! Technology and processes : Redesigning historic everyday products can be costly: components can lose value and properties after many cycles, and supply chain actors are not always flexible to change. Knowledge and motivation: standards and certification are lacking. Consumers need better education to increase demand for appropriate products – incentive schemes such as the bottle deposit system in Germany would do the cause good. Ultimately, there is also a need for more professional and qualified employees in the industry.

 

3. How would you convince people who are still critical of the topic?

The Circular Economy is nothing more than the extension of a product's life cycle, making it more sustainable and profitable for all stakeholders.

 

 

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Disclaimer

This document has been prepared by ODDO BHF for information purposes only. It does not create any obligations on the part of ODDO BHF. The opinions expressed in this document correspond to the market expectations of ODDO BHF at the time of publication. They may change according to market conditions and ODDO BHF cannot be held contractually responsible for them. Any references to single stocks have been included for illustrative purposes only. Before investing in any asset class, it is strongly recommended that potential investors make detailed enquiries about the risks to which these asset classes are exposed, in particular the risk of capital loss. 

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