Status of Circular Economy in Italy and Italian fashion industry

By:Edmond Research and Development | 12/01/2024

The Circular Economy Report 2023, developed by the Energy&Strategy of the School of Management of the Polytechnic of Milan, photographs the strategies of Italian companies in the transition towards circular models.

The research is based on interviews and on the analysis and comparison of data based on a set of 10
statistical indicators and referring to the 5 thematic sections identified by the updated version of the
European Circular Economy Monitoring Framework.

Let's say straight away that Italy is among the nations with the highest performance among the main
European economies.
However, it is in second to last place for private investments in the Circular Economy as far as efficiency in waste management and recycling is ascertained. Italy has a high recycling rate compared to other European countries with 64%, of which 48% goes back into circulation (source Ispra), but this is only one of the factors and it is no longer enough.

Yet the circular economy pays: The savings obtained in Italy in the last year thanks to the adoption of
circular economy practices are 1 billion and 200 million euros, which raise the total to 15.6 billion, or just 15 % of the target of 103 set for 2030. There therefore remains a gap of almost 88 billion, which means tenfold the effort if we want to fill it.
Is the circular economy still a performance only for large companies? As stated in the study: the degree of adoption of at least one practice connected to circularity reaches almost 60% for large companies, but drops to 29% for small ones. Furthermore, especially for this type of business, the overall number of
"skeptics", i.e. those who do not intend to adopt the Circular Economy, has risen from 38% in 2022 to 47% in 2023.

Furthermore, for almost all companies, the circular economy is still in its infancy, with 70% of companies
declaring that they are still at initial levels, with an average rating of 2.06 on a scale of 1 to 5.
The discussion with operators - we read in the report - highlighted that the authorization process is an
extremely significant barrier to the adoption of circularity. There is the problem of timing and
regional/provincial disharmony, aspects that sometimes risk invalidating the implementation of virtuous
projects, such as the recovery of virgin wooden pallets for example.

And there is no shortage of "technical" problems relating to the classification of materials, which today
occurs by "sector", while it should be done by "nature" to make the creation of circular systems around
them truly possible. If the commitment of companies is focused on recycling, practices related to ecodesign have not yet entered into the system. The high investment costs necessary to support the projects and the instability of government choices in terms of regulations and incentives are then indicated. Other barriers that are particularly relevant in the cluster of large companies alone: the need for high quality inputs, the difficulty of managing a high number of partnerships and the high customization of products.
The investments seem inadequate: in more than half of the cases they are less than 50,000 euros: this
favors the return time (within the year for 41% of companies) but this happens because it concerns simple and non-structural interventions on processes and products. Italy is also second in Europe for the total number of patents relating to the circular economy and there are 210 circular startups that have raised 122.7 million euros in funding, but still a pittance if we consider the 2.4 billion gone in 2022 alone to the total number of Italian startups.

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