Hypotheses
During the workshops, all 11 foresight files were presented to the members of the group, who were able to comment on them and add to them. Working from the material in the files, hypotheses on how the macro-variables might evolve were built collectively, distinguishing between:
- Trend-based hypotheses: which relate to dynamics already under way.
- Contrasting hypotheses: which take up uncertainties, controversies and the seeds of change.
- Disruptive hypotheses: which relate to disruptions.
Trend-based hypothesis (H1): Funding geared towards large groups through public bodies, with a shortfall in monitoring
European and French policies continue to encourage the shift to a circular economy through the award of multiple grants and loans to projects on waste management, materials recycling and so on. On the other hand, the criteria for awarding funding make it easier for large companies to access it, but tend to exclude smaller companies. Indeed, the high costs and risks of circular economy investment, as well as the degree of complexity of the procedures, limit access for small and medium-sized companies. Within this framework, circular economy investment remains largely monopolised by large companies. In addition, the funding offers proposed by the European Union and the French government lack centralisation and coordination.
At European level, European countries continue to have the freedom to adopt or not the European Union's directives on encouraging and funding investment in circular economy projects. For its part, the European Union does not specify the tools for measuring circularity or the impacts of investment. European countries less involved in circularity continue to be marginalised and almost excluded from circular economy funding. Once funding has been approved, both the European Union and the French government continue to lack mechanisms for monitoring and following up the beneficiary companies.
Investors consist mainly of public and private bodies, sometimes with joint funding. In terms of private investment, the role of investment advisers and portfolio managers remains marginal. The absence of tools for measuring circularity does not encourage these players to move beyond their short-term outlook and direct their investment towards circular economy projects that are longer and more uncertain. Even when they consider certain circular economy investments attractive, they do so on the basis of carbon alone as the unit for measuring climate risk.
Contrasting hypothesis (H2): Tighter funding, stronger monitoring and disengagement of private players
The criteria for awarding funding tighten for both large and small companies. European and French support becomes increasingly targeted. These funding offers benefit from good communication in order to help companies find the offer best suited to their needs. Companies that have received funding for their circular economy projects are subject to a high level of monitoring. The social and environmental criteria for measuring the impact of their projects are clearly defined and tracked.
At government level, within a bottom-up approach, France proposes to the European Union mechanisms for monitoring and following up the progress and impact of the projects that have received funding. The traceability of several components of the supply chain may, for example, be subject to checks.
On the financial market, private bodies disengage from circular economy projects given their lack of short-term performance, made visible by the measurement tools introduced. This leads to portfolio managers and investment advisers becoming aware of the advantages of long-term thinking and the costs of a short-term outlook. They also receive training in socially responsible investment and sustainable finance. The French State provides them with a clear methodology in order to steer their investment choices and decisions towards sustainability.
At European level, countries that are advanced in circularity, such as France and Germany, help less advanced European countries fund circular economy projects. Investment is directed towards a new unit for measuring climate risk, namely water quality.
Disruptive hypothesis (H3): Sustainable funding, a one-stop shop and increased support for SMEs
The European Union and the French State decide to rationalise investment. They thus reduce the funds granted for circular economy projects in the short term. Nevertheless, in the medium and long term, the funds become larger thanks to the circularity of investment as a self-reinforcing mechanism. The idea is to reinvest the gains obtained from earlier circular economy projects in new circular economy projects. In addition, crowdfunding develops as a mechanism for funding circular economy projects.
The criteria for accessing funding for circular economy projects become more demanding for large companies, given that the latter have the financial and human capital to invest in these projects. By contrast, access tends to become simpler for small companies thanks to a simplified-procedures platform, but also to the provision of support officers to help prepare the necessary documents. All funding offers for circular economy projects are centralised in a "one-stop shop". Companies that have received funding are monitored. The State actively supports small companies embarking on circularity projects in order to ensure their survival. Penalties are applied to companies that fail to comply with the social and environmental criteria of circularity.
At European level, the EU abandons the discretion associated with directives in favour of regulations that are mandatory and immediately applicable in the various member states.
Regarding the financial market, the French State effectively steers flows towards sustainability thanks to the proliferation of socially responsible investment labels. An overhaul of incentive systems targeting financial portfolio managers enables the assessment of long-term performance, with a specific focus on pension fund managers. The State grants licences to insurance companies dedicated to circular economy projects. As a result, the performance of circular economy projects is increasingly high, thereby attracting private investors.
European countries that are advanced in circularity develop financial institutions and mechanisms in non-European developing countries in order to address the challenges of the circular economy worldwide. Funding for investment in recycling and waste management systems is offered in these countries.