Why is circular economy one of the biggest trends affecting the future of real estate?

Reducing the carbon footprint has become a major climate change issue. Both regulatory and voluntary initiatives have been launched to raise awareness among investors and developers.

Almost 4 years ago, the Generali Group joined the Net Zero Asset Owner Alliance (NZAOA), an alliance promoted by the United Nations, which brings together insurers and pension funds, committed to “decarbonizing” their portfolios in order to achieve zero net greenhouse gas emissions by 2050.

The challenge is to work and evolve with different production and development methods in favor of reducing carbon emissions. This leverages on more environmentally friendly practices such as the circular economy and reuse of materials.

The concept of circular economy contrasts with the classic linear economy model of extracting raw materials and energy, producing and consuming goods, then throwing them away. In the construction sector, it is linked to the concept of sustainable development and environment savings. It is based on the following basic principles:

• Renovate to reduce raw material consumption and extend the life of the building
• Use organically sourced and/or reused materials
• Prioritize long-term carbon storage in the building through appropriate choice of materials
• Recycle waste to replenish raw material stores.

The positive impact of the circular economy is felt on environment, biodiversity and health. It also enables investors to develop an economic model that is beneficial both in terms of the cost of materials and the increasingly felt shortage of materials.

Generali Real Estate work with experts who conduct building resource assessments prior to the remediation phase and define materials that can be reused in situ or ex situ.

This commitment is fully supported by Generali Real Estate’s membership in the French Association Circolab , which aims to develop the circular economy in the real estate sector and in particular the reuse of construction products. It brings together a community of real estate players (contractors, companies, manufacturers, recyclers, etc.) committed in repairing, renovating, recycling and reusing building materials.

In 2021, CIRCOLAB developed a reuse label in France. The 100 Champs Elysée was presented as one of the 5 pilot projects and was labeled CIRCOLAB as part of its refurbishment plan.

Torsten Butz , Head of Sustainable Investing:

“Circular economy is one of the ‘youngest plants’ in the field of greening portfolios, but the seed is spread and looking at the DNSH criteria of the EU taxonomy, which are currently under definition, it is obvious it will grow.”

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