Circular Economy: a lever for business competitiveness

These are some of the questions addressed in the new brief by the Sectoral Strategies and Impact Directorate, which examines the current state and prospects of the circular economy in Italy, highlighting the main economic and financial benefits for companies and the levers to maintain the current excellent positioning.

Read the study's key messages and download the document for all insights.

• Circular production and consumption models – which aim to preserve the value of materials and products for as long as possible, minimizing waste production – can contribute to more sustainable resource management and can reduce the risk of value chain disruptions.
• Italy managed to turn limited availability of natural resources into a strength and now stands out in Europe as one of the leading countries in the transition to a circular economy.
• In 2024, almost half of the Italian firms – especially large ones based in Northern Italy – have already adopted at least one circular economy practice. Recycling emerges as the predominant strategy, while solutions aimed at extending the use of products and components remain less widespread.
• Overall, the practices adopted by manufacturing firms have generated savings in production costs exceeding 16 billion euros, which represents only 15% of the theoretical potential estimated for 2030.
• In terms of economic and financial performance, circular companies have shown a greater ability to cover interest expenses with their earnings and acquire long-term assets using free cash flow. Generally, they also rely less on debt compared to traditional companies.
• In the last three years, circular firms have also shown a lower probability of default, even during periods marked by strong exogenous shocks related to raw materials.
• In terms of innovation, these companies reveal a higher potential, as they develop new technologies, processes, services and business models. Italy ranks second in Europe in terms of circular patent applications, more than half of which are filed by SMEs.
• Despite excellent levels of circularity, Italy is struggling to improve its performance, partly because of lower investment compared to other major European countries. This result is influenced by the recent unfavorable economic conditions, but also reflects the Italian entrepreneurial structure, mainly composed of small and micro-enterprises with limited investment capacity.
• Enhancing the driving force of SMEs for the transition to a circular economy is therefore crucial and will require:
  • better access to investments in machinery and technologies as well as in intangible assets;
  • sustainable finance to bridge investment gaps, an area in which National Promotional Banks and Institutions, as long-term investors, play a major role;
  • inclusion in ecosystems that allow collaboration and exchange of practices and knowledge.