A plea to use responsible and regenerative economic models to break the cycle of infinite growth and the misuse of resources deemed "free".

Today, two billion people are members of the global middle class and we are consuming the resources of 1.7 planets. At this rate of consumption, how can we possibly meet the needs of the extra three billion consumers who will join the middle class by 2020? The biosphere will surely not withstand this increase in such a short space of time. According to Matthieu Leroy, until recently IKEA's Sustainability Manager, we have reached the peak of the curve not only for the consumption of oil, but also for sugar, red meat, consumer goods – and furniture. Our carbon emissions are increasing at an exponential rate, but the same applies to toxic emissions jeopardising the water and air and to the earth's deteriorating biosphere. And although the supply of resources is dwindling, only 7% of waste is recycled and injected back into the economy.

Why is this? Because we remain faithful to the linear economic system based on infinite growth, at the expense of the resources of the earth's surface. The consequence of this is that very soon, we will be faced with a considerable risk of shortages of raw materials as well as volatility and increasing prices, for example.

So "extract, produce and discard" should be consigned to history as soon as possible. Scientists say that if we do not drastically alter the factors behind our carbon emissions and use of resources in the next three to five years, climatic phenomena and mass extinctions of species will spiral out of control. To hasten progress towards the new economy, a new EU law is under discussion that would aim to oblige companies to retain ownership of the materials they use to produce their products, selling only the service linked to their use. But our pragmatic neighbours in the Netherlands have pushed ahead: there, 50% of purchases made by state services must be circular by 2030.

Let's switch as soon as we can

Innovation is certainly gaining ground on our old habits: examples include "light as a service" for retailers, whereby you only pay for the light you use and not the actual lights, contracts for the use of tyres on demand, and office photocopiers that are easily disassembled and only available under leasing agreements. Initial experiences of circularity show that the concept produces greater benefits in the medium term than simple sales. But at this stage of designing environmental strategies in the majority of companies, the focus mainly falls on a marginal reduction of negative impacts.

 "This won't be enough", declares Matthieu Leroy. "We cannot continue to increase well-being and to grow if we do not firstly consume better, but also consume less." Though Leroy's former employer IKEA is active in recycling, his passion for the circular model led him to go further and establish STRATA.

His company provides furniture for hire rather than sale, catering for the niche market of landlords who offer accommodation to students or expatriates. "When a table has served its purpose or has gone out of fashion, it is typically discarded as a whole. The same applies to an item of child's furniture that in under two years is no longer useful", continues Leroy. He advocates an entirely new approach that involves a fundamental review of the way we create value, and no longer regards customers as consumers of products but as users of services.

Frentlife is another young Belgian firm illustrating the same furniture hire concept. When the furniture is no longer useful it is either collected and replaced or given to charity.

Several years ago, Amsterdam's Schiphol Airport signed a contract with its provider to receive light "as a service": the provider retains ownership of everything up to the bulbs which it is responsible for installing and replacing, so that the airport always has sufficient light. Costs are lower for the airport, and Philips considerably increases its profit margin while also establishing a long-term customer relationship and drastically reducing the effect on the environment. What could be better than that?

The message is circular

The circular economy aspires to be a model that repairs and regenerates, that abolishes the very idea of the lifespan and replaces it with the goal of reusing for the longest possible period, repairing and recycling. It allows action in various domains, some of which are preferred by companies. One example is the use of non-toxic biological materials (such as biomass and wood) that harmlessly re-enter the biosphere, eliminating any type of waste. Technical components could, once optimised, be reintegrated into a new manufacturing process.

It will also be necessary to design and shape our products for the future in order to extend the lifespan of everything we make. Product-service systems, assisted by technology and market places that connect supply and demand, are another phenomenon increasingly breaking the link between the financial growth of companies and the use of resources. The owners of the Uber and Airbnb platforms have no resources of their own since they rely on what their members have to offer. Alas, a philosophy that remains strongly capitalistic means they have not entirely left behind the linear world, and their wider social effects remain significant.

Other forerunners have taken up the idea of turning waste produced by another firm into resources for use. So some of the 9,500 products appearing in the IKEA catalogue are made from cardboard and plastic waste produced by its own stores. For more examples and details of the five circular economy business models, read the article Progress towards the circular economy. In addition to these, Matthieu Leroy's advice is to explore a variety of areas for action.

Gone too: capturing value and keeping it for yourself

This approach is undoubtedly more disruptive and still rarely used. However, companies are beginning to link up to create value jointly, doing so more quickly than they would if working alone. Solar Impulse is among the first incarnations of this quest for common value and its capacity to speed up the transition. Sharing developments in this way promotes faster learning by the engineers of the parties involved. The Solar Impulse Foundation brings together Solvay, the Lausanne Ecole Polytechnique, Google and others, who are creating the solar aeroplane and will then share the benefits – both tangible and intangible. Value can sometimes be purely intangible, for example media exposure given to the project partners. This makes it no less advantageous to the parties involved.

Models which are 100% responsible

For Matthieu Leroy, a genuine transformation requires innovative models, including a complete mapping of the positive and negative effects of the activity in order to take into account all "externalities".

 "Externalities – such as the generation of large quantities of waste or the carbon impact of extraction, production, use or premature shortening of product lifespans – are not on the whole considered when a conventional business model is established. They just need to be taken into account when businesses are designed. It's not that difficult to do but it's key", he explains. Since he continues to own his furniture, Leroy has every interest in designing modular pieces that last as long as possible and can be assembled or disassembled quickly and easily.

And this is the only way to reduce costs in a circular system. Operating in this way means the manufacturer optimises their model: revenue is more predictable thanks to regular income throughout the lifespans of their products, which are lengthened considerably for the benefit of everyone. Rental also proves cheaper for users, since the object is reintegrated into the circuit in a way that saves energy, materials and labour and produces positive social and environmental externalities. 

As a bonus, users becomes less reliant on commodities and their cost. "For example, by renting a piece of furniture to 10 different customers rather than selling it to just one, you can double your growth more easily while also divorcing it from your resource needs. In this way, you can seriously limit your negative impact. The CEO of Philips says this is very profitable in the medium term and I take his word for it!" Leroy adds.

A recently commissioned survey by BNP Paribas Fortis on mobility found that this remains a major challenge for the coming years. The bank is determined to play its part.

A survey among 2,000 people, and representative of the Belgian population, on mobility shows that the switch to electric driving is slowing. Almost 80% of those surveyed still drive a diesel or petrol vehicle, and more than a third of them have no intention of trading in their cars for a more environmentally friendly model any time soon. And yet almost 50% want to be driving electric by 2029. But before that switch, some hurdles first need to be cleared. According to two-thirds of respondents, the bank needs to take a proactive role in the transition to sustainable mobility.

• Only 10% of cars on the streets today are electric, hybrid or run on hydrogen. Users of these vehicles confirm they are very satisfied. Though most have their own charging station, public charging stations are a bottleneck.
• While fighting climate change remains the main argument for switching, changing mobility habits isn’t so easy. The switch to electric is slow, and more incentives are needed, such as new tax measures, and above all, a commitment from the government. Prices also need to come down. It is clear that the practical issues of driving and charging times mean people hesitate to make the switch.
• As a result, enthusiasm about new mobility initiatives is rather muted. Although, especially in big cities, an app that combines mobility options has good chances of success.
• Mobility and work are strongly linked. One in three people spend at least an hour a day travelling to/from work. It turns out that teleworking is a solution for only 50% of the people, and that the other half of the population don’t have the opportunity to work from home.
• More awareness needs to be created around new mobility. Not everyone is familiar with shared cars, bikes and charging stations yet.

Mobility partner

BNP Paribas Fortis is determined to contribute to more sustainable mobility and be a mobility partner for both professional and private customers. We are doing this by informing audiences of all the advantages of an environmentally friendly switch. And also by offering support through financing, insurance and leasing. Our goal is to provide a global response to tomorrow's mobility needs through innovative services.

More and more people are cycling to work. Mobility solutions expert Philippe Kahn explains how and why.

People are changing the way they travel to limit their environmental impact: behaviours are starting to shift, and the use of bicycles is rising, including and especially for travelling to and from work. We spoke to Philippe Kahn, Mobility Solutions Expert at Arval BNP Paribas Group, about these developments. 

Two out of three Belgians use soft mobility, mainly bicycles

According to Profacts’ “Mobility Tomorrow & Beyond” survey, two out of three Belgians have adopted soft mobility. "But the biggest change is the increasing use of bicycles for business travel and commuting. People are also using bicycles more on the school or nursery run, facilitated by the arrival of electric cargo bikes on the market," says Kahn.

A favourable regulatory framework

But what are the reasons for the increased use of bicycles for business travel?  “Let’s first take a look at how the regulatory framework has changed," says Kahn. "In Belgium, the creation of the federal mobility budget has made alternative ways of travelling attractive for all employees. The budget makes it possible to choose a comfortable company bicycle as part of a tax-friendly salary package. Moreover, this mobility budget can even be used to cover housing costs if you work from home more than half the time or if you live within 10 km of your place of work. So instead of having a company car, people can choose to have a combination of an electric bicycle and a contribution to their housing costs. Furthermore, two measures effective from 1 May 2023 should reinforce this trend: the bicycle allowance for commuting is increasing to €0.27 net per km travelled, and all Belgian employees will be entitled to this allowance. In practical terms, this means that those who choose to cycle for these journeys will be substantially rewarded.”

Investment in public infrastructure is paying off

Another important factor in the increased use of bicycles is the development of road infrastructure.

Philippe Kahn: "One factor that can convince people to cycle to work is the certainty of a safe journey. A few years ago, cycling to work in Brussels, for example, could be dangerous. But today, cycling infrastructure is making these journeys increasingly safe, in particular thanks to the cycle motorways on which only bicycles can travel. Infrastructure investments are now also happening in the rest of Belgium, not just Flanders and its major cities. In recent years, Brussels has undergone significant changes, and things are also starting to move in Wallonia.”

Half of all Belgians live within 15 km of their place of work

Distance from the workplace is also crucial in determining how attractive cycling is. "One in two Belgians lives within 15 km of their workplace, a distance that you can easily cycle," adds Kahn. "Along with the Improved infrastructure, this means that cycling to work is a realistic option for many Belgians. And the €0.27 per kilometre allowance will be an added incentive for them to make the change.”

78% of leased company bicycles are electric

To meet the needs of companies and their staff, Arval is now offering bicycle leasing. This full-service lease covers maintenance, breakdown assistance, insurance and repairs, as is traditionally the case for a car. Philippe Kahn points out some very significant trends in this area: "60% e-bikes and 18% speed pedelecs: in total, 78% of our leased company bikes are electric.

High-end bicycles costing several thousand euros, such as electric cargo bikes, are also highly successful, which is probably due to opportunity: the mobility budget or employer “cafeteria plan” benefits packages are making it possible for people to acquire these bikes. But it may also be a consequence of Belgium’s specific tax regulations: the more expensive the bicycle, the more significant the tax incentive. Another interesting observation is that when a  bicycle replaces a car, it’s usually the family’s second car. So we’re not yet seeing any radical replacement of cars by bicycles, but the emergence of the company bicycle is definitely reducing the total number of kilometres travelled by car.”

Digital applications: shifting up a gear

Lastly, Kahn points to another factor that could encourage more people to take up cycling to work. "I think that technology, and in particular digital applications, can make a big difference. We can expect strong growth in the market for apps dedicated to commuting by bike. The business model for on-the-go electric bike rental is already based on a smartphone app. So imagine the success of an application that gives you a safe and bicycle-friendly route for travelling to and from work, and the boost that this could give to this type of travel," concludes Kahn.

Producing biogas through fermentation of agricultural waste? That is exactly what they do at Biomethane du Bois d'Arnelle, Belgium's largest production facility in Hainaut.

You can spot the three large grey domes and a cone-shaped roof from a distance in the countryside around Frasnes-lez-Gosselies. This is a biogas production unit. It took its creator and CEO, Jérôme Breton, 12 years to complete this project due to the lack of a legal and administrative framework. But today, the unit is operational, producing 70,000 MWh of energy.

Turning food waste into biomethane

"We recycle food waste and agricultural materials, livestock manure, straw, beet leaves, peelings, etc. from farmers in a 15-km radius around the site", says Jérôme Breton. "We work with 100 farmers for whom this represents additional income. In digesters, i.e., concrete tanks that are heated to 40°C, bacteria digest the material and produce biogas, consisting of 45% CO₂ and 55% CH₄ methane. We recover this biomethane through filtration, before injecting it into the natural gas distribution network. Fermented matter or digestate, a black liquid that is rich in organic matter, which is very nutritious for crops, is spread as a fertiliser in the surrounding region, where it is used to permanently store CO₂ in the soil and completely replaces chemical fertilisers."

Unrivalled performance

About 15% of the biogas is converted into electricity and heat, half of which is used for the unit’s own needs. The remaining 85% is purified and transformed into biomethane. Once it has been injected into the grid, this biomethane can be used as fuel or as a raw material for petrochemicals. It can also be used to power turbines, and the heat generated can be recovered, just like in a car engine. “While a cogeneration engine, which produces electricity and heat simultaneously, has a total efficiency of between 40 and 80%, our system allows 99.5% of the biogas produced to be injected into the grid”, the young entrepreneur explains. "The pressure varies in a distribution network. That way, the infrastructure can absorb injections without the need for additional investments to store them."

Growing to valorise

The company also grows maize, beets and cereals to valorise them as biogas: "We made a deliberate choice to grow 600 hectares of energy crops to offer farmers a complementary diversification pathway. This accounts for 30% of our raw materials. These crops are stored to allow us to 'smooth' the inflows into our digesters, which depend on agricultural and food activity, on a seasonal basis."

BNP Paribas Fortis, the only bank with such advanced skills

Jérôme Breton says the project would not have been possible without the support of BNP Paribas Fortis. "We would not have gotten funding if it wasn't for the work of their expert. It is the only bank to have such high-level skills in-house. All the other partners also benefited from the analyses and information that he provided to us! A strong, lasting relationship of trust has developed as a result. In my model, I didn't want to rely on public financing for what I do. At the same time, I wanted to produce at the right prices. We produce and sell our biomethane at 100 euros per megawatt hour, while market prices were close to 350 euros last August."

Entrepreneurial success

At BNP Paribas Fortis, we are particularly proud to be supporting passionate, inspiring entrepreneurs. Because building the entrepreneurship of the future together is also an example of Positive Banking!

Elessent EMEIA is on a mission to make the chemical industry more environmentally friendly and sustainable through innovative methods and cleaner production processes.

"We strive to create cleaner, carbon-free production processes for our customers. Innovation is at the heart of what we do", says Sara Alvarez, Finance Manager at Elessent EMEAI. "We suggest less polluting alternatives to traditional industrial methods, allowing our customers to continue to develop products that are essential to our daily lives while significantly minimising their impact on the environment, particularly in terms of pollutants and CO₂ emissions."

4 key technologies

The metals, fertiliser, chemical and refinery industries make up the majority of the company’s customers, with Elessent EMEAI able to deliver complete turnkey production sites. Tjaart Van Der Walt, Director of Elessent EMEAI: "We have four flagship technologies. The first concerns the manufacture of a compound that is widely used in industry, from fertiliser manufacturers to pigment plants, namely sulphuric acid. This is obtained by burning sulphur. We have 90 years of expertise in site design – we have delivered more than a thousand sites – and process and energy recovery. These processes will be key to producing cleaner batteries."

Increased quality and yield

The company also has alkylation technologies (a reaction that is commonly used in organic chemistry) which is used to produce high octane fuels, for more efficient engines. These compounds are valuable for the petrochemical and refinery industries. "We operate at more than 100 alkylation sites around the world", continues Van Der Walt. "And 25 hydrocarbon hydrotreating sites. This is a crucial step in the refining process, during which some elements are removed from the oil. This includes reducing sulphur and nitrogen content to improve stability. Our proprietary soft hydrocracking technology allows us to recover more value from crude oil."

In addition to these processes, which optimise the quality and yield of hydrocarbons, the company also has “wet scrubbing” technologies, which are very effective in fume treatment.

Financial support and real industry expertise

"Our business is growing on a global scale. For our international expansion, we need the constant support of our bank, BNP Paribas Fortis, which, in addition to assisting us with the financial aspects, contributes its in-depth expertise in our industry", Sara Alvarez explains. "This cooperation is crucial in Morocco, Tunisia, India and South Africa, for example. For our long-term investments in these countries, we benefit from our bank’s advice, particularly in terms of resources and guarantees of payment: secured transactions, letters of credit, etc. The same goes for hedging currency risk, which is essential in the context of volatility. This partnership allows us to continue our international expansion."

Entrepreneurial success

At BNP Paribas Fortis, we are particularly proud to be supporting passionate, inspiring entrepreneurs. Because building the entrepreneurship of the future together is also an example of Positive Banking!