In relation to energy transition, we want to take a closer look at Enel's new KPI, in which its economic performance is weighed against its overall consumption of resources. Let's have a look at the new challenges and commitments involved in calculating the circularity index.
The circularity index, or circularity rate, is an initiative established by the European Union to monitor the circular economy and gauge the volume of natural resources used by a company, how much comes from recycled waste materials, and to what extent they have managed to avoid the extraction of virgin raw materials.
The study of the circularity index is also analysed in a very detailed way depending on the sector; metallic or non-metallic minerals, biomass, ores, etc. can all be studied. In the case of Enel's KPI, analysing its circularity index focused on the comparison of its economic performance with its overall resource usage. Enel has set a target of doubling its indexes by 2030 in order to become a market leader in energy transition. It's an ambitious goal, but the company's leaders are convinced that, with the help of its partners, the government, and society as a whole, they can achieve it.
Enel's vision for doubling its rates by 2030 is, essentially, to avoid consuming raw materials, and instead to use them in such a way as to ensure they are available for future production cycles and future generations. Part of this approach stems from the growing global demand for raw materials and from the realization that they are likely to be in short supply in the future and could even disappear altogether.
Enel, in line with the accounting performance indicator of a company's profitability or EBITDA, is estimating its consumption of resources, such as fuels or raw materials, in each of its departments. It aims to halve these amounts by 2030, acting responsibly and evaluating resources in order to maximize its commitment to sustainability as a market leader.
Another of Enel's objectives with this new KPI is to become a circular business model (according to information provided by Ernesto Ciorra, Enel's Chief Innovability Officer at the World Economic Forum in Davos) through initiatives with the so-called Circular Procurement. The aim of this initiative is to involve suppliers so that they too can be involved in these environmental care strategies, because, without their collaboration, the transition to a circular economy will not be effective.
It is understandable that the targets set in the new KPI are projected for 2030, because we have to take into account that Enel has more than 8,000 suppliers around the world. Again, this is an ambitious task, but one that, if achieved, will engage many companies around the world.
The final aspect that will help Enel meet its goals will be the implementation of the circularity metrics developed for customers. This is a tool that allows entrepreneurs to reshape their businesses with a view to achieving sustainability, thanks to the advice of circular economy experts who are willing to work as guides on an ongoing basis. The consultancy services offered by Enel to its customers are endorsed by the University of Sant'Anna and the RINA company, which is regarded as an authority in the field of circular economy studies.
The circular economy seeks to extend the useful life of products or raw materials as much as possible. This is a model that addresses two important areas - consumption and production - which is why it is imperative to reuse, renew, and share, always working in teams with customers and suppliers to ensure that the entire work chain is committed to the environment. Whereas in the past companies were only in charge of making products and disposing of the waste, our planet's current situation now requires us to produce and recycle, and, as we have already said, such a task will not be possible if customers, countries and suppliers don't join the cause.
In 2023, Enel undoubtedly delivered the most eagerly awaited business news for green activists, and the most remarkable news for its competitors, by being the first company in the world to launch a circularity index. Clearly, this is an ambitious and challenging goal, but it is not impossible. In fact, its ambitions will create healthy competition in the market and inspire other companies to follow suit. We are already on the verge of a cleaner and more sustainable future, and we will closely monitor the changes and contributions made in the run-up to 2030.