‘Tomorrow, it is up to Europe to decide what a sustainable product is for us, otherwise we will not win this battle’

Interview with Pierre-Emmanuel Saint Esprit, Circular Economy Director at Manutan Group

While it seems to be everywhere in the media and gets everyone to agree (and has for a long time), the circular economy still represents only 7% of the global economy. Where does the problem come from then? Is our goal to get to 100%, should we go through new models of innovation and entrepreneurship or, more pragmatically, seek to transform all businesses? We were able to discuss this with the man who says he is passionate about the circular economy, Pierre-Emmanuel Saint-Esprit. The founder of Zack, whose spearhead is the fight against the waste of electronic products in B2C and B2B, was able to resell the service Collection & Revalorisation to public authorities and companies to the Manutan Group in March 2022. An uncompromising interview!

Pierre-Emmanuel, you seem to be on all fronts to make the circular economy a living concept. Can you explain how? 

I am convinced that one of the ways to write a new narrative that is both social, and economic and takes ecology into account, is to put the circular economy forward which is wholly underestimated. It goes through several actions. There is of course the entrepreneurial way with Zack but also the education and evangelization of politics and the general public. At the beginning of the adventure, I had a lot of trouble educating myself on the circular economy. Training is clearly key to enabling business transformation. This pushed me to create the Circular Economy chair at ESSEC (supported by L’Oréal, Bouygues, and EssilorLuxottica) to train future managers who will work on the change of the current models. 

With Zack, we started from the fact that 54 million electronic waste is produced annually worldwide. We launched 2 models to fight against the waste of electronic products. On the B2C side, we launched the purchase of high-value-added electronics. As for the B2B part, the idea was to become the service that guarantees a second life to all electronic products of companies and public authorities. It is this part that attracted the Manutan Group, this 50-year-old ETI, the leader in B2B distribution in 17 countries in Europe.

I am now in charge of defining the first vision and strategy of the circular economy for the group. My main missions are to: 

• reference everything we do in terms of the circular economy ; 

• write a group vision ; 

• and then to create the next circular economy product or service projects to ensure that Manutan's model is gradually transformed to have an increasingly virtuous model and to reduce the carbon footprint on natural resources.

Finally, the association #EC2027 - a five-year period for the circular economy initially launched during the 2022 presidential election. It brings together companies and people committed to the subject so that there is more and more circular economy in the political and public debate. We are therefore the entrepreneurial, field and totally non-partisan and above all cross-sectoral interlocutor of the circular economy 2.0. This is the only one that transforms all businesses and does not only tackle recycling. During the presidential elections, we had a great debate with the candidates' representatives on their measures, we also noted their programs, etc. The goal is to improve their perception of the subject. We are currently working on the "green industry" bill but also on measures around the extended responsibilities of the producer. We are also the interlocutor on all the subjects of the European Commission.

How is circularity defined? 

We can base ourselves on the definition made by the Ellen Mac Arthur association. Its advantage: it is completely anchored in entrepreneurship. From the design phase, we must eliminate waste and pollution. Secondly, think upstream of everything that can improve the second life of products and resources, so think carefully about the materials used. The third pillar is the result of the first two. With this, we must manage to regenerate the natural ecosystem. It is quite rooted and objective. 

But beyond the definition, there is a need to popularize and demystify something that is seen as very expert. In concrete terms, what is the circular economy? It is to manage responsibly as well as natural resources as we can manage our money. 

Today, economic models are based on waste because natural resources were supposedly unlimited. On the other hand, at the end of the year, if you lose money, you will redirect your investments, cut unnecessary expenses, etc. The idea is to have exactly the same reasoning on resources and thus on CO2 emissions because 45% of these emissions are linked to the consumption of natural resources and production. 

Behind each project, whatever the business, we must ask ourselves if the ecosystem can regenerate itself or if we are going to consume natural resources that have been severely weakened. Are we going to be able to reprocess these natural resources at the end of their life or not? The circular economy is as basic as that. It's just not wasting what doesn't belong to us. 

Today, if we don't do natural resource planning at the European level, we will have a hard time ensuring what we ask people to do like buying electric cars for example. Consumers will not realize this until they are told: "we don't have any more". Awareness must be raised through simplification. In this respect, the anti-waste law works because it speaks to the greatest number.

What is the situation today? 

According to the Circularity Gap Report of the NGO Circle Economy, we have a circularity rate of 7%. It would be enough to double this rate to reach the objective of the Paris Agreement. This can be considered good news because we don't need to become 80% circular at the global economy level to reduce the 45% of CO2 linked to production and consumption. 

If we schematize, in a totally decarbonized world from an energy point of view and a world where we are at 20% of circularity, we are carbon-neutral. This is not unreachable.

Now, the circular economy is more in people's heads. Real strategies are being put in place in the economic fabric. There isn't a CAC 40 company that doesn't have someone in-house on the subject. Even if the levels of maturity are different, in any case, the subject has been addressed. 

The difficulty is that we are in a highly interdependent economic world where the models that work have been around for a very long time. Circular models have not yet proven themselves. A Back Market offers phones for less money but does not revolutionize the model. At scale, it is therefore very difficult to find role models. This will come, but the market dynamics are very long. If we are to have a market for second-hand furniture, manufacturers must get together to recover these products, repair them, recondition them, resell them, etc. This is the logical curve of innovation. We lose a lot of money at the beginning for little profitability until the mass market. All the models of renting, repairing, buying back to recondition, and reselling are models that, because they are not systemic, must be maintained. 

The last point is that we are so close to the wall that the circular model is the only one that will work from an economic point of view in a very short time. The first signal is the level of complexity of current supply chains. Each step relies on a bunch of natural resources that will disappear. The only alternative is to recover these resources that are already in circulation. It is not ecological to heat ourselves when we have no more oil, it is just that we have reached the planetary limits. 

We must get out of the short-term political view, we must have a planning of the resource organized through an authority, a state secretariat that manages these subjects. But this is a bankable subject from an electoral point of view…

Can regulations really help in this area? 

At the European regulatory level, there is a major evolution underway. The Green Deal contains a 'circular economy package' with an 'eco-design/eco-conception' directive that proposes lunar and revolutionary things for the European market. It is on this market that we must rely on because it is the only weapon that Europe has against the United States and China. The development of a 'product passport' in the European Union would make it possible to obtain a digital twin for each product with a lot of information on the origin of natural resources, the fact that the product has been reconditioned or not, etc. We would have total transparency to ensure that consumers can make their choice, and even block access to the European market for non-sustainable products. 

At the same time, the new CSRD (Corporate Sustainability Reporting Directive), which concerns all companies with more than 500 employees, requires that their supply chain be guaranteed total transparency on child labor, minorities, etc., but also on natural resources and respect for biodiversity. We are therefore moving towards a model where we are not on 'greenwashing is forbidden', we have 'any company that produces and wants to sell on the European market will have to be able to show its credentials or else no more business'. This has big consequences. 

We also have another revolution, more systemic for the moment. This is the subject of carbon accounting. Today, companies like Kering have a shadow annual report that shows their CO2 emissions. The day when sustainable methodologies like Care, which, at the end of the year, take into account the financial profit but also the CO2 emissions generated, we will have made significant progress. This will ensure that companies that are ultra-profitable but pollute to insane levels and are not covered by carbon quotas today, will no longer be profitable tomorrow and will have to lay off massively. At some point, the only thing that works is to make sure that unsustainable models are loss-making and vice versa. 

We also push, through the association, for the application of a sustainable VAT, i.e. a reduced VAT rate on sustainable products. The objective is to give back purchasing power to consumers and to promote this market. This involves a lot of work on measures but also on definitions: what defines a sustainable product from a non-sustainable product? 

So we are working, very concretely, on this type of measure capable of creating sustainable markets. It is also a geopolitical issue. If Europe manages to define and apply these kinds of new standards with the United States and China, we will win on the issue of sovereignty. Today, Amazon Business has just released a rating system on the sustainability of products sold on their site. Tomorrow, it is up to Europe to decide what a sustainable product is for us, otherwise, we will not win this battle. We will be dictated to what will have been adopted by consumers on the initiative of a company that can weigh more than a country. 

Basically, everything depends on regulation to move forward. 

Yes, but not just any regulation, but regulation that truly meets the needs of the field to create a responsible market and counteract unsustainable offerings. Regulation for regulation's sake is counterproductive. We are questioned every day about rules that make no sense and work against the team. We advocate for entrepreneurial regulation, which makes sense on the ground. There are sections of the law that discourage companies that do not have the means to comply.

And the industries, are they playing the game? 

Some may have models that are totally dependent on the linear economy. They know they have to move for reasons of natural resource criticality, regulation, consumer demands but also employee demands but the models that make money are linear models. So the shift doesn't happen as quickly. At Manutan, the management is completely convinced, but what makes almost a billion in turnover is the product sales activity. Today, the sale of so-called responsible products is almost 14% of the group's turnover, which is a very good start, but we can't say that we are stopping the remaining 80%+. 

Is the circular economy virtuous by nature? 

The circular economy is not good by nature, it is a framework that allows us to highlight things that were forgotten until today. Each project is specific. We have to be able to say the ecological impact, the economic impact, and the social impact. There is no project that is good because it is circular. Like any entrepreneur who starts out, he makes his business plan, and realizes the financing he needs to launch his company, it's the same for each circular economy project. We have to reason in the same way about natural resources as we do about the financial aspect.