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"To truly scale circularity in the built environment, we need a holistic approach—one that integrates material reuse, pricing, insurance, and legal frameworks. If we can align these elements and tie them to financial products like green mortgages, we can create real, bankable solutions that drive lasting change."
Circularity is becoming a critical lens through which businesses and investors are exploring opportunities to align profitability with sustainability. In this interview with James Hooton, we explore the motivations behind the Green Finance Institute's focus on circularity, his reflections on the Circular Buildings Coalition's Blueprint Projects (BPPs), and the potential of reclaimed materials markets. From promising solutions to key challenges and ideal business models, James Hooton offers valuable insights into how circular approaches can drive change in the financial and business landscape.
James has an impressive career spanning nearly two decades in finance, beginning with 17 years at Goldman Sachs where he gained deep expertise in capital markets, particularly derivatives and managing large hedge fund trades. His transition from this high-profile corporate role was driven by a desire to make a more meaningful impact, particularly in areas such as climate and community development.
After returning to the UK from Singapore, James worked as Finance and Operations Director for a drug and alcohol charity, which provided invaluable experience but took him away from his core finance skills. Seeking a role that combined impact with his financial expertise, James joined the Green Finance Institute almost four years ago.
At the Institute, he has been instrumental in expanding its work across Europe and beyond, including projects in Spain, Denmark, Brussels, the Philippines, Indonesia and soon Brazil. Funded by major philanthropic foundations such as Laudes Foundation, the Green Finance Institute addresses market barriers to deploying capital for decarbonisation in sectors such as the built environment, transport, nature and industry. James' work exemplifies the intersection of finance and sustainability, driving meaningful change on a global scale.
A: Circularity represents a new frontier for driving change in the financial landscape, particularly in the built environment. Historically, our focus has been on operational carbon, such as improving energy efficiency through initiatives such as the Coalition for the Energy Efficiency of Buildings (CEEB). While these efforts addressed challenges such as high upfront costs, long payback periods and limited risk sharing, circularity presents a different set of challenges and opportunities.
The transition to circularity involves addressing market barriers to material reuse, such as price competitiveness, de-risking strategies, insurance considerations, and legal or accounting frameworks. Unlike operational decarbonisation, circularity requires a broader approach to align business models and market incentives.
By addressing these interconnected issues, we aim to explore and support innovative solutions that enable the widespread adoption of circular practices. This holistic focus not only complements traditional decarbonisation strategies but also lays the foundation for transformative change in the financial and built environment sectors.
A: Reflecting on the Circular Buildings Coalition Blueprint Project Business Clinic, one standout solution for me was the insurance product, particularly in conjunction with The Building Passport Alignment Project led by Kell Jones of UCLC. The presentation by Concular was especially compelling from a finance perspective, as it tackled a significant market barrier: material reuse. Their focus on material performance and its connection to insurance for that performance was a clear and innovative approach to addressing this challenge.
While other aspects, such as pricing transparency and value assessment, were touched on during the presentations, they lacked the same depth and immediate applicability as the solutions proposed by Concular. Overall, the insurance and performance-driven strategies presented offered a strong foundation for advancing circularity in the built environment.
A: To make these solutions to become viable investment opportunities, several key areas need to be further developed, in particular the legal and financial frameworks. For example, the concept of "materials-as-a-service", where materials are leased rather than owned, raises significant legal issues. These include the terms of lease agreements, restrictions on the use of materials, ownership rights and the definition of responsibilities such as maintenance and replacement over time. There are also insurance challenges, such as how to underwrite and monitor risks for leased materials such as windows, bricks or timber over a 10- or 20-year lease.
From a financial perspective, aligning these models with existing accounting and reporting standards is critical. Currently, assets such as windows are depreciated over their lifetime, often to zero value, which conflicts with the idea of materials being returned, reused and retaining residual value. Addressing these discrepancies in depreciation and reporting frameworks is essential to making materials-as-a-service models bankable and widely adopted.
These legal and financial uncertainties, or risks, are barriers that must be removed to unlock the potential of circular solutions and position them as credible opportunities for investors.
A: The main challenges preventing reclaimed materials from gaining full traction are legal, technical and market confidence issues. A significant barrier is the uncertainty surrounding the performance specifications of reclaimed materials compared to virgin materials. For example, the performance differences between virgin and reclaimed concrete are not well defined, nor are the appropriate use cases. Questions remain as to whether reclaimed materials can meet the long-term demands of projects such as skyscrapers, or are better suited to retrofits or shorter-term applications.
Another key barrier is the lack of assurance mechanisms, such as warranties or insurance products, to guarantee the performance and longevity of reclaimed materials. For example, if reclaimed bricks came with a 70-year insurance guarantee and were priced lower than new bricks, the market would be much more likely to accept them.
Overcoming these challenges is essential to unlocking the significant value potential of reclaimed materials in construction.
A: An ideal collaboration or project would be a holistic circular business model that integrates key components like materials-as-a-service, pricing strategies, and insurance solutions into a cohesive framework. While the Circular Buildings Coalition (CBC) is addressing various pieces of the puzzle, such as material pricing and insurance, a unified approach that ties these elements together would have a significant impact.
For example, aligning such a model with financial products such as green mortgages could encourage retrofitting by enabling homeowners to borrow for sustainable upgrades. Understanding how these loans work when linked to circular solutions - while addressing legal, accounting and supply chain challenges - would further drive adoption. A comprehensive, end-to-end approach would illustrate the impact needed to transform the built environment and support decarbonisation goals.
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