Multicircle economy: a new sustainability model for Italy

An analysis using accounting data from Italian industrial enterprises, categorised by their dimensions, has demonstrated that those pursuing growth drive Italy’s economic performance and contribute to the social and economic well-being of their respective areas to a degree that is more than proportional when compared to smaller companies.

This fact is even more evident in the utility and multiutility sector. In this segment1, growth represents an essential pre-requisite for successfully tackling some of the most significant challenges of our times, including:

  • environmental sustainability, with multiutilities active in strategic sectors (energy and water supply, waste management, etc.) for achievement of ten of the 17 UN SDGs and European and national sustainability targets. The multiutility sector is also the top sector in Italy for companies that have taken actions aimed at reducing their environmental impact (81.1% vs 66.6% average for other sectors);

  • the relaunch of the country in the wake of Covid-19, with multiutilities already on the front line in management of the crisis and guaranteeing continuity of services, playing a strategic role in attracting the resources made available by the EU: in fact, the Next Generation EU plan of the European Commission provides for 37% of resources being assigned to investments that enable “Green Growth”;

  • responding to local needs across the country, with multiutilities well positioned to properly understand the needs of communities and respond effectively. The multiutility sector is already the third nationally for the number of companies that have taken actions in the collective interest and second for the number of companies that have taken actions that benefit the country's production industries.

In this context, through a course of growth founded on investment and an industrial vision based on the informed use of resources, Iren has become one of the largest multiutilities in Italy and is establishing an essential role within the system:

  • it is the fifth Italian company2 for growth in revenue in the period 2015–2019 (CAGR3 +8.4%, higher than all benchmarks4), falling within the top 25 industrial businesses in the country for revenue in 2019, with € 4,275 million;

  • it is number one of the comparable companies and sixth amongst leading Italian industrial businesses for growth in workforce in the period 2015–2019 (+10.5%, higher than all benchmarks), exceeding 8,100 employees in 2019;

  • it is number one of the comparable companies for growth in investment in the period 2015–2019 (CAGR +19.4%), with a cumulative value of over € 2 billion in the period and further growth expected to bring investments to € 3.7 billion between 2020 and 2025, an increase of 12% compared to the previous 2019–2024 Business Plan;

  • it is the third multiutility in Italy for number of customers, currently serving 9.5% of the Italian population in 646 municipalities across 9 regions.

Iren has defined its path of growth not only through careful attention to sustainability but also establishing itself as a leader in the field of circular approaches, optimising synergies and integration of different services (waste, water cycle, and generation and distribution of energy) to multiply the value created in all areas of activity and develop a new multicircle paradigm.

To evaluate the capability of a multiutility to place its growth and the synergies enabled by scale at the service of structured models of multicircularity, the European House – Ambrosetti has created a “Multicircle Index”, which assigns the leading Italian multiutility companies a score from 1 (minimum) to 360 (maximum), depending on the degree of coverage, performance and development of the multidimensional chain of circularity, i.e. across the different services. The index is made up of 9 significant and comparable metrics in the three areas of business in the segment (Waste, Water and Energy) and the three aspects of the life cycle of a resource (management, processing and regeneration).

Iren is the leading multiutility company in the Multicircle Index, with a weighted score of 280 out of 360. This ranking reflects Iren's commitment and results regarding circular economics and sustainable growth. Amongst other successes, Iren:

  • boasts separated waste collection levels at 67.3% in 2019, higher than the average for comparable companies (66.5%) and for the country (58.2%) and up by +10.6 percentage points in the period 2015–2019, which is the largest increase amongst comparable companies, due to examples of excellence such as pay-as-you-throw tariffs, where Iren is number one for citizens served, totalling 513 thousand in 2019;

  • demonstrates continuing success in its approach to waste management, with an increase of 91.5% in the amount of waste processed by its plants between 2018 and 2019, and having achieved its goal of zero municipal waste to landfill;

  • adopts best practices in the transformation of waste into viable products, producing biomethane from organic waste and purification sludge, pallets from processing wood and polymers for civil uses and reducing agents for metallurgy from plastics;

  • boasts leaks on the water network of 33.4%, lower than the average of comparable companies (34.8%) and the country (47.9%). Iren also sends just 8% of purification sludge managed to landfill, with the remainder used to generate energy and in agriculture;

  • records losses on the electricity network of 4.2% (against the national average of 6.4%) and achieves increasing levels of energy efficiency, with >3.2 million TOE saved in the period 2015–2019, also thanks to its position as European leader in district heating;

  • is number one amongst comparable companies for COemissions avoided in the last five years, equal to € 335 million of direct economic costs and € 1,541 million of social costs associated with negative effects of the COemissions avoided. This achievement is confirmed considering CO2 avoided relative to revenue.


Finally, the path of multicircular growth has allowed Iren to generate value and develop sustainable models that benefit the respective areas:

  • in addition to the direct contribution to Italian GDP by Iren, over € 1.4 billion in 2019, with faster growth than all of the benchmarks between 2015 and 2019 (CAGR +7.3%), there is also an indirect contribution associated with activation of the supply and sub-supply chains bringing total contribution to Italian GDP up to € 2.7 billion (with an economic multiplier of 1.87);

  • the same dynamics allow Iren to support a total of around 30,000 jobs in the Italian economy (employment multiplier of 3.66);

  • Iren is the number one listed multiutility in Italy for average annual Total Shareholder Return in the period 2015–2019 (32.7%), with a constant increase in dividends paid, almost doubled over the five years;

  • taking the opportunity offered by tools such as green bonds and EU funds to finance projects with significant benefits for the respective areas, Iren is the first multiutility in Italy to have issued 3 Green Bonds, for a value of € 500 million each, and is number one amongst comparable companies for the value of projects financed by Horizon 2020;

  • Iren is a leader in Corporate Venture Capital, supporting innovative start-ups with IrenUp, a programme that involves investments of € 20 million, confirming Iren as the first Italian multiutility to have launched a structured Corporate Venture Capital project;

  • Finally, Iren has demonstrated solidity and resilience throughout the Covid-19 emergency, which has benefited the areas where it operates through strengthening of services, safeguarding of employment and a focus on customers.

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1 The analysis was performed on the utility and multiutility sector, which includes: production, transmission and distribution of electricity; collection, treatment and supply of water; management of sewage systems; collection, processing and disposal of waste; recovery of materials; sanitation activities and other waste-management services.
2 The ranking includes Italian companies that achieved revenue over € 4 billion in 2019.
3 Compound annual average growth rate.
4 The analysis was performed on the basis of different benchmark levels: system-country averages, reference-sector average, and average of comparable companies (identified as a group of peers composed of 13 Italian companies active in the utility and multiutility sector).