The Art Market: Champion of the Circular Economy?

On 02 December 2020, by Carine Claude

Between global climate and health threats, the explosion of online practices and changing consumption patterns, the long-established view of the economy is changing. The art market is no exception to the rule. Yet maybe it is the pioneer of these new circular models.

 

Virtuous, sustainable, moderate (even frugal), ecologically responsible, collaborative and positive, the circular economy has everything going for it. Its operation in a loop banks on the extended life cycle of goods and materials: a long way from traditional economic models, where wealth creation is achieved primarily through the destruction of resources and the endless renewal of consumer goods.
However, if there is one commodity that has been circulating in a closed circuit for a long time now, it is artworks. From the artist's studio to the first buyer, through private agreements between collectors and gallery owners and from one auction to the next, they pass constantly from hand to hand. Non-destructible by nature—with rare exceptions (we all remember that shredded Banksy)—and renewable through the very fact that artists are active, artworks are champions of sustainability.
There is no need for a second life for these creations of the mind, which gain in value as time goes by, while their obsolescence is ultimately dictated only by the position they occupy in art history. This partly explains the resilience of the art market which, although it has not escaped the sporadic effects of various speculative bubbles, has been a relatively stable market for several decades now, despite crises in the world of economics and now health. Sometimes difficult to pinpoint, the circular economy also finds an echo in that of functionality—an evolution in the service economy where what is sold is not the goods themselves but the use made of them: the famous integrated solutions car manufacturers delight in so much. The method has been shown to not only improve performance but also reduce costs. With a closed-loop system and 360° services, freeports are a speaking example. Conducive to unobtrusive transactions to the point of being taxed with opacity, these have long been pioneers in this field of "servicing", with their arsenal of insurance, private rooms, logistics systems, high-tech security equipment and preventive conservation of works.

Moving Towards a Circular, Dematerialized Market
Still emerging, new online services are now adding to this overview, aiding the performance of objets d’art in the market while reducing the cost of transactions, like block-chain certification when artworks go back into circulation, for instance. Assembled in digital passports considered tamper-proof (for the time being), the data associated with works of art (their authenticity, provenance, condition reports, exhibition and transaction history) are validated by informal communities of Internet users spread all over the world. This participatory, collaborative safeguard against the plethora of forgeries and frauds fits perfectly with the fundamentals of the circular economy. As a matter of principle, the latter fosters the dematerialization of practices, which helps save non-renewable resources to a certain degree. From online auctions to dedicated platforms, online art sales have been well-established for many years, even if 2019 is marking time, with revenues of $4.82 billion: 4% up on 2018, according to the 2020 Hiscox report on the subject. The greatest uncertainty involves the post-Covid era: "Will the coronavirus be the catalyst that finally ignites a still relatively tentative online art market? This is the question all observers are asking," says Robert Read, the Art and Private Clients Director at Hiscox. But for galleries that hadn’t yet taken the plunge, the health crisis certainly hastened their digital transition. During the lockdown, fairs, museums and galleries have been increasing their online presence and viewing rooms, where visitors can discover artworks virtually without budging from their armchairs. Associated with dematerialized practices, the circular economy's collaborative principles are also embodied in the democratization of patronage, particularly through the development of arts crowdfunding, with platforms like Indiegogo, Kickstarter and Patreon. Artists and institutions draw on their huge communities to finance their projects and creations. The advantage here lies in creating loyalty in new pools of donors—and by turning them into new collectors and patrons of the arts—while offsetting a general decline in state aid for the arts and culture all over the world.

Environmental Concerns
Awareness of environmental risks is growing in all strata of the economy, and art market players are also developing greener attitudes. As pointed out by the Art Basel-UBS 2020 report, written by economist Clare McAndrew, the behavior of collectors has changed significantly in recent years. According to her 2019 survey of High Net Worth Individuals (HNWI), the sustainability of the art market and its carbon footprint are now major concerns for them. The younger generation of millennials are particularly sensitive to these environmental issues, with 70% of them considering it vital to reduce their carbon footprint in their art purchasing practices. Whether or not art is bought online, the environmental cost of transporting artworks is considerable. Packaging and shipping generate both carbon and waste. In her report, the economist takes the example of Rokbox, a company that specializes in sustainable packaging for artworks, and has developed a tool to calculate carbon emissions during transportation. The result is edifying: a 5-kg/11-lb artwork shipped from New York to Hong Kong generates nearly one metric ton of CO2. That's the equivalent of 51 trash bags thrown in the landfill or a 4,620 km/2,870.7 m drive... Greedy in terms of air traffic flow, international fairs are proliferating. Objects and buyers circulate on an unprecedented scale to converge at these high-profile gatherings regularly scheduled in the market calendar, and which take the pulse of its economic health. According to Clare McAndrew's report, 42% of the fairs surveyed highlighted their initiatives to reduce energy consumption, whether through LED lighting or energy-efficient air-conditioning systems. Now that some practices are digitized, consumables and paper have also been reduced through the use of online catalogs and dematerialized ticketing. Most of them (73%) have introduced a waste-recycling program, while 38% say they use exhibition and staging materials again in later editions. And lastly, art dealers and collectors are unanimous: exhausted by the frenetic pace of fairs and the need to cope with ever-higher participation costs, many of them had already decided to reduce the number of trips they made even before the health crisis put them on standby. Their carbon footprint, reduced as a result, looks set to decrease in 2020. It remains to be seen whether the next few years confirm this sustainable, virtuous change of direction in the art market...

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