RobecoSAM has launched the Circular Economy Equities strategy. The strategy's investment objective is to achieve long-term capital growth by investing in listed companies that address the opportunities created by the paradigm shift in traditional production and consumption patterns toward a circular economy.
It is managed by Holger Frey, senior portfolio manager in the RobecoSAM Trends & Thematic Investment team.
A revolution of the global economy is underway. The paradigm shift to a circular economy is disrupting traditional production and consumption patterns. An increasing number of countries and companies are addressing the inefficiencies of linear production and waste, and establishing recycling policies. Industry self-regulation towards a circular economy is gaining momentum amid looming regulatory pressure and consumers are increasingly demanding sustainable products.
With such monumental changes come exciting investment opportunities. The shift toward a circular economy has been valued at $4.5trn by 2030.
The RobecoSAM Circular Economy Equities strategy gives investors a unique opportunity to be part of this largely untapped growth story.
It aims to identify and invest in leading companies that create value in loops. These companies employ targeted production and consumption, predictive maintenance, and enhanced use of byproducts to create value from inefficiencies. Specifically, the strategy invests in companies in the following investment clusters:
⦁ Redesign Inputs (Consumer Packaging, Renewable Feedstock & Fiber, Building Materials, Precision Farming)
⦁ Circular Use (Nutrition, Fashion & Leisure, Household & Lifestyle, Sharing Economy)
⦁ Enabling Technologies (Digitization, Product as Service, Logistic & Testing)
⦁ Loop Resources (Product Lifetime Extension, Collection & Sorting, Recovery & Recycling)
Portfolio construction is pre-dominantly based on bottom-up stock selection and takes into account sub-cluster attractiveness. Financially material ESG aspects are integrated in the company valuation analysis.
The strategy also has a positive impact on Sustainable Development Goals (SDGs) as it addresses recyclability of products or packaging solutions, waste prevention in manufacturing, sustainable sourcing, food waste reduction, landfill waste and GHG emissions (CO2e emissions). Active ownership is an instrumental part of the investment process and a way in which we engage on specific Circular Economy issues with individual companies.