Candriam has launched its SRI Equity Circular Economy Fund as part of its thematic range.
According to the firm, the circular economy concept provides an alternative to the current linear economic model (“take, make, dispose”) by avoiding waste and reducing the need for virgin raw materials. It seeks to increase resource efficiencies through the re-use or recycling of materials.
The newly created fund aims to outperform over the long-term by investing in companies that provide new technologies and innovations which enable the transition to a circular economy.
According to the Circular Gap report 2020, the world is currently only 8.6 percent circular, demonstrating the breadth of opportunities available for investors.
The current rate of consumption and production processes have become unsustainable as we are overconsuming our planet by 1.7 times. In the current linear economy, resources are extracted, consumed and disposed. Instead, by considering the full life-cycle of materials and redesigning products and operations, a circular economy can help decrease pressure by reinjecting used resources back into our economy.
A transition towards circularity represents potential for both economic growth and environmental sustainability. Candriam views this as a multi-decade investment opportunity, with the circular market representing an estimated $4.5 trillion economy by 2030.
The firm constructs a diversified portfolio of circular economy enablers and rapid transformers. Enablers are companies that provide solutions enabling a circular economy transition including solutions in waste management, renewable resources, products life extension and resources optimization. Transformers are companies that are actively changing their business operations and value chain to become more circular according to the firm.
The fund will be managed by Koen Popleu, Thematic Equity Senior Fund Manager, and Monika Kumar, Thematic Equity Fund Manager .
Koen Popleu, Lead Portfolio Manager of the Fund commented: “The backlash against single use plastic and the growing popularity of plastic-free goods has shown that regulators and consumers support the transition to a circular economy. In the face of reputational risk and consumer boycotting, companies have decided to drastically increase their use of recycled plastic packaging and transform their operational processes.”
Vincent Hamelink, Chief Investment Officer, said: “Sustainable investing has been at the heart of our business for 25 years and we are proud to launch the CANDRIAM SRI Equity Circular Economy Fund. As we strive to promote a zero waste economy and deliver the United Nations Sustainable Development Goals, the move towards a circular economy will be an essential part of our transition towards a more sustainable future.”