There didn’t seem to be a thread on this topic yet, and it’s something I’m very interested in. I anticipate the so-called circular economy becoming a megatrend in the coming years, which is interesting from an investor’s perspective. The circular economy means, among other things, that produced materials and products remain in circulation for as long as possible and generate as little waste as possible. Recycling is one part of the circular economy, but it is much more, including technologies linked to services that create added value. Of course, maintenance and reuse are important aspects, ensuring that value is preserved for a long time.
Natural resources are not endless, and if everyone in the world consumed in a Western style, natural resources would quickly be depleted. This necessitates smarter resource use – “more with less” – and is also driven by the threat of climate change. This is not just about “hippie ideals”; the circular economy is closely linked to technology and economic growth.
From an investor’s perspective, “product as a service” (PaaS) operators are, in my view, beneficiaries of the circular economy. When it comes to individual stocks, the options are quite limited in my opinion. Companies focused on recycling, of course, are potential firms for those interested in circular economy investing, as are all companies working with renewable energy sources.
As an investor, the options are to pick individual companies or invest in an ETF or a fund. On the fund side, I’ve only come across a few options: the BGF Circular Economy Fund, which has an annual fee of 1.82%, quite high even for an active fund, and on the ETF side, the BNP PARIBAS EASY ECPI CIRCULAR ECONOMY LEADERS ETF, which is cost-effective (annual fee 0.30%) and can be acquired, for example, from the German stock exchange. The ETF is quite new (approx. 6 months) and still has relatively little assets under management (approx. €26 million).
What do others think about circular economy investing?
