New report calls on financial sector to build on circular economy activity momentum

Written by Adam Cadle

10/09/2020

A new report published today by the Ellen MacArthur Foundation entitled Financing the circular economy – capturing the opportunity highlights the rapid growth in investment and other financial services activity in the circular economy, and also calls on the financial sector to build on this momentum.

The report calls on the financial sector including insurers, to seize the full potential by scaling the circular economy in collaboration with governments and corporates. Over 30 CEOs and senior executives from leading asset managers and banks, including BlackRock, Barclays, Citi, Credit Suisse, the European Investment Bank, HSBC, LGIM, Lloyds Banking Group, Intesa Sanpaolo, JPMorgan Chase, Morgan Stanley, and UBS, among others - together representing over $18trn in assets under management - are backing the report.

While no such fund existed in 2017, by mid 2020 ten public equity funds focusing partially or entirely on the circular economy have been launched by leading providers including BlackRock, Credit Suisse, and Goldman Sachs. The total amount of assets managed through these funds increased six-fold since the beginning of 2020, from $0.3bn to over $2bn. On average these funds performed five percentage points better than their Morningstar category benchmarks over the first half of 2020.

Since 2016 there has also been a tenfold increase in the number of private market funds, including venture capital, private equity and private debt, investing in circular economy activities.

Ellen MacArthur Foundation CEO Andrew Morlet said: “We have seen huge growthin circular economy financing over the past three years, with major players capitalising on its value creation potential while meeting their climate change objectives. Investors, banks, and other financial services firms can play a vital role in rapidly scaling the circular economy by supporting businesses to make this shift, and in doing so seize new and better growth opportunities.”

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