Candriam backs circular economy with new thematic fund
Candriam has launched Candriam SRI Equity Circular Economy Fund. The circular economy concept provides an alternative to the current linear economic model, the "take, make, dispose” model, 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.
Resource depletion and inefficient waste management are key concerns due to their significant and costly effect on our economy, society and ecosystem. According to the Circular Gap report 20202, the world is currently only 8.6 per cent circular.
Replacing the ‘line’ with a ‘circle’ has become an imperative, says Candriam, towards ensuring a sustainable future. 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 a potential for both economic growth and environmental sustainability. Candriam see this as a multi-decade investment opportunity, with the circular market representing an estimated USD4.5 trillion economy by 2030. Through its proprietary thematic approach and fundamental idea selection, Candriam 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 optimisation. Transformers are companies that are actively changing their business operations and value chain to become more circular.
The fund, which is the latest addition to Candriam’s thematic equities range, 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 comments: “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.
Monika Kumar, co-manager adds: “This represents a significant opportunity for companies offering innovative technologies and solutions aligned to the circular economy.”
Vincent Hamelink, chief investment officer, says: “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.”
Candriam will donate up to 10 per cent of the sub-fund’s net annual management fees to charities and organisations providing solutions to promote the transition towards a circular economy. Candriam has selected organisation “Close the Gap” as its first beneficiary. Close the Gap is an international social enterprise that aims to bridge the digital divide by offering high-quality, pre-owned computers donated by European and international companies to educational, medical and social projects in developing and emerging countries. Since 2004, Close the Gap has supported over 6,000 projects in more than 50 countries all around the world. All projects are demand and impact-driven oriented initiatives.