23.01.2020 kl 11:22 449

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BlackRock started a fund focused on the circular economy in October alongside the Ellen MacArthur Foundation. At $23 million, it’s a drop in the ocean for the $7.4 trillion asset manager, though still a meaningful development as CEO Larry Fink puts environmental concerns at the center of the firm’s investment process.

Wide-scale adoption of the concept would not only cut costs and bolster productivity, advocates say, but climate change and pollution would be tempered. It represents a $4.5 trillion-dollar opportunity globally by 2030, according to Peter Lacy, author of ‘The Circular Economy Handbook.’

But some academics argue that it doesn’t address what they see as the fundamental problem of pursuing limitless growth.Still, retailers are also acting. H&M, criticized for its part in so-called “fast fashion,” is trialling a rental clothing service in one of its Stockholm branches as well as an in-store repair service. British start-up Hurr offers clothing rental, as does Rent the Runway Inc. in New York.

The global economy now needs 100 billion tonnes of materials a year, according to the not-for-profit organization Circle Economy, a figure set to more than double by 2050. Historically, for every 1% increase in GDP, resource usage has risen on average 0.4%.

The flow of materials accounts for more than half of emissions in OECD countries. Reducing that insatiable demand could therefore go a long way in achieving the global target of limiting temperature increases in the atmosphere to below 1.5 degrees Celsius.

“What we’re looking at is, how can we actually decouple some of the trends we’ve seen in terms of increasing consumption, increasing pollution and emissions, from growth prospects,” said Helen Mountford, vice president for climate and economics at the World Resources Institute. “We’re already exceeding or rapidly approaching a number of planetary boundaries.”

BlackRock isn’t the first money manager to embrace the circular economy. Some smaller firms have been running funds focused on it for a number of years.

Geneva-based Decalia Asset Management, which oversees 3.7 billion Swiss francs ($3.8 billion) in total, launched such a fund in 2018. It gained nearly 23% in 2019.

Circularity Capital in Edinburgh has a 60 million-pound private equity fund that’s invested in businesses such as Winnow, a food waste reduction company, and ZigZag, which reduces retailers’ product return waste.

The key challenge is getting more governments and companies on board. The European Commission has a circular economy action plan, which includes transforming the way plastic products are produced and recycled. It’s also part of China’s five-year plan. The government there has stopped importing waste, something that’s forcing other countries to adapt.

“When you set off on one of those long journeys, the resources you have with you are the absolute minimum you can survive with, to be as light as possible to stand any chance of breaking a record or winning a race,” MacArthur said. “I realized the global economy was the same -- we have finite resources, and yet we’re using them up.”

--With assistance from David Goodman.

To contact the reporters on this story: Jill Ward in London at;Suzy Waite in London at

To contact the editors responsible for this story: Simon Kennedy at, Fergal O'Brien, Jana Randow

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©2020 Bloomberg L.P.
Redigert 23.01.2020 kl 11:34

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