Article
Söderberg & Partners
18 w
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Our investors asked for a focus on circularity – Here are the results
Circularity presents an opportunity for businesses to improve their environmental and financial performance. As part of the fund strategy Aktiv Påverkan, Söderberg & Partners Asset Management invested in two companies – Elanders Sverige AB and Rottneros AB – with the purpose of helping them with their circular goals and strategies through a partnership with RISE. The project resulted in a new report, new circular goals for both companies, and an increased focus on circular business models going forward.
There is a need to transition to a circular economy to prevent the waste of equipment and natural resources. For example, Swedes buy around 3 million new cell phones every year. Meanwhile, only about 1 million cell phones per year are recycled. Most other phones are left in people’s homes, unused. This is one of the reasons that the average Sweden uses up to 25 tonnes of raw materials every year, which can be alleviated through more circularity.
Research shows that circular business models can benefit companies financially and environmentally. Ultimately, the issues revolve around how to make it happen, and what material flows to focus on in the transition. When the investors of Söderberg & Partners Asset Management’s (“S&P AM”) fund strategy Aktiv Påverkan (“Active Engagement”) chose circular economy as the strategy’s focus, S&P AM partnered with Research Institutes of Sweden (“RISE”) to answer these questions.
Active ownership in Elanders and Rottneros
As part of the strategy, S&P AM invested in two companies:
- Elanders Sverige AB (”Elanders”), which is a global company offering corporate printing, packaging, logistics, and e-commerce solutions, is divided into two business segments: Supply Chain Solutions and Print & Packaging Solutions. The group has around 8,000 employees and operates in around 20 countries across 4 continents.
- Rottneros AB (”Rottneros”), which is an independent producer of pulp. The group consists of the parent company Rottneros AB, listed on Nasdaq Stockholm, and (among others) the subsidiaries Rottneros Bruk AB and Vallviks Bruk AB. These subsidiaries produce and sell pulp for the market. The group’s other subsidiaries include Rottneros Packaging AB, which produces packages from molded fiber, the Latvian raw material procurement company SIA Rottneros Baltic, and the forest actor Nykvist Skogs AB. The group has over 300 employees.
Results: CO2 savings reports and new circularity goals
After an initial workshop between Elanders and RISE, a strategy was developed that focuses on the subsidiary ReuseIT Sweden AB to increase revenue connected to reused IT products. RISE wrote a report analysing the CO2 emissions of reused IT products compared to newly produced products. They found that, except for large products like copy machines, repairing and reusing products emits less CO2, even if the machines are transported very far to do so. These numbers were translated into tangible examples to make it easy for managers and employees to understand. For instance, reusing one laptop saves CO2 equal to the emissions of a car driving 28,000 km or the carbon absorbed by 12 trees in a year.
Since the start of the project, Elanders has started reporting monthly CO2 savings to all employees. The results? In 2022, for example, Elanders took care of around 85,000 discarded IT units that could be given a new life with a new user, leading to savings of 24,500 tonnes of CO2 equivalents (CO2e). In 2023 they took care of around 100,000 units, equalling over 27,000 tonnes of CO2e.
“Getting support from experts like RISE has given us a good baseline, which means we feel confident in the data we use. Having calculations from such an expert also gives us value when communicating with customers,” said Daniel Steneby, CEO of ReuseIT Sweden AB.
At Rottneros, the focus was a high-level analysis of how long-lived their products were, and how the company’s business model contributes to a more circular society. RISE also found that the company had no quantifiable goals for circularity, making follow-up challenging. By setting a framework for investment decisions that include financial, circular, and environmental outcomes, Rottneros was given the tools necessary to make more sustainable decisions moving forward.
Two of the goals set within this framework were “30 percent less waste from raw materials (or waste, depending on the department) by 2030” and “Become self-sustainable in electricity”. These goals besides financial considerations make circular economy decisions, such as implementing a production system for residual energy in factories, more likely as they contribute to the circular economy goals. This has also identified other values of focusing on sustainable actions; it attracts a specific subset of workers which is very attractive.
“We might not have set a circularity goal at all if this project hadn’t happened. The project has become an eye opener for how we can quantify circular goals,” said Nils Hauri, Chief Innovation Officer at Rottneros.
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18 w
The circular economy notion is a distraction from the challenges we face. It would have been a good idea a century ago, before we exceeded planetary boundaries. We are now in an advanced state of ecological overshoot (too many people consuming too many natural sources and sinks). This is a terminal condition unless eliminated. Reducing demands on nature from a circular approach cannot achieve the level of reduction required. We have to stop making a lot of things that we actually dont need, not just make them more efficiently. Unless we grasp the magnitude of the challenge we have, we will never get to a sustainable society. Population size is also very relevant; current levels are way beyond a sustainable state . More education and contraception is essential for voluntary reduction in fertility. Technology alone cannot bring us to where we want to be, despite how enticing that idea is.
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18 w
Circularity is a great idea if you are not starting from a position of massive ecological debt. It is with regret that I observe that your organisation does not recognise the need for humanity to return within the carrying capacity of Earth, and does not recognise the threat posed by pronatalism and growth economics. Until humanity return within the carrying capacity of Earth, nothing that we do is sustainable. Climate change is a symptom of ecosystems collapse caused by cultural patterns that perpetuate overconsumption and overpopulation. Every day we are escalating mass extinction and ecosystems collapse. Please consider reporting on the proposed UN Charter for Ecological Justice, an aspiration to peacefully and equitably shrink both the global economy and population size until we return within the carrying capacity of Earth. The insights from I=PAT warn us of the dangers of applying growth economics during ecosystems collapse. Please check out my article explaining how to calculate Earth's carrying capacity, and offering suggestions how we might peacefully and equitably return within half the biocapacity of Earth; this would allow biodiversity to recover from the onslaught and loss of habitat that we are inflicting right now. https://app.wedonthavetime.org/posts/5b7db59b-a9d0-4ba0-b727-dfb0c6ee7b20 I urge your organisation to challenge anyone expressing aspirations to continue to grow the global economy and population; instead please explain to your influencers and partners that humanity must reduce its global needs to within half the biocapacity of Earth before we can achieve sustainability.
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18 w
The power of partnerships in achieving the set targets is clearly indicated by this companies.
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18 w
It's interesting to see how many companies don't realize the potential of circularity - there's a lot of work to do and investors certainly have an important role to play!