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Chi Impact Capital

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Rethinking Investment: Driving Systemic Change through Circular Economy

Today, the global economy relies on extracting more and more resources from nature. In a sustainable society, we need to move away from this and towards a circular economy that benefits our planet as well as our wallets. Investors are responsible for supporting solutions that bring us closer to this circular society, but it can be hard to know where to look. More guidance is needed from fund managers to make it easy to fund our circular future.
Copyright: Chi Impact Capital
Copyright: Chi Impact Capital

As the global economy grows, reaching almost 105 trillion USD in 2023, we need to start questioning how we create value to continue growing our finances. Economic growth is important as it allows increased living standards among growing populations, but relies on the rampant consumption of limited natural resources.
To continue growing our economy, we need to move our investments to circular solutions. Currently, the consumption of the world population consumes about 1.7 planets’ worth of natural resources, meaning that the planet can only regenerate a little more than half of the resources we consume every year. We are using resources borrowed from the future, and eventually, they will run out.
One primary reason why we consume so many resources is that we don’t take enough care of our things. Around 90 billion tons of materials are extracted from nature globally per year, more than 12 tons per person. That number is expected to more than double by 2050. Only 9% of these materials are reused in new products after their first use. By reusing and prolonging the lifetime of our materials, we can push down resource use and make sure that humanity can survive on the resources renewably provided by nature.

Circularity: A win for the wallet and the planet

Fortunately, investing in circularity not only helps keep our resource use in line – it’s also one of the biggest business opportunities of our time. Circular systems create far more jobs than linear systems, and their local nature means that jobs are more decentralized. Circular systems also mean more efficient material use and more recycling, which can be a financial gain if appropriately implemented. Overall, transitioning to a circular economy represents a growth opportunity of 4.5 trillion USD worldwide by 2030.
Reusing materials is not only a way to conserve resources, but it also prevents pollution. Plastics, of which only 14% is collected for recycling, accumulate in the oceans and as microplastics in nature. Heavy metals from electronics, which can be poisonous to both air and soil, are released into nature as only 20% are recycled. Implementing circular solutions is important both for our economy and for our planet.
As global economies face mounting environmental challenges, the shift toward a circular economy is gaining legislative momentum. Emerging policies, such as stricter product standards, environmental scoring, and stronger repair laws, aim to reshape production and consumption patterns by reducing waste and encouraging sustainable practices. These trends highlight the economic potential of a circular model, fostering innovation while safeguarding environmental resources. Collaboration across sectors is essential to fully realize the benefits, driving systemic change that balances economic growth with ecological responsibility. The circular economy thus offers a compelling path forward for both the environment and the economy.

The how: Guiding investments towards circularity

Circular solutions exist, and if implemented at scale they can significantly reduce resource use. For example, German start-up Vytal has created a system for reusing plastic cups, a commodity that otherwise often ends up in nature. These solutions need more investments, but it’s hard for investors to know where to look to find these scalable solutions. More guidance is crucial, in the form of counseling and funds that are specifically targeted toward circularity.
Professionalizing the understanding of circularity is crucial for aligning investments with sustainable goals. Leading business schools like IMD are setting the standard, equipping business leaders with the expertise to identify high-impact opportunities and incorporate circular principles into strategic decisions. This approach fosters a deeper understanding of how circularity can drive value, making it an essential focus for investors who seek to support businesses that prioritize both economic and environmental resilience, ultimately guiding capital toward more sustainable, long-term growth.
Funds like the Burning Issues Impact Fund (BIIF) are dedicated to investing in circularity as well as climate tech and food tech, driving systemic change by addressing urgent global challenges. BIIF seeks to deliver economic returns while generating positive environmental impacts across these key sectors. This is an opportunity to collaborate with other impact investors, supporting the expansion of innovative business models that enhance our global economy. Investing in circular, climate, and food technologies aligns with both economic and ethical imperatives, acting as a catalyst for the broader systemic transformation necessary for a sustainable future. By joining forces, we can significantly amplify this critical movement.
Written by Enrique Alvarado Hablutzel
  • ReallyRecycle.com UK 🌍

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    19 w

    Definitely agree!

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