Managers

In brief: Summa’s 4 circular economy investment opportunities

A recent report by the Swedish GP provided a 'pragmatic' guide to investment opportunities in a market estimated to be worth €1.5tn by 2040.

-

The transition to a circular economy presents four areas of opportunity for investors, according to Swedish private markets firm Summa Equity. In its circular economy report published last week, the GP presented a “pragmatic” definition of circular economy and identified four themes for potential investment:

  1. “Circular business models”: Investment opportunities that increase the “useful service” of a product. This includes business models that prevent product wastage through mechanisms such as reducing the destruction of unsold goods or increasing the lifespan of products through improved maintenance.
  2. “Material efficiency”: Business models that reduce the amount of material used to create a product. The could be done through new production methods, avoiding overordering or producing different sizes of product to meet user needs (eg “not
    all cars will have 5 seats”)
  3. “Circular Materials”: Structures that incorporate recycled materials into the manufacturing of products.
  4. “Residual waste valorisation”: Strategies that extract more value out of unavoidable, nonrecyclable waste, for example by reducing emissions from landfilling or producing biomethane from organic waste.

The report, which provides analysis of the circular economy transition, estimated that the EU circular markets could be worth €1.5 trillion by 2040, and require €230 billion in physical asset and infrastructure investment alone. A recent study by the OECD’s Oriana Romano found that regulation was the main barrier preventing a faster transition to a circular economy.