Candriam has launched a new global equity fund targeting opportunities from a move towards the "circular economy", investing in companies that offer new technologies and innovations enabling the transition from the current unsustainable linear model.
Managed by thematic portfolio managers Koen Popleu and Monika Kumar, the Candriam SRI Equity Circular Economy fund seeks to benefit from the transition from the current "linear economic model" of "take, make, dispose" to a more sustainable "circular" economic model, the firm said.
The 2020 Global Circularity Gap Report found the world is currently only 8.6% circular, "demonstrating the breadth of opportunities available for investors", Candriam said, adding that resource depletion and inefficient waste management are "key concerns due to their significant and costly effect on our economy, society and ecosystem".
Investee companies in the fund - 10% of the annual management fees of which will be donated to charities and organisations aligned to the circular economy - will be concerned with avoiding waste and reducing the need for virgin raw materials.
Companies will consider the full life-cycle of materials, and redesign products and operations, thereby helping decrease pressure by reinjecting used resources back into our economy.
Candriam said the transition to a circular economy is "a multi-decade investment opportunity", with the circular market representing an estimated $4.5trn economy by 2030, according to the Global Circularity Gap Report.
The Luxembourg-domiciled fund will employ Candriam's proprietary thematic approach and fundamental idea selection, and allocate to so-called "enablers" and "rapid transformers".
Enablers, the firm explained, are companies that provide solutions "enabling a circular economy transition including solutions in waste management, renewable resources, products life extension and resources optimisation".
Transformers meanwhile are companies that are actively changing their business operations and value chain to become more circular.
Lead manager Popleu said "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."
Candriam CIO Vincent Hamelink added: "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."