Experts at BlackRock, the world’s largest financial management company that manages over $ 8.6 trillion, outline the four sectors to be explored in 2021 to support the transition to a circular economy. They argue that although the corona plague has threatened to curb global momentum around sustainability, the circular economy has nevertheless returned to lead as a result of several factors – increasing regulatory compliance, changing consumer preferences now turning to sustainable alternatives, and organizational responses focusing on circular methods.
In BlackRock, there are four sectors that investors need to look at for growth opportunities:
Plastic is not the problem – It could be the solution. There are ways to reuse plastic not just by recycling it, and we are seeing huge companies using bioplastic alternatives like poly-lactic acid for food packaging instead of plastic.
We at BlackRock believe that the epidemic will shift the focus to building the right infrastructure for plastic disposal – waste management, collection, sorting and chemical recycling. We therefore believe in investment opportunities in the post-Corona era supply chain, as now, unlike in the past, there is a discourse on the proper use of plastic rather than its complete removal from the process.
Technology is pushing consumers for more sustainable consumption. Technology companies play an important role – they both adopt the principles of a circular economy and also push their customers to do so. The issue will become more significant in electronics, especially in the process of dismantling and recycling electronic components, and already today there are companies working on the subject that produce new products from old electronics – it is cost-effective and adds value for customers looking for a sustainable investment.
We at BlackRock are looking for companies that help reduce waste by reusing or recycling, and this also applies to the components of the electronics we use at BlackRock. At the same time, we are seeing more and more applications based on a cooperative economy and offering online flea markets, second-hand and rental sales platforms, e-waste recycling solutions, leasing for electrical products and more.
We expect the field to develop, especially in electronic components where there is a need to develop a sustainable solution. For our investment portfolios, we are looking for companies that help reduce waste, primarily through reuse or recycling, this applies to the components that go into technological hardware, and also for household product needs.
There is a growing need to build a more reliable health infrastructure. The field of medical equipment is the leader in the reuse of devices and products. Hospitals are required to have the latest and greatest equipment, and product recycling can be more efficient than electronics – today there are companies that run efficient logistics systems for collecting, renovating, or dismantling used medical equipment, and there is increased use of the leasing model for medical equipment as well.
Health care plays an important part in the circular economy with increasing relevance, especially given that much medical equipment is in single use only. The corona plague has highlighted this area, and we at BlackRock believe that it has accelerated the need for a better understanding of the correct use of medical waste and the need to develop permanent and better solutions for recycling and reuse of medical equipment.
The circular economy is also coming into fashion. Just like food packaging and investment, the fashion industry is now under pious consumer scrutiny, which is expected to accelerate the industry’s transition to more circular practices. For our investment portfolios we are now looking for brands and companies that manage supply chains that are leading this transition and adapting their business models to a circular economy. We have a better ability today to push towards the circular economy than half a year ago.
Given the extent of the change needed for this transition and the significant barriers to change, we believe that today’s industry leaders play a critical role in this solution. Our essential tool for pushing companies into this transition is to invest in companies that will take proactive steps to promote a circular economy and report on their progress.
Link to full report: https://bit.ly/3bbc11p