Re-use instead of throwing things away: Mountains of refuse and scarcity of resources make recycling essential. Investors can also benefit from this.
Products that make the Theme Investable
It’s no longer a secret: The mountains of waste are becoming larger and larger, while space on earth is becoming increasingly scarce. Calls for the sustainable use of natural resources are getting louder, as overexploitation and waste disposal are causing environmental and health problems. Burning refuse, for example, leads to harmful gases and toxic slag, which the planet, and humanity, will not be able to endure in the long run.
Mountains of waste are piling up, the damage to people and the environment is increasing – waste and recycling solutions are in greater demand than ever before
A few facts to illustrate this: Every year, 24 million tons of waste are generated in Switzerland, two thirds of which is construction waste from demolition. One quarter is municipal waste, which is equivalent to about 700 kilograms of waste per inhabitant. About half of this is recycled, the other half is burned. 10 % is hazardous waste, often shipped overseas, where it is treated with chemicals or burned. Today’s resources are consumed at a rate of 1.5 times what the earth can produce long term. According to The World Counts (https://www.theworldcounts.com/) around 7 billion tons of resources were extracted from the earth in January 2020. Furthermore, a third of the food produced worldwide ends up in the trash. Long term, this equation is not sustainable if we want to maintain our world and our health.
A ray of hope on the horizon: The circular economy
To put an end to ecological and health problems as soon as possible, technologies are being developed to reduce the consumption of resources and to recycle waste. Such solutions could become increasingly important, especially in light of the UN’s ecological and social development goals, to which all 193 members of the UN have unanimously committed themselves. The ideal model is the circular economy, which reduces the use of natural resources to a sustainable level by recycling and reducing resource consumption. Thanks to digitalization, the technological development of the circular economy could be accelerating: State-of-the-art sensors and systems in the circular economy make it possible to reduce resource consumption and simultaneously recycle waste and raw materials. The growth potential of companies with appropriate technologies and established regenerative systems could be promising.
Circular World Index – Combining ecological and financial returns
In cooperation with the index sponsor, Carnot Capital AG, the Circular World Index enables investors to participate in the performance of listed established companies which promote regenerative systems. The Circular World Index expressly includes only those companies with products and technologies that enable and promote the re-use of natural resources, thereby helping to combat climate change.
The natural resources considered include primarily water, metals, pulp, oil, natural gas and agricultural land. Technologies and topics represented in the index include wastewater treatment, desalination, collection/sorting/recycling technology, the sharing economy, bioplastics, renewable energies, soil detoxification, agriculture, food conservation, plant cultivation and the fishing industry.
What is special about the Circular World Index: it combines financial and socio-ecological performance, thus enabling a financial return while at the same time supporting sustainability goals.
Who is the Index Sponsor Carnot Capital AG?
Carnot Capital is an asset management company that specializes in energy and resource efficiency. Founded in 2007 in Zurich, it received FINMA approval in 2013 as an asset manager for collective investments in Switzerland. It manages several funds while taking ESG sustainability into consideration.
The index includes shares in listed companies with products and technologies that reduce the consumption of natural resources. Due to increasing scarcity and growing environmental problems, these companies could benefit from structural growth. Stock selection is value driven, based on combining the quality and valuation ratios. Quality is assessed primarily on the basis of the debt-to-equity ratio, return on capital, and cash flow strength. Other criteria in the selection process include market position and growth potential. Valuation ratios include financial debt and other financial obligations, as well as non-operational investments.