The adoption of circular practices, which pivot away from a throwaway global economy into one where waste is eliminated and products are upcycled for reuse, offers the potential for businesses to run more nimble, productive and well-regarded organizations by reducing risk and operating costs and strengthening relationships with suppliers, customer, employees, shareholders and local communities.
Consumers are playing a crucial role in driving this evolution, for example, demanding that companies use less plastic and other packaging materials, and ensuring that those components are fully recyclable.
Embracing a circular economy framework also provides an opportunity for the financial sector to deliver on its sustainability agenda, thereby creating an outlook for long-term growth and wealth generation. Analysis of 200+ listed European companies across 14 industries has shown that the more circular a company is, the lower its risk of defaulting on debt, and the higher the risk-adjusted returns of its stock.
Understanding how businesses can best implement circular economy principles is a topic much explored by leading universities around the world, one of which is UCLouvain, Belgium’s largest French speaking university, which is recognized internationally for the excellence of its research.
A Chair on the Regenerative Economy within the Louvain School of Management was created in 2017, in order to train students in the specifics of this economic model and the management practices resulting from it. Since September 2019, Candriam has been the official partner of the Chair in Regenerative and Circular Economy at UCLouvain. This initiative reflects Candriam’s ongoing commitment to collaborate with the world’s leading academic institutions to advance the investment industry’s efforts towards a sustainable and inclusive climate recovery by fostering academic efforts towards a circular economy through The Candriam Institute for Sustainable Development.
“The Chair in the Circular Economy provides a fantastic opportunity to confront academic research and investment objectives on this still emerging subject,” explained Senior Portfolio Manager David Czupryna. “It is part of the Candriam Institute’s mission to support independent academic research into topics that are shaping progress to address the most acute environmental challenges.”
Candriam has partnered with UCLouvain to further develop the Chair in Regenerative Economics by expanding teaching and research on the circular economy. The Circularity Gap report of 2022, published by the Circle Economy, showed that the world is currently only 8.6% circular, with too many finite resources still being consumed globally. Resource depletion and inefficient waste management are among the key concerns due to their significant and costly effect on the economy, society and ecosystems.
The partnership, led by Louvain Management School Professor, Yves de Rongé, with Wim Van Hyfte, Global Head of ESG Investments and Research at CANDRIAM, prioritises several projects including:
- Developing a PhD focused on key impact indicators within the circular economy;
- Developing a circular economy barometer, with the aim of measuring corporate progress;
- Developing an in-depth analysis of different sectors to identify circular practices of companies and measurements of circularity; and
- Developing circular economy reports and collaborating with the CANDRIAM environmental advisory board.
Alongside teaching activities, the Chair develops a research programme centered on the circular economy.
For the investment team at Candriam, academic research provides valuable insights into how companies can contribute to the transition to the circular economy and how this in turn is affecting their financial performance.