Circle Portfolio: Evaluating the Circularity of Investment Portfolios

An online tool that enables investors to review the circularity of companies within their portfolio and collaborate with investees to improve their circular performance.

case study

The Challenge

Continued investment in a linear economy results in long-term, system-wide impacts and risks that have adverse effects on the economy, society and the environment. Moving towards a circular economy can generate value and reduce vulnerability against these risks.

The Approach

Circle Portfolio Visual 2_Company OverviewCircle Economy understands that a global standard is needed to help investors assess the resilience of their portfolios against circular economy objectives; while engaging with their investees to improve their circularity performance and create long-term value. The Circle Portfolio enables investors to review the circularity of companies in their portfolio allowing them to collaborate with investees to reduce risks, capitalise on new opportunities, and enable long-term growth in a circular manner.

By completing our online survey, Circle Assessment, companies are evaluated based on the extent to which they are pursuing and implementing various circular business strategies. The results of the assessment are used as an input into the Circle Portfolio to assess the overall circularity of an investment portfolio. This enables investment managers to identify areas in which they can improve the overall performance of their investment portfolio.

“The circular economy is unlikely to be delivered by individual firms alone. In order for it to develop meaningfully a significant number of like-minded players, in key sectors such energy, manufacturing, and technology, must stimulate sector-wide learning and sharing of best practices.”

– ACTIAM

Key Learnings

A large part of the development of the tool involved focusing first on the business model and the relationship between the partners. However, it was soon decided that a more lean-startup approach was required to first develop a version of the tool and let it organically direct the approach along with the business model. Following this approach and engaging with companies and investors has yielded a significant amount of insights including  new directions for the tool.

What’s Next?

The creation of the Circle Portfolio involved presenting mockups of the tool to financial institutions to gain feedback and further insight regarding their needs. Input was received from portfolio managers at PGGM. Additionally, from initial reactions and conversations with ABN, AMRO, GRESB, as well as learning from the RACE Finance program, the tool was redesigned to better evaluate the extent to which circular economy strategies can enable investors to make smarter decisions. It also provides incentives for their portfolio companies to pursue circular strategies.

The Circle Portfolio is a useful tool to gather information about the circular possibilities and actions of potential investments. As a partner in the development of this tool, PGGM will use our network to create a community of financial institutions to further develop the circular analysis framework.”

PGGM

Project Partners

2

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