A circular economy is an industrial/manufacturing system which is designed to re-use, repair and recycle as many of its products, including waste products, as possible. The intention is to reduce waste and environmental impact through the implementation of superior product designs and materials and more efficient systems and business models.
Circular economy investment is, therefore, a form of socially responsible investment (SRI) which focuses on selecting companies that follow the principles of the circular economy model. The companies should show clear values and efforts towards models and systems for re-using, recycling and repairing as much as possible.
As with other forms of socially responsible investment, circular economy investors are targeting strong financial returns on capital invested as well as promoting the values of the circular economy. Part of their decision-making process is informed by the idea that companies using the circular economy model will often have good customer relationships, positive public perception and efficient systems and processes which are likely to increase the viability of the opportunity for circular economy investors.
The emergence of circular economy principles has shown its potential to have a positive impact on social or environmental challenges in addition to helping businesses (both new and existing) innovate in a way that boosts their bottom line as well as the economy at large.