What exactly is the circular economy?

The circular economy is a model of production and consumption that focuses on extending product lifecycles and minimizing waste. Unlike the traditional linear model (take, make, dispose), a circular approach emphasizes reusing, sharing, repairing, refurbishing, and recycling materials for as long as possible. This creates a closed-loop system where resources maintain their value and environmental impact is reduced.

Why are circular economy companies considered good investments?

Companies in the circular economy sector are positioned to benefit from increasing global pressures around resource scarcity, waste reduction, and environmental regulations. They often have defensive characteristics (everyone needs waste management) while also offering growth potential from new technologies and changing consumer preferences. As sustainability becomes a business imperative, these companies provide essential services and solutions that other industries increasingly need.

What is the difference between recycling and the circular economy?

Recycling is one component of the circular economy, but the circular economy is much broader. While recycling focuses on converting waste materials into new materials (often of lower quality), the circular economy designs out waste from the beginning. It includes business models based on sharing, product-as-service, repair, remanufacturing, and regenerative approaches that maintain materials at their highest value. Think of recycling as one tool in the circular economy toolbox.

What does "depolymerize" mean when discussing plastic recycling?

Depolymerization is a chemical process that breaks down plastic polymers (long chains of molecules) back into their original building blocks or monomers. This is important because it allows plastics to be recycled into virgin-quality materials that can be used again for the same purpose, unlike mechanical recycling which often results in lower-quality materials. Companies like LOOP in this stock group use depolymerization technology to transform waste PET plastic back into its original components for infinite reuse.

What is "waste-to-energy" technology?

Waste-to-energy technology converts non-recyclable waste materials into usable heat, electricity, or fuel through various processes like combustion, gasification, or anaerobic digestion. For example, CREG in this stock group captures industrial waste heat and gas and converts it into electricity. This approach helps reduce landfill use while generating energy, though it's considered less preferable than reuse and recycling in the circular economy hierarchy.

16 handpicked stocks

Circular Economy

Discover companies transforming the traditional 'take-make-dispose' model into sustainable cycles of renewal and reuse. These stocks have been carefully selected by our analysts for their innovative approaches to resource efficiency and waste reduction, positioning them for long-term growth as sustainability becomes a competitive advantage.

Han Tan | Market Analyst

Updated 2 days ago | Published at juin 18