Introducing the Rize Circular Economy Enablers UCITS ETF
On May 31st, 2023, the Rize Circular Economy Enablers UCITS ETF (CYCL) debuted on the London Stock Exchange. CYCL seeks to invest in companies that stand to benefit from our transition to a more circular economy. These are companies that view the shift to a circular economy as a means of achieving truly sustainable growth by decoupling productive economic activities from the linear consumption of the Earth’s finite resources and thereby reducing pressure on our ecosystems and environment. These are companies that are making a substantial contribution to “The Transition to a Circular Economy” objective of the EU Taxonomy of Sustainable Activities, either through their own Circular Products and Services or through Enabling Products and Services that support (i.e. enable) other companies (i.e. industry practitioners) to enhance circularity within their own business models.
Our current linear economy involves extracting finite resources to manufacture products that are used and then thrown away. This linear process, colloquially known as the “Take-Make-Waste” model, is highly unsustainable, as it leads to the depletion of natural resources and environmental degradation. A more sustainable approach is the circular economy, which aims to prevent waste in the first place.
To understand the benefits of circularity, it is essential to first comprehend the linear economy’s unsustainability. The linear economy’s framework was laid during the Industrial Revolution and has undoubtedly brought many benefits to humanity, including mass production of goods, societies of abundance and poverty alleviation. However, the linear economy is innately polluting and degrades natural systems over time. We are now witnessing the adverse effects of the linear economy’s rapid scaling, which is a key driver of global resource depletion, rising temperatures and biodiversity loss.
The linear economy has many consequences that reflect its unsustainability. For instance, only 8.6% of the resources we use are cycled back into the economy and over 90% of natural resources taken from the earth are wasted. Additionally, over 80% of all product-related environmental impacts are determined during the product’s initial design phase. This unsustainable model has led to an increase in global material use by over four times in 50 years, with the world consuming over 100 billion tonnes of materials annually. In 2021, the mass of human-made things outweighed all living beings and biomass, including oceans, trees and animals. Experts project that natural resource use to manufacture goods will rise to between 170 and 184 billion tonnes by 2050.
The linear economy has also significantly impacted the environment and human health. For instance, intense scaling of the linear economy over the past 50 years has led to deforestation, soil degradation, loss of biodiversity, pollution and greenhouse gas emissions. Human health is also affected, with 4.2 million people dying annually from ambient air pollution and 1.8 billion people globally using contaminated drinking water sources.
The transition to a more circular economy involves implementing strategies that promote sustainable resource management, such as reducing waste, recycling and reusing materials. For example, the circular economy can be achieved by using renewable energy sources, prioritising materials that can be recycled and reused and incorporating circular design principles that reduce waste in product manufacturing. Implementing these strategies can mitigate the negative impacts of the linear economy and promote a more sustainable future.
In conclusion, the linear economy’s unsustainability has led to resource depletion, environmental degradation and negative impacts on human health. The transition to a more circular economy is necessary to mitigate these negative effects and promote sustainability. Implementing sustainable resource management strategies, such as reducing waste, recycling and reusing materials, can help achieve a circular economy. The shift to circularity is not just an environmental imperative but also a social and economic opportunity for businesses, governments and individuals to create a more sustainable and prosperous future.
 Platform for Accelerating the Circular Economy, January 2022. “RELEASE: CIRCULARITY GAP REPORT 2022”, Available at: https://pacecircular.org/news/release-cicularity-gap-report-2022
 Joint Research Centre of the European Commission, “Sustainable Product Policy”, 2023. Available at: https://joint-research-centre.ec.europa.eu/scientific-activities-z/sustainable-product-policy_en
 Circle Economy, “THE CIRCULARITY GAP REPORT 2022”, January 2022. Available at: https://www.circularonline.co.uk/wp-content/uploads/2022/01/Circularity-Gap-Report-2022.pdf
 United Nations, “Global Water Pathogen Project (GWPP)”, 2014. Available at: https://en.unesco.org/theme/water-security/hydrology/water-human-settlements/gwpp