James Alexander
CEO, UK Sustainable Investment and Finance Association (UKSIF)
Learn about the financial impact of shifting to circular economy principles and the rising demand for sustainable investments in the UK.
Customer preferences and stricter regulation are squeezing profits for major waste producers, drawing investor scrutiny.
Promoting circular economy approach
Principles for Responsible Investment (PRI) urges investors to incorporate circular economy principles into decision-making, highlighting the risks of ‘linear’ business models — with increasing environmental awareness among consumers.
Members of UKSIF — including prominent UK banks, asset managers and pension funds — report surging demand from clients and savers for investments that reflect their personal values. In UKSIF’s public polling undertaken in 2023, 69% of respondents said they were uncomfortable with their investments going to organisations that damage the environment.
Is adopting the circular model smart investing?
The central business risk from climate and environmental concerns in the UK is not currently immediate physical threats like flooding and wildfires disrupting supply chains. While those risks are increasingly significant, the central risk is regulation that renders previously heavy-polluting business models unviable.
With the UK Government’s legally binding commitment to reach net zero emissions by 2050, it suggests that big polluters, including large waste producers, are operating on borrowed time.
Investing in businesses built on circular economy principles can do more than just reduce the risk of climate-based litigation; it can deliver improved resilience through business model diversification — and even generate long-term rewards that accompany being among the first movers to a circular model.
In 2023, 69% of respondents said they were
uncomfortable with their investments going
to organisations that damage the environment.
Policy landscape hinders investment
Members frequently emphasise the considerable investment potential in emerging markets
like clean energy and electric vehicle supply chains, heat pumps and the power grid. Despite this potential, investment flow remains limited. Policy certainty and clarity of intent are crucial factors.
Investors must be allowed and encouraged to think long-term. The policy landscape must clearly signal that the green transition is underway and that polluters releasing needless, avoidable waste will need to pay. Wavering unsettles investors. Once the direction is clear, billions in potential investment await, as our members affirm.
The UK Sustainable Investment and Finance Association (UKSIF) is the membership organisation for those in financial services committed to promoting a more sustainable and resilient financial system that works for the benefit of society, the environment, and us all. UKSIF represents a diverse range of financial services firms committed to these aims, and our 320+ members, managing over £19trn in assets under management (AUM), include investment managers, pension funds, banks, financial advisers, research providers, NGOs, among others.