Podcast: The circular economy and the $25 trillion opportunity

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[00:00:08.650] - Joe Fernandes

Jack, we know the linear economy is about take, make and waste. And we know the circular economy is about take, make, reuse. But could you give us more of an idea of what the circular economy is actually about and how we do things?

[00:00:22.040] - Jack Dempsey

Yeah, sure. Good question, Joe. I mean, the simplest way to think about it is if you think about today we live in a linear economy, as you said, take, make, waste. So if you think about it's almost a conveyor belt, you're taking stuff, you're making something from it, you're using it, and then it becomes waste, right? So often it ends up in a landfill or, I don't know, you can picture plastic bottles in an ocean, right? And that's not sustainable. So a circular economy is all about turning that line into a circle. So, instead of stuff falling off that conveyor belt and becoming waste, it's reused or repurposed and becomes something else of value. And why that's important and the kind of main reason that we care about a circular economy is that our global economy today, consumes too much resources. So the best way to think about what the circular economy, I guess, aims to achieve, it's all about decoupling economic growth from resource consumption and that's the ultimate aim. The other, I guess, thing to pull out from the circular economy and it's also why we quite like it as a sustainability theme, is that a lot of sustainability often seems a bit reductive.

[00:01:30.680] - Jack Dempsey

So don't go on that flight, don't eat red meat, don't buy new stuff which is all well and good and does have a positive impact, so we can't fault it. But we don't want to detract away from economic growth. People still want to have more stuff, people want to have better lives, people want to have better standards of living. And the circular economy is one way to achieve that. If we can grow our economies, if we can grow the economy without using up all our resources effectively, because we're already doing that, we're already using more resources than we consume, or we're already consuming more resources than we produce and still leave economic growth unimpacted, it can be a pretty powerful outcome.

[00:02:16.480] - Joe Fernandes

Great. And that all makes perfect sense that we're over consuming currently as an economy and as a nation and globally we're trying to reduce our dependency on fossil fuels and resources. But what kind of things or how can we address the circular economy or how do we get there?

[00:02:31.890] - Jack Dempsey

Yeah, I mean, the way we look at it, and I guess the way others look at it as well, is, I guess what sort of stuff do you do on a bottom up basis, as you said, to achieve that outcome? And the three, I guess, pillars of that are keeping products and materials in use. So, I said in the first example of the stuff falling off the conveyor belt and becoming waste, if we can stop that becoming waste, we don't need to use new materials. So globally today, all the waste we produce in the world, only 14% of it is recycled. If we can find a way to move that 14% to 100% or somewhere close to it, that means we need a hell of a lot less materials. It's also more economical because all that stuff we throw away has a value and it also creates growth opportunities for companies to help bridge that gap. Whether it's the companies collecting waste, the companies recycling it, there's a huge amount of work to be done. So that's the kind of first pillar. The second one is about designing out waste and pollution. So how do we make products that don't produce waste or don't produce pollution?

[00:03:32.950] - Jack Dempsey

So like a really simple example of that know, we're in the UK, a lot of people have gas boilers in their homes for heating. So obviously you're using gas, which is a fossil fuel. How do we now make products that don't produce that pollution associated? So if you think about something it's in the news a lot around heat pumps. That's a way to help, I guess, electrify your heating supply. And if that electricity comes from renewable sources, by choosing a different product, you've helped design out waste and pollution. And then the third pillar is around regenerating natural system and that really regenerating natural systems and that really ties into using less non renewable resources and so, the big culprits there are the likes of oil and gas. So how do we transition from oil and gas to, I guess, alternative fuels are alternative products. So if you think about, one, electrifying the grid, two, using stuff like biofuels, or again, a big topic today, sustainable aviation fuel, how do we fly a plane without producing emissions? And the best answer we've got today is we transition to sustainable aviation fuel which can reduce the emissions from aeroplanes by over 90%.

[00:04:40.860] - Jack Dempsey

So again, it's tying those three pillars together are, I guess, the kind of stepping stones to how we achieve it.

[00:04:47.770] - Joe Fernandes

So we've got to be more conscious about what we extract into the loop, keep things in the loop for longer and think about what happens when they reach their end of the life and taking them apart and remaking them into different things or putting them back into the loop. And this is all great and we know we're extracting more resources than the Earth is producing, which is obviously going to run out at some point. And what happens then? Or is that going to happen?

[00:05:13.400] - Jack Dempsey

Yeah, hopefully it doesn't happen. Again it's coming back to that decoupling economic growth from resource consumption. So as you said, we're using more than we produce. So I guess to put some numbers around that, of the whole planet Earth today we're using about 170% of the resources that the planet naturally produces each year. So we're using more than we produce. And obviously that's not incredibly sustainable. I mean, just like your bank account, if you spent 170% of what you earn each year, you're going to find yourself in a lot of trouble or you're going to be asking your boss for a big pay rise at the end of the year. And you don't always get a good answer to that. I guess that's the main issue. And we're at 170%, which equates to 1.7 planet Earths. As early as recently as the 1970s, we were using one planet Earth, right? So in that time period, obviously it's been a great, whatever, 53 years of economic growth, right? And the global economy has really come a long way, but we've done that on the back of using more and more and more resources. So we've gone to the point of using one planet Earth to 1.7 planet Earths.

[00:06:25.360] - Jack Dempsey

And so if we then we look forward over the next 30 years out to 2050, the UN projects, there'll be 9 or 10 billion people on the planet. And everyone's got the ambition to have a higher standard living. And unfortunately, in today's world, a higher standard living perfectly correlates to using more resources. So if you think about the emerging class in Asia or I guess what will become emerging class in Africa, all those people will want more stuff. We're heading towards a path where we're going to need three planets by 2050. But then if everyone was to say live like someone from North America, that would be five. So it's quite urgent as to doing something about that. And the only real answer we see is transitioning to a more circular economy to really tackle that need to decouple economic growth from resource consumption. The other side of that, and kind of a byproduct of using too much resource, is around decarbonization and tackling greenhouse gas emissions. So it's not something that gets a huge amount of press compared to, I guess, renewables or all the kind of front page news. But 45% of greenhouse gas emissions come from the way we make and use things, and that includes agriculture.

[00:07:37.160] - Jack Dempsey

So if you think about the need to make steel, our cement, our plastics, chemicals, obviously they all produce emissions, but they can't be solved by electrification alone or rolling out renewables alone. So if we don't do anything to tackle those 45% of emissions and the growth in those because obviously as the world uses more of those resources and needs more food, et cetera, those emissions grow. If we don't tackle them, we actually don't do anything to achieve the 2050 Paris climate goals. And so we like to say internally, we see no net zero without a circular economy. And so the decoupling economic growth from resource consumption, there's the tackling the climate change and then also increasing focus, and a definitely bigger focus of at Schroders as well is around natural capital. So 90% of biodiversity loss comes from extractive industries. If we transition to a circular economy, we need less extractive industries as I spoke about, if we can recycle more, we need less new inputs. And so by transitioning to a circular economy, we can also help tackle biodiversity loss. And so we find it's a pretty three urgent kind of environmental sustainability needs, but one pretty clear solution.

[00:08:59.690] - Joe Fernandes

So we're talking there about Earth Overshoot Day and how that's increasing as the years go on and we're using more and more resources every year, and that day is getting earlier and earlier. And you're quite right that people in emerging markets will want to increase their lifestyles and that all takes resources. And you and I, we still want to be able to go on holiday and do things. So that really isn't the answer to all this. And we're sat here now with chilli bottles, reusable water bottles, and we go down the supermarket with a tote bag because we know plastic bags aren't great. But why is all this kind of happening now or what's driving the growth in the circular economy?

[00:09:38.130] - Jack Dempsey

Yeah, that's often the best question we get asked is, I guess, why now? I mean, I just touched on decarbonisation, right? I mean, decarbonisation gets a lot of focus. So we've had the EU Green deal. We've got the Inflation Reduction Act in the US. It seems like the whole world is on board with tackling decarbonisation. So that's one element to know regulation specific to, I guess, the circular economy as we spoke about, not using plastic bags, which I guess we've been not using for quite a while now. The EU has its Circular Economy Action Plan, which is a lot of prescriptive legislation on reducing waste, making packaging more cyclable, improving agricultural practises. In China, there's a five year Circular Economy Development Plan around precisely decoupling economic growth from resource consumption. So they've got specific targets on, they want to reduce water use per unit of GDP growth, they want to reduce material use per unit of GDP growth, which is quite a powerful message, I guess, if you're setting out those target as a country level and it's up to, I guess, companies and consumers to achieve it. And then, you know, in the US, the US is the biggest economy in the world, but we don't have a kind of federal level circular economy legislation.

[00:10:51.390] - Jack Dempsey

But you do see on a state level and I guess it depends politically where those states lie, but you definitely along the coast, you've got bigger focus on reducing packaging waste, driving recycling rates and tying, I guess, into those three pillars I spoke about on a circular economy basis. And then you even have countries in emerging markets where they're the first step on a long journey. But the batting of single use plastics, the move away from, as you said, plastic bags going to the supermarket, they're small steps, but they all matter on that journey, I guess, to one force change true legislation, but two also changing consumers behaviour. So I guess that's the first big one. Second one, which again is kind of really grown in focus over the last couple of years, is around supply chains and how deglobalisation is maybe forcing a change in how companies and governments as well want to think about how their economies are supplied. So you're seeing a greater focus on moving supply chains back closer to where the consumption actually occurs. And obviously there's a lot of reasons for that.

[00:11:59.860] - Jack Dempsey

The supply chain delays over COVID. There's greater, I guess, geopolitical tension as well, but I guess specific to the circular economy. If you've got materials that you can use to support your economy, support your economic growth, in your economy, and they're leaving as waste, or they're leaving to be recycled somewhere else, that doesn't make a lot of sense because it's more cost effective if you can use them there. So we're seeing a greater focus from, again, linking into that legislative push of, I guess as I said, reusing those materials. So the EU has a critical raw materials legislation which is again focusing on what materials does the EU need to operate its economy. And a lot of that ties into materials for semiconductors or materials for EV batteries. And so there's a much greater push to start recycling those materials in the EU rather than having them leave and to go to another country which then have to return. So it's not super efficient, but also the supply security. And you see it in the US as well, where with the Inflation Reduction Act, there's been some direct legislative push within that and funding available around recycling.

[00:13:07.440] - Jack Dempsey

So especially on EV batteries again, lithium and the other kind of rare earth minerals that go into batteries are. I think it's pretty clear that if the world moves to 100% electric cars, there may not be enough of this stuff. And so do you want to be reliant on supply chains thousands of miles across the world to supply this stuff that you need to keep your country moving? The answer is probably not. So, if you can reuse it, it's more economical, I guess it keeps money in the economy, but also it gives you a bit more supply chain security. I guess another reason, and again kind of COVID has thrown up this a lot in greater focus, given the kind of high inflation over the last couple of years, is that it can often be more profitable. And when companies make decisions to be more profitable, it's just capitalism, it's not sustainable, even though the outcome is, yeah, they can go hand in hand. And so I've seen examples of companies, specifically in Europe around, I guess, the energy crisis last year where companies had invested in heat recovery plants or using biomass from their own supply chain, from their own value chain to produce energy.

[00:14:25.170] - Jack Dempsey

And those are the companies that did a lot better supported their profitability and margins. And so we're increasingly seeing that if you can have better control of your raw materials, you can adopt circular economy practises. You have better control over your costs. And if you have better control of your costs, you probably have better control of your margins. So again, it's an increasing push and every day when we're out meeting, companies are reading sets of results, the circular economy is getting a better focus because it's a way to improve profitability. And then I guess the final push is around demographics. And I guess demographics is spoken about in an investment way. It's often kind of the world ageing, which the world is obviously ageing, definitely in the Western world, it may not be everywhere else, but when it comes to circular economy, we definitely see a higher propensity for younger consumers to push for more sustainable products. So again, you think of the likes of Coca Cola, which is probably like the bastion of capitalism in the US. They have very stringent recycling targets for 2025 and 2030. They're using more cans rather than plastic.

[00:15:34.330] - Jack Dempsey

I don't think they're doing that for the good of their own heart. They're doing it probably because their end consumer wants to associate with a brand that is sustainable. And so that's well and good, right? And that's something that, again, it's not just Coca Cola that is doing that, it's across the economy. But if you think about that change, so for 30 years you've had increasing penetration of plastic in bottles, bottles of Coke, bottles of water, et cetera, et cetera, that used to come in glass and aluminium and steel, which are all infinitely recyclable, which is very circular economy, right, because it's in a loop. And then it was more cost effective to put it in PET plastic. And so, again, Coca Cola as a not just Coca Cola, all kind of beverage companies started pushing plastic more because they could charge the same, put it in a lower cost packaging and they could make more money. It made sense, right? Plastic is still the cheaper one, right? But it's not the most sustainable one. And so you're seeing companies change because their consumers are demanding it. And so if you think about much wider than just packaging, if you think about that transitioning across a whole economy of consumers demanding all this stuff, it's a pretty powerful tailwind.

[00:16:50.950] - Jack Dempsey

And so it's happening because of regulation, it's happening because of consumer demand and it's happening because of companies desire to make more money, because the circular economy can be a driver of profitability.

[00:17:02.550] - Joe Fernandes

So it seems like everyone's waking up to this kind of growth in the circular economy and the benefits for both companies that are onshoring or reshoring having more control over their resources. Realising that the emissions and efficiency of shipping resources from the west to the east and back again isn't very good for business or for Planet. Seems like consumers here are driving the change, wanting and willing, I think, to pay more for some of these sustainable products.

[00:17:27.600] - Jack Dempsey

Yeah, I mean, you laugh all the time when you see cans of water. Growing up did you ever see any cans? But obviously people want cans of water. And we've got examples of companies that we think our investors should consider as interesting, where, again, I kind of referenced that plastic, bit of plastic grew in Coke bottles, but now you've got the beverage can is coming back. So in the US, 75% to 80% of new beverage product launches come in a can. Which is an amazing stat, right?

[00:18:01.680] - Joe Fernandes

Yeah.

[00:18:02.060] - Jack Dempsey

Because obviously consumers are seeing the sustainability benefits of a can recycled infinitely. It's a perfect loop, right. Aluminium goes to the recycling centre, it's made back into aluminium, goes back to the can makers, gets filled with Coke, water, whatever energy drinks, whatever you drink, and then comes back and be reused. And that can often happen in a 60 day cycle, which is amazing. And so we're seeing companies who didn't necessarily grow for a long period of time, suddenly they're growing 5% 10% a year. And that's translating into, obviously, much higher earnings growth, which, again, is pretty attractive in a broader sense. But it's all driven by that need to be more sustainable because consumers are demanding it.

[00:18:44.710] - Joe Fernandes

Yeah, absolutely. So we're sort of seeing this big change here, and consumers are being rewarded if they hand back plastic bottles through a deposit return system they're endorsed here with extra money, or whether they're handing in old clothing to companies and given discounts on new purchases. So the loop does seem to continue and grow. We've touched on a couple of examples, or you have already of beverage cans and what have you, but where are the kind of problem areas or where do we need to focus on in order to aid the transition to a circular economy?

[00:19:14.780] - Jack Dempsey

Yeah, I guess, like high level, if you think put your investment hat on, taking a step back is kind of, why does the opportunity exist? Why are we interested as investors, right? And there's a mismatch of supply and demand, right? Because we're using more resources than we produce. Demand exceeds supply. Normally, when demand exceeds supply, there's an opportunity for investor because either prices are going to rise or if you can fulfil that demand, you'll be rewarded. Actually, there's a couple of good books by Accenture, that Accenture have written, Waste to wealth and The Circular Economy Handbook, and that looks into kind of as they kind of obviously say in the title of the book, but businesses and what they can do and examples of how they do it. But they've got an interesting piece of work they did where they look at basically as the economy grows and there's more people, that kind of resource gap that opens up. So that excess of demand over supply. So that's worth a couple of trillion by 2030. But if you look out to 2050, they estimate that's worth $25 trillion, right? So if you think about where that demand exceeds supply and where companies can help close that resource gap, that's a huge amount of reward they can play for.

[00:20:35.290] - Jack Dempsey

And so if companies have an opportunity to see outsized growth or outsized returns, we as investors, I guess, have to take notice and pay attention to it, right? I mean, that's like a really high level, kind of top down way to look at it on a more bottom up basis. We kind of book it into five areas that we, I guess, see the greatest problems. I mean, I spoke about waste. There's about 2 billion, I think it's tonnes of municipal solid waste. That's a waste me and you create at homes, our businesses outside, I don't know, coffee shops, et cetera, our offices create each year, right? That's going to grow by 70% by 2050, because as we spoke about population rising, rising living standards equals more waste. So that's a problem that's becoming a bigger problem. But within that, as I said already, that 14% of waste being recycled. That needs to improve as well, right? Because that 14 ideally, needs to head towards something more like 100. And obviously it's not going to hit 100 in our lifetimes. But, even if you can move that 14 to 28, that's a huge amount in a growing market.

[00:21:51.330] - Jack Dempsey

So, again, that's a really big problem. And the way we like to think about the circular economy investment team is that problems need solutions. And we like to invest in the companies providing those solutions, those solution providers. So, I mean, that's the waste example. Water is the next one. Water demand is going to increase 30% by 2050, yet 60% of the kind of global water supplies, that kind of groundwater that we all draw from are close to depletion. I e. We're taking out more than is getting filled up. And you're seeing that play out in droughts in Europe and Canada and the US and places that didn't historically get them. And again, it's that demand and supply mismatch. And so there's got to be huge opportunities for companies to want improved water infrastructure. Places like the US. 15% to 20% of the water supply is lost in leaky pipes. Again, it's solvable. It's not rocket science, right? I mean, obviously there's a cost benefit analysis and companies need to be paid to go and do it. But again, if companies can be paid to do it, we as investors need to look up because if that's changing their growth projection and their earnings know, that's pretty interesting.

[00:22:59.130] - Jack Dempsey

And that's one, that's water infrastructure, it's water reuse of places like Israel and Singapore aren't blessed with huge amounts of water supply. So the investment in water reuse where up to 80% of it is reused, as opposed to in the rest of the world, 80% of it is just kind of becomes wastewater. So I'm talking about kind of industrial processes there. And then there's also like property investing in more water treatment plants. So again, there's opportunities for companies across that spectrum of the water value chain to see again additional growth because demand is exceeding supply. The three other areas are construction materials. So if you think about the built environment, it produces about 60% of global greenhouse gas emissions. So whether that's the making of steel, the making of cement, it's the heating for your home, it's the power for factories, et cetera. So it's 60% of global greenhouse gas emission source, but it also produces 60% of global waste. Right? Because it's knocking down stuff, building it, you see skips outside construction sites, right? So I mean, it's a huge problem area, but it often seems across most of the world that we don't have enough houses.

[00:24:17.850] - Jack Dempsey

Infrastructure needs investment and we need more.

[00:24:20.370] - Joe Fernandes

Need more homes and need more.

[00:24:21.940] - Jack Dempsey

Exactly. Maybe we don't need more offices, but it's a general trend. We need more stuff. So how do we build more and have less of an impact, right? I mean, it's difficult answer, but the solution is in starting off designing buildings to be net zero. So whether that's using software from the likes of like Autodesk, if you're an architect or if you're doing infrastructure like a Bentley Systems in the US, when you're designing a building to be net zero, you're obviously going to need good insulation, you're going to need sustainable building products. So high degree of recycled material. So like Carlisle in the US do insulated roofing systems where just like your body, most of your heat goes out of your head. Same with buildings, right? Most of it goes out the roof. And so if you can save energy that way, that's another way on that path to being more sustainable and solving those issues. But it's also about increasing the amount of recycled content in that material. And so we're seeing huge kind of, I guess, step ups and commitments from companies to deliver those sorts of products as more and more companies become focused on scope three emissions and going beyond.

[00:25:35.550] - Jack Dempsey

So again, that's a huge end market and a globally growing one. Two massive problems, but they all need solutions and there's a lot of companies that play a part in that, which obviously will see growth on the back of it. The other areas we see agriculture and kind of that natural capital element of agriculture is the number one loss or source of biodiversity loss. We need to produce more food in the next 40 years than we did in the last, I think it's 8000, which is like an unbelievably scary stat, right? So how do we do that without using cutting down more rainforests? It's all about increasing agricultural yields, using more sustainable fertilisers, introducing in or investing in cold chain infrastructure in the emerging markets because one third of food ends up as waste. So again, that need to drive efficiency, design out waste, keep products and materials in use, stop stuff becoming, one being more efficient, but also stop stuff becoming waste by investing behind it. And then the fifth one is energy and transport. So obviously, the burning of fossil fuels is the number one source of greenhouse gas emissions and electrification and renewables have a huge amount of work to play in tackling that.

[00:26:50.580] - Jack Dempsey

But we mentioned going on planes and stuff like that. There is hard to abate sectors and so huge opportunities in the likes of biofuels and sustainable aviation fuels. Excuse me. And then the nascent kind of hydrogen space again, is going to play an answer in decoupling that economic growth from resource consumption that I've been kind of hammering home about. But those are the kind of five problem areas that we see and each of them have a huge amount of opportunities within them.

[00:27:25.850] - Joe Fernandes

Well, so there's a big opportunity here of about $25 trillion here that if we do not reach the three planet Earths that you mentioned earlier, by 2050, there's a lot of areas that can benefit here and companies that can benefit too. I mean, you and I have been looking at a lot of report and accounts for companies at the moment. We can do a control F and search the circular economy. There's a lot of companies commenting on this, but we know from the likes of you mentioned Coca Cola earlier and you walk through the supermarket and some of the FMCG businesses aren't really circular economy businesses just because they use a recycled bottle or they break down a bit easier. So what do we need to do here to make sure we are targeting those solution providers that are really going to aid the transition to a circular economy?

[00:28:09.540] - Jack Dempsey

Yeah, that's a great way of summarising it up. And I think the best way, obviously I would say that, but I think the best way to think about it, and the way we do think about it is, does a company's revenue and profits increase? Are they driven by the need for a more circular economy?

[00:28:33.050] - Joe Fernandes

So are people buying or drinking more Coca Cola because it's a recycled bottle, it's in a can?

[00:28:38.230] - Jack Dempsey

I mean, you tell me. I think the answer is no. I mean, do they buy more? Maybe they keep buying it because it is in better packaging, but it seems like the whole world has transitioned to this more path again, depending what part of the world you're in, of course. But I mean, the very simple way I think we need to look at it is that, do people buy more of their products because of the need for a circular economy transition? And so we don't see companies that package their products in recyclable or recycled material packaging as circular economy investment themes. Right. Because as an investor, if you're investing in a theme, you want that theme to drive, I guess, the future prospects of the company, right? So we want to be sure that we're investing is that we see a need to decouple economic growth from resource consumption. And so we want the companies we're investing behind to benefit on the back of it. And so we want to be quite stringent in how we assess that. And it comes back to is it designing out waste and pollution? Is it keeping products, materials in use and is it regenerating natural system?

[00:29:53.460] - Jack Dempsey

And if the need for the product is achieving one of those three things, then we think we can invest behind it because the company's prospects will improve on the back of that transition.

[00:30:05.970] - Joe Fernandes

But we do know the companies that get it right are acquiring customers and customer acquisition is expensive for businesses. And we know that people, if they are truly paying up for sustainable materials, do want them time and time and again. So do we need to score companies here or how do we really distil some of the investment world into the sort of pure play operators that we want to look at?

[00:30:29.390] - Jack Dempsey

Yeah, everyone can have a different approach. The one we've gone with is we have a circular score framework. So we look at, as I said, the company's products and services. Is the need for that driven by a circular economy transition? That isn't one element of the score. But then we also want to understand how a company goes about providing those products or services. So if they're using raw materials, where are they getting them from? What are they doing with the waste? Is that sustainable? Is it not sustainable? Are they using a lot of water? Is that water being treated before being released back into the rivers or the oceans? We want the answer to be yes. Are they using lots of energy? Is that coal? Is it renewable? Hopefully the latter. And then also what are they doing about their supply chain? There's a lot of companies out there who have kind of good sustainability profiles because they don't actually make anything. They outsource the production of what they sell. And so it's a kind of, well it's not my emissions, it's someone down the chain, but the end product has got same emissions. We want to know what are they doing about the waste, the energy usage, the emissions in their supply chain.

[00:31:39.880] - Jack Dempsey

And also is everyone in the supply chain being treated fairly? And then we also want to know, is the management team aligned with achieving these goals? We want to see management pay incentivised to a degree on achieving environmental outcomes which again are aligned with circular economy principles. And so we factor all that in and then we also consider the risk profile of if you're a brand new company and you've got this unbelievable product that's going to, I don't know, change the world, that's great, right? And that's a potentially high impact circular economy investment. But we also need to be cognisant that not every investment works out right. So we've got to factor in risk to it as well. And so when we combine all those open a kind of quantitative framework, we get a score. If the company exceeds a score of 50, they can be included in our investments, but if not, they don't pass the bar to be included in any fund. And so I guess it's our way of making sure that we're one investing in those solution providers, but also providing investors with a genuine and authentic exposure to a theme that we see as an enduring and a secular growth theme.

[00:32:55.620] - Jack Dempsey

And so it's all about really making sure that every single investment is aligned with the growth of the circular economy. Because I think when people invest into a circular economy theme, they're investing behind the theme. They're not investing behind, I guess, good citizens who might, like Coca Cola, who might put their stuff in recycled bottle, but the demand for those products aren't being driven by a circular transition.