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Rize ETF launches Circular Economy ETF


Rize ETF has listed its new Rize Circular Economy Enablers UCITS ETF (CYCL) on the London Stock Exchange (LSE) and the Frankfurt Stock Exchange (Xetra). The ETF will also be listed on the SIX Swiss Exchange in the next several weeks, the firm says.

The firm writes that CYCL is Europe’s first Article 9 sustainable thematic ETF specifically targeting publicly listed companies that have been identified as enablers of the transition to a more circular economy.

CYCL distinguishes itself by placing special emphasis on Circular Economy Enablers (e.g. Origin Materials, Verbio Vereinigte, Aurubis), which are companies that are enabling the transition to a circular economy, in stark contrast to Circular Economy Practitioners (e.g. Lego, IKEA, Nike) who actively engage in implementing circular economy principles into their business models, and Linear Economy “Best Practice” Facilitators who focus on optimising traditional linear economic models (e.g. Waste Connections, Veolia, Republic Services). 

CYCL is an SFDR Article 9 Fund and carries an OCF of 0.45 per cent. The ETF seeks to provide investment returns that correspond generally to the price and yield performance, before fees and expenses, of the Foxberry SMS Circular Economy Enablers Index.

CYCL invests in companies within the four circular economy business models of the SMS Circular Economy Enablers Thematic Classification addressing primary linear challenges across seven Key Product Value Chains which have been inspired from an anthology of circular economy literature published by the European Commission. The Thematic Classification was built in partnership with sustainability experts Sustainable Market Strategies and is the world’s first public investing classification of companies that are making a substantial contribution to “The Transition to a Circular Economy” objective of the EU Taxonomy. Each company is assessed for its relative contribution based on the extent to which it provides its own enabling Circular Products and Services or Enabling Products and Services that support (i.e. enable) other companies (i.e. industry practitioners) to enhance circularity within their own business models.

This new ETF launch brings Rize ETF’s total ETF offering to nine, complementing existing sustainable thematic ETF offerings including the Rize Environmental Impact 100 UCITS ETF (LIFE) and the Rize Sustainable Future of Food UCITS ETF (FOOD).

Rahul Bhushan, Co-Founder and Director of Rize ETF says: “A circular economy aims to break the current linear economic cycle by prioritising waste prevention and the continuous use of resources. Transitioning to a circular economy, directly addresses the challenges of resource scarcity, environmental degradation and climate change.”

He adds: “With CYCL, our clients have an investment strategy that is purpose-built for EU Taxonomy-aligned portfolios, leveraging literature published by the European Commission and its working groups on the “Transition to a Circular Economy” objective. Crucially, the investment strategy focuses on the enablers of the transition to a more circular economy (e.g. Origin Materials, Verbio Vereinigte, Aurubis) as opposed to companies that are merely circular economy practitioners (e.g. Lego, IKEA, Nike) or enabling end-of-life “best practice” in a linear economy (e.g. Waste Connections, Veolia, Republic Services). This sets it apart from what’s out there today.”

Stuart Forbes, Co-Founder and Director of Rize ETF adds: “We recognised the need for an impact strategy focused on the circular economy. The Rize Circular Economy Enablers UCITS ETF is Europe’s only circular economy ETF that aligns itself with the nine “R” Strategies and Principles Hierarchy of the Circular Economy. By acknowledging these nuanced degrees of circularity and the diverse contributions different companies are making towards enhancing circularity, our ETF stands as a testament to our commitment to sustainable investing. With this unique perspective, we enable investors to participate in the journey towards circularity, unveiling new dimensions of value and promoting sustainable growth.”

The Rize ETF team writes that  the circular economy is a departure from our current, enormously wasteful “linear” economic model of Take-Make-Waste, in which resources are extracted, turned into products, used—generally not to their full potential—and then eventually thrown away. 

“The linear economy is an innately polluting economy that degrades natural systems over time and is also a key driver of our global resource challenge, impacting the degradation of our ecosystems and biodiversity. Conversely, a “circular” economic model redefines production and consumption around principles of designing out waste and pollution, keeping products and materials in use for as long as possible and fostering a regenerative approach to resource management. It entails redesigning products to be more durable, reusable, repairable and recyclable, and therefore kept in circulation for as long as possible. Beyond product design innovations, it also means changing the way we consume and use goods and services, and rethinking consumerism as a society.”

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