At Goldman Sachs, an ESG filter designed to prioritize companies focusing on recycling, waste management, and re-use is recommending investments in coal giant Glencore Plc over Big Tech leaders like Microsoft and Alphabet. Despite Glencore’s association with coal, it ranks highly due to its extensive recycling initiatives, according to Evan Tylenda, EMEA head of Goldman Sustain.
This circularity-focused investment strategy reflects a growing awareness of the limited supply of natural resources and the planet’s finite capacity for waste absorption. Goldman’s circularity portfolio, launched in 2021, has outperformed the MSCI ACWI Index by up to 16 percentage points. The strategy highlights firms like Glencore, which, despite its coal business, excels in recycling materials like copper, lithium, and cobalt.
The circular economy remains underappreciated, but Goldman argues it is crucial for addressing both net-zero emissions goals and biodiversity loss. Currently, 875 companies meet Goldman’s criteria for circularity, while Big Tech falls short due to concerns about resource efficiency. As circularity gains prominence, regulators, particularly in the European Union, are expected to push companies further toward sustainable practices.