GS Sustain: The Evolution Towards a Circular Economy

The need to move towards a Circular Economy – one in which consumption of ecological resources is equal to or less than what the planet can regenerate – has been discussed for years but not sufficiently deployed, with resource consumption 75% more than Earth’s regeneration capacity in 2021 and waste on track to be 70% higher by 2050 vs. 2016. However, Goldman Sachs Research sees three catalysts that can push forward deployment of Circular Economy solutions, which could potentially unlock $1 tn of annual materials savings, based on a World Economic Forum study. First, the spike in commodity prices is likely to increase deployment of energy/waste/food efficiency solutions from both individuals and corporates. Second, the intrinsic link between resource consumption/waste and GHG emissions will make Circular Economy solutions critical for transitioning towards a low carbon economy. Third, the extension of the EU Taxonomy to include Circular Economy categories is likely to increase corporate and investor focus on solutions as well as valuation uplift for strong performers. In this report, Goldman Sachs Research details seven Circular Economy themes.