Yesterday’s idea, today’s solution
The traditional, linear model of ‘take, make, dispose’ thrived in an era of cheaper materials and predictable supply chains. Today, heightened uncertainty, geopolitical tensions and supply chain shocks are forcing both companies and governments to reconsider the importance of resource efficiency. Enter the circular economy. The concept is not new, but we believe its importance today is greater than ever.
What’s driving the shift towards a circular economy?
- Rising input costs due to tariffs: Trade barriers and tariff escalations are increasing the cost of raw materials (Figure 1, below), making resource efficiency and reuse more attractive for companies.
- Supply chain constraints amid geopolitical tensions: Heightened geopolitical risks are exposing vulnerabilities in global supply chains, reinforcing the need for localised and circular sourcing strategies.
In short, the circular economy is evolving from purely a sustainability concept into a strategic imperative. By designing products for reuse, recycling, and resource efficiency, businesses can secure critical inputs, reduce waste, and build resilience in an era of resource scarcity and geopolitical volatility.
This strategic shift is one of the reasons the Sustainable Global Equity team see strength in the circular economy trend. We are actively allocating capital to companies that are innovating and delivering solutions to complex circularity challenges – those we believe are positioned to thrive as resource efficiency becomes a competitive advantage.
Figure 1: Export restrictions on the rise
Forever metal
Aluminium plays a critical role in many industries – from automotive and aerospace to packaging and renewable energy infrastructure. Its lightweight, corrosion-resistant properties make it indispensable for electric vehicles (EVs), solar panels, and wind turbines, all of which are central to the energy transition.
However, resource scarcity is becoming an increasing concern. The reasons for this are numerous:
- Energy-intensive production: Aluminium smelting requires enormous amounts of electricity, making costs highly sensitive to energy price volatility.
- Geopolitical risks: A large share of global aluminium supply comes from regions exposed to trade tensions and export restrictions, increasing vulnerability to supply shocks.
- Rising demand: The push for decarbonisation and electrification is accelerating demand for aluminium.
These dynamics underscore why circular economy principles – such as recycling – are critical for aluminium. Notably, aluminium is highly recyclable without losing its quality, making it a prime candidate for circularity solutions that seek to reduce dependence on primary extraction and mitigate supply risk.
Figure 2: The metal of the future: Aluminium’s rapid market expansion
We are actively allocating capital to companies that are innovating and delivering solutions to complex circularity challenges.
The real-world player
Norsk Hydro is a Norwegian aluminium and renewable energy company operating across the entire aluminium value chain – from mining and refining to primary aluminium production, recycling, and energy generation. As one of the world’s largest aluminium producers1, Norsk Hydro is also a leader in aluminium recycling, positioning itself to address resource scarcity and sustainability challenges.
As part of its decarbonisation and circular economy strategy, Hydro focuses on expanding its recycling capabilities. Key highlights2 include:
- Scaling recycling capacity: Hydro has invested in new recycling plants, such as the Høyanger facility in Norway, which processes 36,000 tonnes of post-consumer aluminium scrap annually. Scrap from vehicles, building facades, and packaging is de-coated and melted into ingots, then blended with primary aluminium to produce low-carbon casting products.
- Innovative product lines: Hydro offers Hydro Circal, which contains high levels of recycled content, and Hydro Reduxa, a certified low-carbon primary aluminium product, aligning with circular economy principles.
- Ambitious strategic targets: Hydro aims to increase recycling of post-consumer aluminium scrap from 443,000 tonnes in 2023, up to 850,000–1.2 million tonnes per year by 2030 (a 38% increase from the previous year). Since launching its recycling growth agenda in 2020, Hydro has recycled over 1.4 million tonnes of post-consumer scrap.
- Why it matters: Recycling aluminium is the fastest way to reduce emissions, requiring only 5% of the energy needed for primary production. It also reduces dependence on primary extraction and mitigates supply chain risks, while helping customers meet sustainability goals.
Norsk Hydro’s commitment to recycling and low-carbon aluminium solutions makes it an important player in advancing the circular economy. By scaling recycling capacity and innovating product lines, the company is not only reducing emissions but also strengthening resource security in an increasingly uncertain global environment.
The future is circular
Circularity is emerging as a strategic lever for industrial resilience and long-term value creation. Norsk Hydro’s integrated approach – combining recycling scale, product innovation, and low-carbon manufacturing – demonstrates how circular models can unlock efficiency, reduce exposure to supply chain volatility, and meet evolving customer expectations.
As resource constraints intensify, companies focused on circularity are not only solving environmental challenges but are building durable competitive advantages. That’s why we continue to invest in businesses leading this transition.
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This information does not constitute a solicitation or offer to any person to buy or sell any related securities or financial instruments.
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