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Green Shoots & Big Shifts is hosted by Reetu Gupta, who started the show to have open, hopeful conversations about what it really takes to make sustainability part of how we live, lead, and work.
Each week, she talks with people doing innovative, meaningful work, turning ideas into action. From startup founders and corporate change-makers to community leaders - reimagining how business, society, and the planet can thrive together.
These are stories about innovation, collaboration, possibility, and the everyday shifts that move us toward a more abundant and resilient future.
you're listening to Green Shoots and Big Chefs
the show that spotlights the people and ideas
transforming our world for the better
I'm your host Reetu Gupta
in every episode
I'll be talking with innovators and trailblazers
who are reimagining our relationship with our planet
earth whether it's a small spark of innovation
or a sweeping shift in how we live and work
we'll explore the stories that give us hope
and the actions making a difference
together we are planting seeds of change
and driving big shifts for a healthier
abundant sustainable future
hi I'm Reetu Gupta
I am your podcast host I'm very excited
to have Emily Bagner today on the call as a guest
thank you so much Emily
for joining for our listeners
could you just share a brief overview of what you do
your company sounds great
thank you for having me Ritu
uh yes
my name is Emily Wagner
I am the industrials and Materials
Equity Research analyst
at Calvert Research and management
we are an asset manager a responsible asset manager
with about 50 billion in assets under management
awesome and I know Calvert has recently
published a significant report on circular economy
for our listeners
who may not know what circular economy is
or it might equate that to recycling
can you help us unpack
what circular economy really means
from an investment perspective
so yes we published a white paper
on the risks and opportunities
in the circular economy the way that we look at it is
that we're currently in a world shaped by resource
scarcity and supply chain challenges
so when you think about a circular economy
this is a model that minimizes waste and
reuses resources
and it stands out as a strategic investment opportunity
from our perspective
because it can reduce cost and risk
while also addressing pollution and emissions
while circularity is very much tied to recycling
it's not everything um
we've our research
we've also noted that uh
at the design phase about 80% of
a product's environmental impact
is determined at the design phase
so as we looked at our approach to circular economy
while we included recycling as a clear theme
one aspect that we want to start with
is really looking at things from a raw material
perspective and how do we go all the way
from the beginning of the supply chain uh
through uh production
consumption and end of life
yeah that's very interesting
and I read your report and it breaks down
as you were mentioning
circular economy into segments of like
sustainable material asset
lifestyle management recycling
obviously as you think across that report
or based on your experience
what are two or three key takeaways from
from that report
that you think would be most meaningful
for either corporations
or people who are trying to implement circular economy
yeah so
the four themes that we have are sustainable materials
so these are really the building blocks
on the supply side so
these are companies whose products
or business models are material
you're producing recycled materials
medals and packaging and then
we think about it from the demand side of the equation
so circular economy
leadership would be companies that are like
consumer packaged goods or beverage
companies that are really pulling forward the demand
of those recycled materials
and then once you have a product that's in production
one tenant of a circular economy is
maximizing the useful life of that product
so we think about things
through asset life cycle management
certain business models like resale or leasing
that might be employed there
to extend the useful life of an asset
before finally
thinking about waste collection and transformation
which is what truly distinguishes
a circular economy from a linear one
because you need to address both um
both aspects of
you know collecting and transforming those materials
so as we think about it for a corporation
many corporations fit into one of those four categories
so I think it really uh is a example
where this is applicable across all different sectors
as we think about it it's really about resilience
and a risk management strategy
so how do you ensure that volatile commodity prices
or supply chain disruptions
geopolitical changes or global conflict
and shifting regulation
are impacting your risk and your bottom line
and the cost perspective so
the way that we've taken
the approach here is to focus on financial materiality
so how do you as a company
have a financially material
connection to the circular economy
and that could be through a revenue perspective
so thinking different servicing models
like repair or refill while for expenses
it's
how can you design a product in a way that minimizes
waste and secures your supply chain
and then lastly risk also so again
thinking about supply chain using more local materials
things in your backyard are often going to be uh
less risk averse than
something that you have to import from other
areas of the country or other areas of the world
and so along those three aspects of connectivity
for materiality
that's really how we would expect corporations
to interact with something like this
in this report and thinking about how does
circularity benefit their bottom line
and their risk tolerance yeah
I I love that connection
I love the connection between financial
materiality or bottom line
and how circular economy can actually enhance it
um to your example of like
if you have local material in your supply chain
it is less um
risk prone to supply chain disruptions
due to a multitude of of
of reasons that might be there
and like just to make it real for the listeners um
are they like can you share
any real world examples from a particular
company or industry
or something that stood out for you over the years
or in terms of you know
a circular the business model
yeah um
yeah I think
waste transformation is kind of the obvious one to
to go for so if we think about waste management
companies are not necessarily the
the sexiest of industries
but they're very much necessary
so if you think about global solid
municipal waste generation
right now
we're currently at around 2.1 billion tons globally
in 2023 that's expected to grow to 3.8 by 2050
so this requires significant landfill capacity
but then it also requires
recycling to be able to divert waste
so if I think about this
business model and what is circular about it
we're really seeing players in the waste
management industry
making significant investments in recycling capacity
to help divert some of the waste from landfills
so that helps extend the useful life of the landfills
I think this is also really important
when you think about the advent of extended producer
responsibility laws
that are getting enacted in certain parts of the world
so this is going to increase the amount of collection
of recycling
and then you of course need that processing capacity
so companies are making investments
to prepare for that
there's also opportunity for AI applications
so we're seeing that
while these larger companies are not necessarily um
building out their own AI
they're working with um smaller startups that have uh
AI capabilities in terms of sorting
so think about the recycling facility
if you have homingled plastic and paper
and all of the different substrates going um
through the Mur for the material recycle
or the material recovery facility
you can use AI
to help sort all those different materials
which can help waste stream purity
recovery and then reduce the cost of the recyclers
cause it's a very manual process
yeah
and then the last one I think is as interesting on the
the new side and the cost side of the equation is that
um landfills are not exactly
you know the most eco friendly
they release a lot of methane gas
and so we're starting
to see companies make investments
into capturing that landfill gas
and transforming it into renewable natural gas
and so this is beneficial to the company
because they can sell it and have a new revenue stream
but they can also use it internally
so
there's certain companies that operate garbage fleets
they're using that as a fuel internally
versus buying it on the market
that reduces their costs
so this is a clear example where this business model
there's alignment here
from a revenue opportunity standpoint
cost reduction and then risk mitigation
yeah that is so interesting
I wouldn't have thought about waste management
like I said it's not the most fun one to talk about
but we all put our trash out every few days right
it's if that's a
you know part of his life
yeah and as I've been reading more like
you know obviously I've been recycling for
for a long time but I only recently Learned that
you know those materials when they are commingled
it is so hard to separate and recycle them
so in your example
it makes a lot of sense why they are investing in
in areas um
can you explain what extended producer
responsibility is for our listeners
yes haha
I like this one yes
so extended producer responsibility
um it's a type of law or regulation that's been um
coming into place in the last few years
uh it's really designed to price the externality
of consumer waste by
addressing the materials that go into packaging um
and textiles as well as disposal schemes
so they're really incentivized to
use recycled content and packaging
and they use fee schemes to help collect money
to fund the end of the life
collection and recycling that's needed
to support the supply
to what goes into that recycled content
so if you think about it
there's two major laws that are been passed
one in Europe
called the packaging and Packaging Waste Regulation
that goes into force this year
and one in California SB 54
those are the two big ones
for instance California
the way that the law is structured
is that it says that all single use plastics
or single use takeout containers need to be recyclable
or compostable by a certain year
and if they're not
then you have to switch what substrates you're using
and similarly there's requirements
on certain amounts of recycled content
that go into certain packaging streams
and so with that
there's also this concept of eco modulation
where the fee structure that a consumer packaged
good company right
that's putting a product on the market would be paying
is aligned with incentivizing
use of more recycled materials
so if you are putting something on the market
that is really difficult to recycle
you're gonna pay a slightly higher fee
than something that's putting a product in a
and it's more easily recyclable
so there's alignment there
mm hmm mm hmm
so going back to what we were talking about earlier
so currently the way packaging is
you know it
it needs to be separated in
in ways which sometimes is not possible manually
with this legislation is
the aim
becomes that the packaging is like single material
or like where it incentivizes that
yeah I think the
the design of these regulations is that
it is incentivizing that for single materials
or also certain things that are hard to recycle
so if you think about plastic films
those are really difficult to actually collect
and recycle you think about what label says
it says drop it off at a certain facility
who's in actuality dropping it off there
the California law at a very high level
I think addresses some of this and saying okay
if you don't reach a certain recycling rate
you're not allowed to use that substrate anymore um
so there is incentive I think
there to create opportunity
to create those circular loops of being able to
you know continue to use these materials
if they are able to be processed responsibly
and if they're not
there's also incentive or opportunity to switch
substrates uh
and and that's something that's more recyclable oh
I just wanna like double click on something you said
you said it's not only about that
can they be recycled easily
what I heard was like
then the goal is that once they're recycled
they can be reused in some way or
or did I miss it
it's about hitting a certain recycling rate
so if you think about it um
certain substrates are recycled at different rates
than others so for instance
aluminum is something that uh
gets processed at a higher rate than plastics do
just in terms of collection
and being able to process it um
and so the idea is is that
if there are certain
substrates that are not necessarily hitting
those higher rates of um
actual recyclability and recycling
then that might trigger a shift in what's allowed
in terms of the packaging regulations okay
that's still working out all the details right
so I think we're kind of in this we're in this uh
place where this regulations passed
but now
they're also trying to figure out all the rules
and how do you set up all of the um
producer responsibility
organizations that are dealing with the collection
and the processing and all of that
so it's getting complicated
and it's gonna take some time to work itself out
but I think the the EPR is structured
is really elegant in the sense that it has a goal
and it also has the means to be able to uh
finance
some of the things that they're looking to achieve like
yeah it gets because it as you said
it is not just a regulation
but there's funding opportunities through that right
the fees that are getting collected
are actually being used to
to the change that's needed to to set the
the regulation
so in a way the regulation is circular itself
all about circles today
so
the other concept that I'm hearing a lot about is this
right to repair um
and from your perspective
what are the main opportunities or challenges
when it comes to companies
as they navigate this expectation from consumer
or even policy around this
just to repair yeah
good question so I think right to repair fits with the
if we think about the four concepts we laid out
or the four themes of circular economy
it fits closely with asset life cycle management right
and so how do you extend the useful life of an asset
so when we talk about right to repair
this is really the concept that an owner
of a product
or a good should have the reasonable ability
or the right to repair um
this this right and so
this can be applied to something as small as consumer
electronics like your phone
screen breaking to bigger purchases like a car
or an industrial applications
like farm equipment is another one where this comes up
so we think this is an interesting angle
there's not necessarily a clear
opportunity and a clear risk
because it's still getting worked out um
what we are seeing is that
you know why is this important
is that over time as
products and appliances have gotten more complicated
more tech more intellectual property goes into them
it makes it much
more difficult for the consumer to repair
them on their own so if you think of going from like
you know
more analog and internal combustion vehicle towards um
an EV which has a lot more um
technology in it it makes it a lot harder
for the lay person to fix their own car
um
and it's even difficult for certain body shops even to
to get into that as well and so
there's some concerns here
from a regulatory standpoint
with certain lawsuits
that come out around right to repair
so there's a risk component I think for some companies
but then there's also opportunity
in the sense that offering repair services
as well as parts can be really lucrative as well
from both just a new revenue perspective
but also from a customer relationship standpoint right
so if you think about
who do you trust to fix your equipment
you go back to that same dealership
or you go back to that same company
over and over again so
it's a little tricky to figure out
where is it going to settle
um in terms of which companies are well positioned
to take advantage of right to repair
and those that might be a bit more uh
hurt by it if it's something that gets passed
I think another way to think about this is that
there's always going to be two groups of people
do it for me and do it yourself right
and so sometimes um you need both right
and so just because right to repair might pass
doesn't mean that there might be a shift in
customer behavior right
they might still want to outsource it
or they might still trust the dealer to do that work
or maybe it gives gives an option to go somewhere else
but I think
think about it from the circular economy perspective
the focus on repair over any
junking a piece of equipment
because it's too complicated to repair is really the
the
as we see it to participating in the circular economy
and that really goes back to basics right
you need to think about
how is a product designed so that it can be repaired
you have to have parts available
you have to know how to repair them
you have to provide the manuals to do so um
and it seems very simple but obviously it's
it's a challenge and um
that's why it's getting a bit more focused
I think in the marketplace
yeah yeah
it is also complex because it as said
it would require consumer behavior change
and what are the financial incentives
so there's a lot to figure out there
so one question I have is
since you're looking at companies
from an investment perspective
at Calvert
how do you
and I know you spoke a little bit about it earlier how
how do you balance that financial
materiality with sustainability principles
especially when a sustainable solution might not
have a very black and white economic output from
from the analysis yeah
that's a great question
so Calvert itself is a principles based investor
so what that means is that
our investment philosophy
is guided by our principles for responsible investment
and so this is really a manifesto that articulates
what responsible corporate behaviors are across
those pillars of environmental
and social and governance
if we think about this in actuality
what does this mean um
as a research analyst
I'm applying those principles to our investments
through this lens of financial materiality
uh and so because we're broken out by sector
myself covering industrials and materials
this really allows me to drill down on what is material
for my sectors
that might be pretty different from others
and I think a good example here is
you know I'm talking about packaging right
so a packaging company
a significant exposure to environmental concerns
as well as social risks as we think about supply chain
water physical product safety right
and that will look very different
than a financial services company
where the material risks and opportunities
might have a bit more of a social focus
right on human capital management or data security
um I think you asked a really great question of
when a solution isn't black and white
how do we think about that
and I think that financial materiality really guides
that back so if we think about
how we think about this for a circular economy
we take a pragmatic approach right
we can't change human behavior
and all consumerism
in some ways is not necessarily circular right
just by by consuming
we're going against that
what is that circular principle
we acknowledge that right
but I think through developing this framework
to identify companies
whose actions are materially participating
or facilitating those circular practices
it's really important here
so while the packaging companies
are contributing to single use plastics
they're also part of the solution
and we also have to figure out where that line is
and so by applying materiality as a framework
that really helps us
drill down on who is going to be best positioned
to take advantage of the opportunity
and who might not necessarily want to be in
you don't want them to be in the universe
because they have more risk than opportunity
so it's really a tool that we use
yeah that's that's
that's how cool I should have asked this before
but for people who are not in sustainability
can you help define what financial materiality is
ha ha sure
uh it's a great question
so this is how I would think about financially
materiality is um
it's not about altruism right
if we think about sustainability
it's about how does something impact the bottom line
do we care about uh
GHD emissions
because it's impacting the company through
the costs of product sold right
and can they do something in terms of their
different environmental or sorry
their different energy makeup to reduce that cost right
that would be an example of financial materiality
right and so it's really the intersection of um
business on a day to day basis as well
employing these issues at the same time right
so it's finding that intersection of what matters
so just because you know
something's listed in our principles
it doesn't mean that it gets applied equally
across all sectors
and I think that's really the differentiation that's
important to understand for this type of investing
yeah that's very helpful
so it's been so great speaking with you
learning from you I've Learned so much
I like to ask my guest and the question is like
if you were to leave one word
like what's
the one word you would want the listeners to carry
with them after today's conversation circularity
circularity yeah
and I think just as we think about circularity and
and role of it in investing
one thing
we didn't talk about is the framing of how circularity
fits into uh
the entire landscape or the entire umbrella of climate
right uh
so I think one one sir
one example I always like to talk about is
I think when a lot of people think about climate
investing they think about energy
right and so
if you think about global greenhouse gas emissions
roughly 55% of them are related to energy
it's energy systems transportation and buildings
but if we really want to as a society or as investors
address all of greenhouse gas emissions
we need to consider the other 45%
that come from the production of goods
and materials and the management of land
which can be addressed through circular practices
so I think think about circular economy
and how it fits into the landscape of climate investing
it's really
important to think about it as being complementary
to energy transition
and you need both together to really
address all emissions that is such a great point
I'm glad you you brought up and
and about it um yeah
it's not one silver bullet
and we have different solutions to get to
where we wanna be and thanks for sharing that
oh thank you again
thank you so much I enjoyed the conversation so much
um and this might
might be new for someone some people
people have heard about it before
but I feel like thinking from it a investing angle is
is uh
unique and and
and I Learned a lot so thank you so much Emily