This article was originally published by Fréttabladid, Iceland's most widespread daily newspaper.
Circular Solutions is a young company specializing in environmental solutions for companies, municipalities, and institutions. Their vision is clear: to have positive effect on the future development of the planet by helping companies meet their sustainability commitments. In that way it can help Iceland meet its Paris Agreement commitments before the year 2030.
Within Circular Solutions there is a comprehensive knowledge and experience in the field of environmental science. Two of the founders hold PhDs in the field. The founding team has then also conducted research and tought courses on Life Cycle Assessment (LCA) and Sustainable Solutions at the University of Iceland and DTU and SDU in Denmark over the last few years.
"This knowledge and experience helps our customers minimize risk and cost to comply with laws, regulations, and standards as well as helping them use and implement quality methods towards minimizing their carbon footprint and other environmental effects," says Bjarni Herrera, CEO of Circular.
Service oriented analysis and interactive delivery
"Recently, the first annual reports have been published in which companies' non-financial information in compliance with new regulations has been disclosed. Some companies have relied on our specialized knowledge to disclose their ESG-indicators. In such disclosure companies disclose their Environmental, Social, and Governance matters in a more structured way than before."
Hafthór says that Circular Solution's goal is that the analysis it performs can be useful for its customers, for example to help them in their strategic work. It's solution oriented work can also be very useful towards reaching the appropriate goals for the business.
"We present our work in a business intelligence format which illustrates these non-financial indicators in a similar manner as key-financial-indicators in order to track and monitor the performance over time."
An analysis of these ESG-indicators can also be helpful for the financial industry in terms of responsible investments. Both for conducting analysis of individual investment projects as well as for portfolio analyses, for pension funds for example, says Hafthór.
The financial industry - green investments
Bjarni says that the financial industry and the field of environmental science has merged in a very interesting manner over the last few years, especially in terms of portfolio analyses and green investments.
"The financial markets are in a key position when it comes to financing environmentally friendly or sustainable projects. However, the potential projects need to be carefully analyzed w.r.t. the environmental benefits, transparency to investors being key", says Bjarni.
"Green bonds are examples of a fast growing "green" financial instrument. The value of green bonds worldwide has tripled over the last four years and the overall value of the green bond market is estimated at USD 220 billion in the year 2018. Green bonds are considered reliable [based on the underlying projects and the issuers, mainly municipalities] and their supply does not meet their demand despite a fast growing market," says Bjarni.
Circular Solutions specializes in evaluating the environmental impact of the green financial instrument's underlying projects using methodology appropriate for each. It ensures that the projects comply with the standards for green projects to receive a better grade by external rating bodies.
Conducting the appropriate analysis using the right methodology can result in better terms of the instrument. Circular will also track and monitor the environmental impact of the investment over the bond's lifetime, to fulfill investors' increased demand for transparency.
"Iceland is in a very interesting position considering some of the projects that have been discussed, e.g. infrastructure for electric cars and public transit systems, projects that need to be financed. It is important to carefully conduct environmental impact analysis for such projects.
The projects that we need to undertake over the next 12 years need to be of considerable scale and number if Iceland intends to fulfill its Paris Agreement commitments, as was covered in the University of Iceland's Institute of Economic Studies report which was issued in 2017," says Bjarni.