Goldman Sachs GS SUSTAIN Executive Summary - Evolving towards a Circular Economy - back to the future William McDonough, the 1 A Circular Economy could help add $4.5 trillion in additional economic output by 2030, and $25 trillion by 2050. The World founder of Cradle to Cradle®, stated that the world doesnt Economic Forum estimates that by 2025 recycling, reuse, and remanufacturing could help the economy unlock $1 trillion a have a ‘waste issue, it has a year untapped resource savings. We see rising commodity prices leading to increased deployment of energy/waste/food ‘design issue efficiency solutions from both individuals and corporates and the extension of the EU Taxonomy to include Circular Economy categories will provide a boost in recognition from corporates and investors. 70% of GHG emissions are Transitioning towards a Circular Economy will be pivotal t o solving decarbonisation and will become an increasing directly linked to material focus for investors, corporates and regulators to achieve net zero carbon goals and decouple economic growth from handling and use - including resource consumption, in our view. Zero waste pledges are few and far between compared to the proliferation of net zero from extraction, transport, processing, use, and end of life carbon pledges from companies, governments and investors, yet both are necessary for a sustainable low carbon economy according to The Circularity Gap due to the intrinsic link between resource usage, energy and emissions (resource-energy nexus). Decarbonisation efforts Report (2022) have traditionally focused heavily on scaling up renewable energy and increasing energy efficiency, while focusing little on the benefits that can be gained via circular economy solutions. We believe the decarbonisation synergies gained through transitioning towards a circular economy will become an increasing focus and priority among governments, corporates and investors in the years ahead. We identify 7 circular economy solutions that can help corporates reduce their dependence on increasingly scarce resources and create new service offerings, including: 1) Efficiency; 2) Substitution; 3) Durability; 4) Ecodesign; 5) Asset Utilisation; 6) Recyclability and Recycling; and 7) New business models and circular partnerships. The next phase of the EU Taxonomy will catalyze investor and corporate focus on the circular economy. We see corporate and investor adoption of the EU Taxonomy as inevitable, serving as a tool for both investment and eventual corporate strategic decision-making. New sectors covered under the circular economy include some of the most underweight sectors in ESG funds currently, presenting opportunities for re-weighting. We map the 21 new circular economy activities to our existing GS SUSTAIN EU Taxonomy tool. 1 Lacy, P. & Rutqvist, J.. (2016). Waste to wealth: The circular economy advantage. 10.1057/9781137530707. 3 May 2022 2