Financial stakeholders have a key role to play in facilitating the initiation and growth of new circular business models and supporting substantial improvements in existing, linear incumbent firms. To empirically investigate how these financial stakeholders make sense of and form investment practices around the circular economy (CE) as an emergent, novel category in the financial industry, we conduct 37 interviews across 31 asset management firms using the lens of Weickian sensemaking. We identify the key characteristics of asset managers’ (AMs’) sensemaking processes that facilitate reducing uncertainty and ambiguity around CE investment risk and return, thus fostering investment practices that increase the CE’s viability as an investment category and may facilitate a transition towards a CE. We provide recommendations for interventions that can support AMs’ sensemaking around the CE.
