New York City-based Closed Loop Partners (CLP) convened more than 100 leaders from across the supply chain and investment community at Google’s New York City headquarters Oct. 5, 2017, to discuss the opportunity to infuse more capital into circular supply chains, according to the organization’s “In the Loop” quarterly e-newsletter released Oct. 30. During the meeting, CLP offered insights from a recently completed Capital Landscape Study. CLP says it will work with these and other leaders to bring new capital into this sector to increase the impact of their efforts.
The study looked at recent trends in investment activity, unmet demand, near-term forecasts and projections to achieve a fully circular infrastructure by 2030, according to the summary report of the study. “Through a series of surveys, interview[s] and analyses of third-party data, we have gained several key insights about where capital is—and is not yet—flowing,” the summary states.
The study was based on data from more than 130 municipalities, 440 private companies and 260 investors as well as numerous experts that have advised CLP. Closed Loop Foundation conducted the study with support from the Goldman Sachs Center for Environmental Markets and Wells Fargo Foundation.
“In our experience deploying more than $30 million in loans and grants since 2015, we have often co-invested with other ‘concessionary’ sources, primarily public (e.g., state grant programs) and private philanthropy (e.g., The Recycling Partnership grants)," according to the study summary. "This type of capital is critical for creating more investable opportunities for mainstream investors."
The organization says it found more than $800 million of concessionary capital is going to recycling infrastructure and innovation. “Eighty percent comes from public sources supporting general operations for recycling infrastructure as it exists today. Unfortunately, very little of this can be considered “catalytic,” unless municipalities are increasing their ability to benefit from recycling revenue or avoid landfill costs.”
However, by persisting with a linear rather than a circular model, “We are missing a tremendous opportunity to unlock trillions in economic value and create a lasting positive impact on the environment,” the summary reads.
The study finds multiple benefits associated with building a circular supply chain:
- 30 million more households would have access to convenient recycling;
- 80 million tons of material would be recovered from residential single-stream recycling, a fourfold increase;
- CO2 equivalent emissions would be reduced by 250 million to 350 million metric tons;
- $7 billion in new revenue opportunities from recycling for cities and recyclers would be achieved;
- innovation in processing technologies and business models would occur; and
- circular manufacturing would generate $2 trillion in annual U.S. revenue.
The study found a number of barriers to further developing the circular economy:
- private capital lacks visibility across the system;
- a few players control the supply side;
- commodities markets are too volatile;
- capital seekers lack longer-term offtake agreements; and
- innovative technologies exist but are too early stage/unproven.