Closed Loop Fund, an investment fund that finances recycling infrastructure and sustainable manufacturing technologies to advance the circular economy, has released its first public progress “Impact Report.”
Details from the report reveal investment opportunities in the recycling industry that deliver environmental and financial returns for cities, companies and private investors, despite the headwinds of low commodities prices.
In addition, the report unveils a new umbrella, called Closed Loop Partners, that includes Closed Loop Fund; Closed Loop Ventures, a venture fund that invests in sustainable consumer goods, advance recycling technologies and services related to the circular economy; and Closed Loop Foundation, which funds research and development of technologies and business models focused on building the circular economy.
Closed Loop Partners, according to the impact report, is an investment firm using venture capital and project finance, through the Closed Loop Fund, to commercialize and scale solutions for the circular economy.
Ron Gonen, a managing partner with Closed Loop Partners, says, “The recycling industry is poised for a new phase of growth. Based on data from our first ‘live’ investments, we are seeing municipalities and private companies—especially those with integrated models—generate savings, revenues and profit as a result of improving recycling infrastructure. And so far, each investment is paying back as expected.”
The report highlights Chicago-area recycling company Lakeshore Recycling System’s new Heartland single-stream material recovery facility (MRF) that launched in March 2016. The MRF is generating a profit within its first six months, and is poised to divert more than 1 million tons of material from landfill by 2025, according to the report.
Lakeshore CEO Alan Handley says, “Recycling is core to our business. The success of the Heartland MRF illustrates our ability to increase both profitability and environmental impact as we scale.”
Key highlights and statistics from the report include:
- The Closed Loop Fund has invested nearly $20 million in nine projects, unlocking more than $50 million in co-investment from municipalities, banks and impact investors.
- There is huge demand for investment capital, with the fund receiving more than 150 inquiries for more than $350 million in financing.
- Four live projects already have diverted nearly 50,000 tons of material, avoiding the equivalent of 112,000 metric tons of greenhouse gas emissions.
- The fund has received 100 percent on-time loan repayments.
- Through the fund, municipalities have realized nearly $250,000 in economic benefits.
- Activities funded reach or represent recycling generated by nearly 900,000 households around the country.
The opportunities to generate environmental and economic return are real, but few traditional investors are getting on board at the moment, the report notes.
Jennifer Pryce, president and CEO of the Calvert Social Investment Foundation, says, "Closed Loop Fund is helping impact investors like Calvert Foundation understand the investable opportunities within the circular economy."
Gonen adds, “Closed Loop Fund investors have exhibited tremendous leadership in coming together to support a new model for systems change. We are building the case for more consumer product companies, impact investors and institutional investors to capture the value of optimal recycling and circular systems in the United States by demonstrating these investments make financial sense.”
The report shows that unstable commodity prices expose the challenges in the current system, as operators adapt to ever-evolving single-stream materials with outdated equipment, operational inefficiencies and misaligned contracts.
“We have focused our investments on municipalities and companies that are doing what works—writing smart contracts, showing commitment and leadership, and building forward-thinking business models and operations,” says Gonen.
Closed Loop Fund says it is committing 20 percent of its capital to develop robust end markets to ensure the system economics work.
Gonen says, “You can expect to see several end market investment announcements from us in 2017. We have some great business models in our pipeline that will maintain value across a range of commodities. Stay tuned.”
Founded in 2014, Closed Loop Fund is an investment fund that provides cities access to the capital required to build comprehensive recycling programs. Closed Loop Fund says it aims to invest $100 million by 2020 with the goal to create economic value for cities by increasing recycling rates in communities across America. Closed Loop Fund brings together the world’s largest consumer product, retail, and financial companies committed to finding a national solution to divert waste from landfills into the recycling stream in order to be used in the manufacturing supply chain. Key supporters include 3M, Coca-Cola, Colgate-Palmolive, Goldman Sachs, Johnson & Johnson Family of Consumer Cos., Keurig Green Mountain, PepsiCo and the PepsiCo Foundation, Procter & Gamble Co., Unilever, Wal-Mart and the Wal-Mart Foundation.