Capital Landscape Study
Understanding the social, environmental and economic benefits of the circular supply chain model.
The Closed Loop Fund was created to catalyze investment through the deployment of catalytic capital to scalable public and private models and innovations within circular supply chains. Our unique approach is helping to grow innovations and scale successful business models in the circular supply chain.
In the US, municipalities are paying more than $5 billion a year to landfill recyclables, food, clothing and electronics
$80-$120 billion of economic value from plastic packaging material is lost each year
$2 trillion in annual US revenues generated by circular manufacturing
In 2017, Closed Loop Partners and Closed Loop Foundation conducted a study of the capital landscape supporting circular supply chains in North America. We looked at recent trends in investment activity, unmet demand, nearterm forecasts, and projections to achieve a fully circular infrastructure by 2030.
Through a series of surveys, interviews, and analyses of third-party data, we have gained several key insights about where capital is – and is not yet – flowing. Findings represent data from more than 130 municipalities, 440 private companies, and 260 investors, in addition to numerous experts who have advised us throughout this process. The research was conducted by Closed Loop Foundation with support from the Goldman Sachs Center for Environmental Markets and Wells Fargo Foundation.
The Cost of Linear Models
- Linear supply chains cost us too much. In the US, municipalities are paying more than $5 billion a year to landfill recyclables, food, clothing and electronics. Globally, $80-$120 billion of economic value from plastic packaging material is lost each year.
- Underpinning the linear economy is investment capital. In our research, we found approximately $10 billion a year in relevant deals, though much of it is supporting this linear infrastructure.
The Upside: Transitioning From a Linear to a Circular Supply Chain
We are missing a tremendous opportunity to unlock trillions in economic value and create a lasting positive impact on the environment. In our analysis, the upside of building a circular supply chain has dramatic social, environmental, and economic benefits, including:
- 30 million more households with access to convenient recycling
- 80 million tons of material recovered from residential single stream recycling – a lift of 4x
- 250-350 million metric tons of CO2 equivalent reduced
- $7 billion in new revenue opportunities from recycling for cities and recyclers
- Innovation in processing technologies and business models
- $2 trillion in annual US revenues generated by circular manufacturing
The Barriers to Investment and the Role to Catalytic Capital
With $10 billion a year in investment dollars supporting the old linear model, too much capital is waiting on the sidelines. Why? In more than 20 interviews of investors, fund managers and advisors, we heard several themes:
- Private capital lacks sightlines across the system
- The supply side is controlled by a few players
- There is too much volatility in commodities markets
- Capital seekers lack longer-term offtake agreements
Some mainstream investors have already figured out how to mitigate these risks and find value in circular supply chain opportunities. At the same time, “catalytic” concessionary capital can play an important role in de-risking investments, proving business models, and stimulating even more investment.Other supports, including subsidized R&D, long-term offtake agreements and price floors, loan guarantees, and green procurement or codes, can also help drive additional investment.