Reflections on New York Climate Week: What’s Next for the Circular Economy?
September 27, 2022
In September 2022, New York City was home to the vibrance of Climate Week – a collection of robust professional programming, community gatherings and coffee catchups with friends new and old in the climate sphere.
Closed Loop Partners was active throughout town as the link between the circular economy and climate change mitigation becomes increasingly clear. These discussions included one that I participated in alongside Amy Duffuor at Azolla Ventures and Allison Hinckley, PhD at Fine Structure Ventures on the Future of Climate Venture Capital Investing, facilitated by Co-Founder of Climate Tech VC, Kim Zou, at the HolonIQ Impact Summit.
The fundamental question for so many is how the current geopolitical and macroeconomic climate will impact climate VC in the coming months and years. As Kim and her colleagues have written, plenty of earmarked dry powder remains to be deployed. The question that remains is how climate VC’s evaluation criteria will shift in light of the relative uncertainty.
As investors in the circular economy, Closed Loop Partners has long been mindful about the underlying economic models that persist today and their link to climate change – namely those that link perpetual economic growth with extractive and emissions-intensive practices, reliance on long, brittle supply chains for energy and finite raw materials, and excessive waste within those existing supply chains. Given the macroenvironment of rising costs of capital, ongoing wars in the East, tariffs, and trade tensions with China, exacerbated climate conditions and an overhang from the worst pandemic in our lifetimes, the old way of production and economic “prosperity” is being called into question – and is now poised for disruption.
The sensibility across multiple conversations and events attended by Closed Loop Partners was that these forces have pushed climate-related innovations out of the silo of Corporate Social Responsibility (CSR) programming or parallel initiatives designed with a primary mandate to “give back.” Instead, we are seeing broader integration of circular economy and climate-related initiatives and investments entering the C-suite through supply chain, procurement, operations, and shareholder expectations. This means we are seeing corporations adopt transformations with an explicit economic mandate that can simultaneously facilitate a lower carbon, more circular future. Companies with this multidimensional mandate are those that Closed Loop Partners’ Ventures Group partners with and we are proud of the companies in our portfolio that are shepherding the economy into its next, more circular future.
As these transformations accelerate, so too does the need to drive mutual benefits for players further up and downstream from the products and services that we consume every day. In that spirit, value chain resilience continued to be top-of-mind across Climate Week events. Late last year, my team published a report outlining the catalytic power of mutually beneficial supply chain transparency in the next generation circular economic model. Whether from building up new, localized ecosystems through domestic or nearshored manufacturing or from actively creating value for legacy suppliers in an established ecosystem (e.g., parts manufacturers in automotive, mills or cut-and-sew players in the fashion value chain), companies can enable innovations that reduce waste, reduces full value chain liability, and – ultimately – facilitates a just transition for the ecosystem more broadly and builds future resilience.
This is no small task ahead of us; however, it is one that we – and much of the climate tech community – are embracing with open arms a transformation of how industry works. We are energized by novel solutions to tough problems and there is no shortage of both problems and solutions to take on in the coming months and years. Above all, the climate VC community is one of unfailing optimism. At the cusp of this transformation, we’re honored to be thought leaders on the circular economy and look forward to playing a small part in advancing the world toward the next generation of circular ecosystems.