Americans toss out $11.4 billion worth of recyclable containers and packaging annually. To try to find a solution, in 2014 Rob Kaplan and Ron Gonen cofounded Closed Loop Partners, a $100 million dollar fund that invests in sustainable consumer goods and recycling technology. "Recycling has been stagnant for the last five to ten years in the U.S.," Kaplan told Fortune in an interview.
The company hopes to create a positive impact in many ways such as diverting more than 20 million cumulative tons of waste from landfills and improving recycling for more than 18 million households. Kaplan explains, “We are very excited about the potential for a circular economy…which is why we decided to expand the platform to look at other waste streams like food and organics, as well as electronics and apparel.” Closed Loop helps develop the circular economy by offering loans in three different ways: funds, ventures, and foundation.
The Closed Loop fund helps government municipalities build better recycling infrastructure. Recycling systems and programs in many US cities could benefit from improvements. Even large cities are sometimes falling behind with their programs. The main recycling infrastructure issues arise with collecting, sorting and processing the materials.
What many people don’t think about is that waste export management redirects their tax dollars away from other beneficial things. NYC alone spends $300 million dollars annually just on landfill disposal fees. Closed Loop Partners is trying to solve the issue by creating this fund which helps direct money to municipalities and ease the financial burden on municipalities.
So who is putting up the cash for the fund? Large companies like Pepsi, Nestle, and Walmart have linked up with Closed Loop Partners because they have a vested interest in finding a better way to utilize the garbage. By diverting a large portion of the waste sent to landfills, the materials can instead be used by consumer companies and aid the circular economy principle to help the environment.
Coco-Cola’s North America VP of Environment and Sustainability, Bruce Karas explained, “The challenge with recycled content today is it's tough to get material...we put recycled content in our PET but it's challenging to get ahold of enough to really make a difference.” Making recycling more efficient is a win-win for everyone.
The second arm of Closed Loop is the venture arm which invests in private companies that offer sustainable goods and services. The venture fund backs early-stage companies that meet a strict set of sustainability criteria. As of 2016, 150 companies have already applied. Some companies that have been accepted include HomeBiogas and AMP Robotics.
Gonen mentioned that Closed Loop is working to find companies to solve specific issues such as recycling complicated materials, explaining, “Glass and higher-number plastics, however, are difficult to sort out profitably, and demand for mixed glass is weak. As a result, recyclers often send them to a landfill.”
Closed Loop’s third arm is the foundation which funds research and development that can help enable circular economy. By focusing on “technologies and business models focused on building the circular economy,” the Closed Loop foundation supplies valuable research to answer questions such as what bottlenecks are holding back recycling improvements.
The foundation supports research that identifies trends, gaps, and impacts of financing for recycling infrastructure. It also looks at electronic waste within the United States to understand that problem and find a way to improve used consumer electronics recycling. Gonen recently suggested that the Environmental Protection Agency’s research is vital to helping the recycling industry and cutting the budget on this agency could undermine those efforts. The Closed Loop foundation focuses on this kind of research and hopes to better understand those pain points.
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