- Closed Loop gets vote of confidence from Fortune 500 consumer brand backers, as they opt to keep capital in a pool available to fund recycling technology.
- Backers including Pepsi and J&J recently extended initial five-year commitment after approving the fund’s work on more than two dozen projects.
- With the coronavirus adding to plastic medical waste while simultaneously forcing some recycling programs to close, the practice is taking on a greater urgency.
The folks at Closed Loop Partners weren’t sure what would happen when five years was up and they’d have to pay back Coca-Cola, Colgate-Palmolive and seven other big corporate supporters that kicked in $54 million for its first fund formed to back recycling projects with low-interest loans.
They figured that after five years, they’d pay back the lenders, with a little return, and that would be that.
Turns out the backers — mainly consumer brands looking for ways to keep plastics stamped with their names out of waste streams — liked what they saw in the Infrastructure Fund, Managing Director Bridget Croke told Karma in an interview. New York-based Closed Loop was funding 27 projects around the U.S. from municipal projects like Florida’s Emerald Coast Utilities Authority, not-for-profits such as Eureka Recycling in Minneapolis and for-profit firms like TemperPack in Virginia.
“After four years, they hear that this is working,” Croke said. “At year five, the harvest period, it was time to pay it back. And they said wait, let’s roll it forward. It was a unanimous decision.”
Backers kicked in $5 million to $10 million each, she said. The $54 million fund attracted other investors and the multiplying effect, the “leveraging” as they called it, helped bring in more than $200 million of financing.
All nine companies — including Johnson & Johnson Consumer Health, Keurig Dr. Pepper, PepsiCo, Procter & Gamble, Unilever and The Walmart Foundation — kept their money in the fund. They have since been joined by Amazon, Danone North America, Danone Waters of America, Nestlé Waters North America and Starbucks.
The companies are recommitting as recycling faces a series of challenges, not the least of which being whether the practice itself is effective in reducing waste. Closed Loop, co-founded by Ron Gonen, New York City’s Deputy Commissioner of Sanitation under Mayor Mike Bloomberg, says 5 million to 7.5 million metric tons of recycled materials will be needed by 2030, an up to four-fold increase.
The pandemic has caused the suspension of recycling programs around the country while plastic, disposable medical waste — so-called PPE — mounts with some of it washing into oceans. At the same time, recycling has been declared an essential service amid the pandemic, because companies like McDonald’s have committed to using materials diverted from dumps.
The industry has come under renewed fire after studies suggest barely 10% of plastic is kept from dumps. An estimated 18 billion pounds of plastic gets dumped in oceans each year, according to the University of Georgia, and plastic is now the top item dropped into landfills, replacing paper several years back. Companies and consumers are increasingly asked to reduce and reuse because of recycling concerns.
Croke, who on June 17 testified before the Senate’s Environment and Public Works Committee on challenges faced by recycling in the U.S., acknowledges big corporations have far to go in making recycling more effective and convenient for consumers.
“We’ve designed a lot of complexity into the system and we have to take some of that out,” she said. “It’s too much for the consumer.”