Closed Loop Fund Reaches Phase 2 As 3M, Coke And Others Advance Loans
- Closed Loop gets a vote of confidence from supporters of the mainstream Fortune 500 brands as they choose to keep the capital in a pool available to fund recycling technology.
- Funders including Pepsi and J&J recently extended their initial five-year pledges after approving the fund’s work on more than two dozen projects.
- With the coronavirus adding to medical plastic waste while simultaneously forcing some recycling programs to close, the practice is becoming more urgent.
The folks at Closed Loop Partners weren’t sure what would happen after five years, and they would have to pay back Coca-Cola, Colgate-Palmolive and seven other big companies that donated $ 54 million for its first fund formed for support recycling projects with low interest loans.
They thought after five years they would pay the lenders back, with a little return, and that would be it.
As it turns out, funders – mostly mainstream brands looking for ways to keep name-stamped plastics out of waste streams – liked what they saw in the Infrastructure Fund, said. CEO Bridget Croke told Karma in an interview. New York-based Closed Loop funded 27 projects in the United States from municipal projects like the Emerald Coast Utilities Authority of Florida, nonprofits like Eureka Recycling in Minneapolis, and for-profit companies like TemperPack in Virginia.
“After four years, they hear it’s working,” Croke said. “In the fifth year, harvest time, it was time to pay off. And they said wait, let’s go ahead. It was a unanimous decision. “
Donors have contributed $ 5 million to $ 10 million each, she said. The $ 54 million fund attracted other investors and the multiplier effect, “leverage” as they called it, raised over $ 200 million in funding.
The 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.
Companies are re-engaging as recycling faces a series of challenges, not the least of which is whether the practice itself is effective in reducing waste. Closed Loop, co-founded by Ron Gonen, New York City deputy commissioner of sanitation under the leadership of Mayor Mike Bloomberg, says 5 to 7.5 million tonnes of recycled material will be needed by 2030, a multiplication by four.
The pandemic has caused recycling programs to be suspended across the country as disposable plastic medical waste – called PPE – accumulates with some of it washing in the oceans. At the same time, recycling was declared essential service amid the pandemic, as companies like McDonald’s have pledged to use materials diverted from landfills.
The industry was the subject of a new fire after studies suggest barely 10% of plastic is preserved in landfills. An estimated 18 billion pounds of plastic are dumped into the oceans each year, according to the University of Georgia, and plastic is now the top article dumped in landfills, replacing paper many years ago. More and more businesses and consumers are urged to reduce and reuse due to recycling issues.
Croke, who on June 17 testified before the Senate Committee on the Environment and Public Works on the challenges faced by recycling in the United States, recognizes that large companies have a lot to do to make recycling more efficient and more convenient for consumers.
“We have designed a lot of complexity into the system and we need to remove some of it,” she said. “It’s too much for the consumer.