ImpactAlpha, October 24 – PepsiCo Foundation has committed $15 million to an investment initiative by Circulate Capital, an investment firm that launched in July to combat the global ocean plastic problem. Circulate Capital is looking to make debt, equity and quasi-equity investments in recycling and waste management ventures in India, Indonesia, and other Asian markets.
Circulate Capital is a spin-off of Closed Loop Partners, which invests in U.S.-based recycling initiatives and technologies. Circulate’s founder, Rob Kaplan, told ImpactAlpha that the impetus for the initiative was companies looking for similar investment opportunities in emerging markets, particularly Asia, where half of the plastic that ends up in the ocean comes from only five countries.
The philanthropic arm of PepsiCo, which also backs Closed Loop Partners, provided early support to Circulate Capital’s founding team as it was conducting a feasibility study for a similar investment thesis geared towards emerging markets. Its new commitment to Circulate’s investing initiative was the first capital in the door.
“Never have I seen an environmental topic explode onto the public mainstream psyche like the plastic waste crisis has in the last 18 months,” PepsiCo’s Roberta Barbieri told ImpactAlpha.
Barbieri, who works for PepsiCo proper rather than its foundation, adds that the company’s evolution on the issue and motivation to steer away from single-use plastics mirrors the public’s growing awareness and concern. “It’s as much about [business] risk mitigation as much as environmental protection. This is one issue where the two coincide really well.”
Circulate’s portfolio approach will be different from Closed Loop Partners to reflect the different needs and market gaps in emerging markets. “In the U.S. and Europe, municipalities own waste management; in emerging markets, it’s the informal sector that manages most of the waste,” Kaplan says. “There’s also a leapfrogging opportunity. In the U.S., [we’re doing] waste and recycling with legacy systems. In Asia, there’s an opportunity to build new value chains out of waste streams.”
Circulate Capital is expecting $90 million in commitments from corporate backers, including Procter & Gamble, Dow, Danone, Unilever, and Coca-Cola in addition to PepsiCo.