Taking on the challenge of providing funding to municipalities and private companies in order to develop local and recycling infrastructure, Ron Gonen, Co-Founder and CEO, of the Closed Loop Fund discusses its ultimate goals and role in the waste industry.
What are the current challenges of building a waste/recycling infrastructure in a community/city? The greatest challenge facing cities and communities in the development of waste/recycling infrastructure is inadequate funding. With little funding flowing to municipalities to bolster their waste management infrastructure, efforts to optimize recycling channels are yielding limited impact because they lack scope and scale.
What are the most common ways to fund waste/recycling infrastructure currently? What are the challenges of these? The most common ways to currently fund are through city and state agency grants as well as city bonds. Grants tend to be below the minimum threshold to put in the proper infrastructure and they have to compete with urgent issues such as roads and bridges for bond money often making it low priority even though it has a long-term pay back.
What is the Closed Loop Fund and when was it created? What is its goal? The Closed Loop Fund connects cities and communities with a simple funding channel, presenting a market-based solution that invests corporations in unlocking private finance for public sector solutions. It is comprised of consumer goods companies and retailers who are creating economic value by increasing recycling rates. The Closed Loop Fund provides 0 percent interest loans to municipalities and below market interest loans to private companies to develop local and recycling infrastructure. We aim to invest $100m over the next five years.
The Closed Loop Fund was announced in April 2014 at Walmart’s inaugural Sustainable Product Expo. After completing its first round of fundraising, the Closed Loop Fund opened for applications earlier this month. By 2025, the Fund expects the initial $100 million investment to:
- Reduce more than 75 million tons of greenhouse gas emissions
- Divert 27 million cumulative tons of waste from landfills
- Create 27,000 new local jobs
- Help municipalities save more than $1.9 billion in waste disposal costs
- Provide packaged goods companies with much greater access to recycled materials
Our goal is to ensure that all consumer products and packaging is recycled and returned for use in manufacturing new products and packaging and that all food waste is used for beneficial purposes such as donation to food banks or converted to compost or clean energy from anaerobic digestion.
What types of industries, companies does it serve? Who is involved? Are there other big corporations that are planning on joining this organization? The Closed Loop Fund has already attracted numerous partners, including a number of Fortune 100 companies such as Wal-mart, Procter & Gamble, Unilever, Johnson & Johnson, Coca-Cola, PepsiCo and Goldman Sachs, as well as large companies like Colgate-Palmolive, 3M and Keurig Green Mountain. They have made financial commitments to the Closed Loop Fund numbering in range of several millions, and these funds will be loaned to municipalities. The Fund continues to bring on new investors.
The Closed Loop Fund presents a win-win case for stakeholders across both public and private sectors. The public sector needs to reduce escalating costs of managing waste and ensure local municipalities are actively addressing community challenges. Through the Fund, municipalities can now take advantage of loans at below-market rates to build the infrastructure needed for more robust recycling systems. The Fund will link these companies that want more recycled material in their supply chains to municipalities that need low-cost capital to provide consumers with easy and efficient recycling infrastructure.
How will the Closed Loop Fund benefit the waste/recycling industry? What activities/programs can the funds be used for? The Fund will finance major municipal recycling projects and act as a catalyst for additional investments. The Closed Loop Fund will also seek to co-invest with local economic development corporations, state agencies and private investors. These partnerships will all focus on improving the state of recycling in the U.S. across the board as well as creating local jobs, empowering consumers to recycle and reducing greenhouse gas emissions due to inadequate waste management.
The types of projects available for financing include curbside recycle carts, curbside organics carts, recycling facilities (MRFs), upgrades to MRFs and anaerobic digesters, among additional infrastructure projects.
What kind of ROI can companies expect to receive from their investment? A number of consumer goods companies and retailers have recognized that improving their organization’s bottom line is closely tied to their sustainability efforts. However, several of these goals, especially those centered on sustainable packaging, reducing waste-to-landfill and environmental friendly manufacturing, are hitting a roadblock: the lack of consistent, steady supply of recycled materials. For example, only 30 percent of the valuable PET that beverage companies like Coke and Pepsi want to recuperate in their supply chain gets recycled today. The other 70 percent is sent to landfills because it was not recycled.
The private sector is vested in finding solutions that increase product sustainability and elevate profit margins. Diverting recyclable materials from the landfill back to corporate supply chains presents a win-win situation for business and government while also empowering consumers to recycle efficiently. Additionally, partner companies will get their investment principal paid back over a 10-year period.
How can municipalities/companies be selected for funds? How long does the process take? Municipalities and companies should go to www.closedloopfund.com and click on “apply’ to find the criteria and RFP forms. Applicants can expect to get through the first phase in 14 days to confirm eligibility. At that point it could take anywhere from six weeks to six months depending on the project and pipeline. The application for the first round of funding was opened in October 2014 and the first funding will be given in Q1 2015.
For more information, contact Bridget Croke, Communications and Partnerships, Closed Loop Fund, at [email protected].