Processors, Governments, Brands and Nonprofits Band Under Circular Services

In the face of climate change and evolving policies to try and mitigate it, stakeholders from brands to investors and nonprofits are joining the movement to advance a circular economy. But making it happen will entail radically transforming a huge system that is linear in nature (products are made, used, then tossed) and where relevant players along a complex supply chain work in silos.

Closed Loop Partners has launched Circular Services, leveraging its network with plans to add more players, to try and help solve for these problems, and scale a circular model. This broad ecosystem approach, joining multiple partners, is at the core of Circular Services’ strategy. But it’s honing in on two other tactics: expanding the types of materials that Closed Loop has focused on, and growing a regional, centralized operation.

The new enterprise begins its venture with $700M in growth capital from Brookfield via its Global Transition Fund. And it sets sail with established business partners—including Balcones Resources, SMR (formerly Sims Municipal Recycling), and Retriever; several municipal and county service contracts; and a few commercial customers, mainly offtakers, among participants.

While Circular Services will focus largely on processing packaging, it has added textiles, electronics, and organics to the mix.

“We include all these materials [rarely if ever accepted in a single collection program] under one business model. So, if I’m a municipality or commercial customer I no longer have to reach out to a number of different entities scattered across regions to manage each of them. I can just work with Circular Services,” says Jessica Long, chief Strategy officer, Closed Loop Partners.

The bull’s eye is the East Coast and Southern part of the U.S., where Closed Loop has long-term municipal service contracts; and where there are large and fast-growing population centers with high material usage that are prime for scaling.

“We want to keep operations as local as possible, so we are not shipping materials across the country [saving money and emissions]. We need these facilities in high-growth areas to get to that scale. When you have enough quality material, you can handle it locally/regionally, and you might be able to justify secondary processing (cleaning, flaking, etc) or perhaps even ‘bottle-to-bottle’ facilities locally,” Long says.

Large cities from Austin to New York and Phoenix, as well as several counties, are tapping into Circular Services for support with processing their materials.   But plans are to also go into less-populated, underserved locales leveraging Closed Loop’s small, localized modular materials recovery facilities (MRFs), developed in house.

On the commercial side, offtake agreements are a small portion of the portfolio, but an area where there is room to grow, Long says.

Major investor Brookfield has a 24-GW clean energy portfolio and a 100-GW pipeline. Its $15 billion Brookfield Global Transition Fund, from which the investment in Circular Services has been made, has a dual mandate to deliver risk-adjusted returns as well as decarbonization impacts that align with the Paris Treaty goals.

“[The Circular Service’s] model is well-suited to our transition investing strategy since it allows for a relatively smaller upfront investment, which is downside protected, and then positions us well to deploy more capital at greater scale as and when the business starts to deliver construction-ready infrastructure,” says Natalie Adomait, managing partner in Brookfield's Renewable Power & Transition group.
Currently, robust circular services are lacking, even in booming jurisdictions. Long surmises the void is due to insufficient political will and bad economics, fueled by the absence of a cohesive materials management system.

“Consolidating programs and operations under Circular Services lets us handle many materials that may not economically make sense to manage as standalones,” she says, adding making the model pencil out will entail pumping capacity at large—not just adding material types.

“We want to process many multiple times more tonnage over the next several years. We are interested in the hundreds of millions of tons that end up in landfills, incinerators, or in the environment that have value that we can keep in circulation.”

The intention is to look at reuse and refill first. Circular Services currently offers repair and resale of some commodities, with plans to grow this model, as well as to add broader reuse and refill options for certain materials.

“With electronics and textiles especially the question is, can this device or piece of clothing be repaired and resold in its current form before I think of recycling?  You can ask a similar question around refill as it pertains to packaging. Are there opportunities to refill and reuse containers versus breaking them down via recycling?” Long says.

These capabilities can be scaled with Circular Services’ existing infrastructure and municipal and commercial clients, she believes. Key will be identifying the business model that will have economic and environmental benefits in a given scenario.

At the core is developing strong collaborations. Partnerships with municipalities who supply feedstock and city leaders who, like municipalities, prioritize getting to net zero and increasing recycling participation. Buy in from brands and corporate partners who serve as end-markets for recycled content; who can leverage branding expertise to show consumers the value of more sustainable products; and who will design these eco-friendly products.

The Circular Services team also plans to add partners in the nonprofit and scientific arenas to help guide alignment with community and climate goals—specifically aligning on what it means to get to “zero waste” and on how to get there.

The company has named no corporate or academic partners to date and has named one nonprofit investor so far: The Partnership for New York City, a group of businesses aiming to strengthen the relationship between industry and government.

The New York City group’s participation is motivated by potential it sees to innovate around recycling infrastructure and bolster broader sustainability goals, regionwide, says Maria Gotsch, president and CEO of the Partnership Fund for New York City.

“As Circular Services helps more cities across the U.S. adopt a more circular approach to waste management, its presence in New York City will be a welcomed boost to local efforts to position New York as a leader in the growing circular economy,” she says.

Other nonprofits, corporations, and scientific groups will be announced early in 2023.