Closed Loop Partners' Ron Gonen on investing in circularity
Communicating the opportunity to other financial players and disrupting tradition — all in a day's work.
This article has been adapted from the Circular Weekly newsletter, running Fridays. Subscribe here.
Every emerging industry needs champions. Over the coming months, I’ll be running a series of brief interviews with circular economy leaders that are showing the way.
This week, I spoke with Ron Gonen, co-founder and CEO of Closed Loop Partners, an investment firm focused on developing the circular economy through investments in sustainable consumer goods and packaging companies, innovative recycling technologies and advanced supply chains. With investors including Amazon, Procter & Gamble, Unilever and Coca-Cola, the fund has deployed $50 million across 21 projects and secured $210 million in additional co-investment to date, according to its 2018 Impact Report, released this week.
The following conversation has been edited for clarity and length.
Lauren Phipps: What are you excited about right now?
Ron Gonen: I’m excited about the recognition among the CEOs of major consumer goods companies that circular supply chains are opportunities for them to significantly reduce costs. That recognition is what’s going to lead to updating their supply chains from linear ones that rely on a lot of extraction and landfills, to circular ones that benefit their bottom line and the environment.
Phipps: What’s the biggest obstacle you see in advancing your work?
Gonen: The biggest obstacle to advancing the circular economy is the flow of capital. We need more capital flowing into the circular economy space in order to finance the infrastructure required. We need major banks and major investment firms to better understand the opportunity, and to start investing.
Phipps: What will it take to get these players to understand that opportunity?
Gonen: We in the circular economy space are first responsible to make sure we communicate the opportunity well to those financial players so that they clearly see why it’s in their best interest to invest. I think that’s No. 1. I think No. 2 is we need to have some nice wins in the circular economy space so investors see the opportunity.
A great example of that is the SodaStream acquisition by PepsiCo. We view SodaStream as a great example of sustainable product design and circular economy where you’re able to deliver flavored beverages to consumers without all of the plastic packaging and water that’s traditionally used in the delivery of beverages to consumers. It’s the perfect example of an investment that made a lot of money for the investors and the employees at SodaStream, and it was a great, strategic acquisition by PepsiCo in terms of where they are going in the future. The more we see these sorts of success stories, the more and more people will take note.We view SodaStream as the perfect example of an investment in the circular economy that made a lot of money for the investors and the employees at SodaStream.
Phipps: What’s keeping you up at night?
Gonen: Making sure that our firm is focused on the right areas, backing the right companies and ensuring that we’re able to get the right amount of capital to flow into this space. I’m not sure it keeps me up at night necessarily, but it’s something that’s top of mind.
We’re battling some very powerful legacy industries. There’s the petrochemical industry that wants to continue to use virgin plastics, and there’s the landfill industry that wants to continue to put these materials in the landfill. In order to counter their growth, we need sufficient amounts of capital to flow into the circular economy space so our initiatives can grow.