L’Oréal invests €50M into Circular Innovation Fund for industry circularity

25 Apr 2022 --- L’Oréal is investing €50 million (US$53.7 million) into the formation of the Circular Innovation Fund (CIF), recognizing the increasing pressure on natural resources and the urgent need to scale-up circular economy solutions. The CIF is a global early-stage start-up financing fund devoted only to circular innovation.

The investment from L’Oréal is part of its for the Future sustainability program and cleantech-focused capital managers, Demeter and Cycle Capital, are in charge of the CIF. The fund will also benefit from a spectrum of investors, including strategic investor Axens, family offices such as Haltra and Claridge, and private investors.

“Circularity is the next Industrial Revolution for any sector of activity,” a spokesperson from the L’Oréal Group, tells PersonalCareInsights. “In the personal care industry, addressing the climate and waste crisis will require finding alternatives to petrochemistry, reinventing packaging solutions, adapting manufacturing processes, relying on recycling technologies that are truly circular and rethinking business model by design.”

“L’Oréal is the initiator of the Circular Innovation Fund and its first investor with €50 million (US$53.5 million). I am convinced that finance can play a decisive role in mitigating the impacts of climate change and can be a vehicle for progress,” says Christophe Babule, executive VP and chief financial officer at L’Oréal.

L’Oréal details that sustainable investing solutions will continue to rise as climate change increases.“We believe impact investment is one of the ways we can contribute to spur innovation in the circular economy space as part of the L’Oréal for the Future program. Impact investing is an illustration of sustainable finance, that is to say, the ability to combine financial value creation with environmental and social value creation.”

The need for circular investment moves
L’Oréal’s spokesperson explains that supporting entrepreneurs who are developing innovative circular solutions with a global impact in multiple sectors will directly benefit the personal care industry.

“To date, less than 10% of the global economy is circular. This is a domain where technological developments and access to investments are crucial to foster innovation,” adds L’Oréal’s spokesperson. “Joining forces and investment capacities with like-minded committed companies and investors is necessary to be transformative at scale.”

“As organizations and individuals feel the pressure of climate change, sustainable investing strategies will continue to soar. This strategic collaboration between impact investors and established institutions is pivotal as we need to rethink how we consume goods globally,” says Andrée-Lise Méthot, founder and managing partner at Cycle Capital.

Combating climate change
The Circular Innovation Fund will help start-ups and companies in North America, Europe and Asia create circular resource use across various industries, such as innovative bio-economy materials, circular packaging, recycling and waste management, logistics and eco-efficient processes.

L’Oréal, as an anchor investor, will provide €50 million (US$53.7 million), bringing the total of the CIF to €150 million (US$161.2 million).“At L’Oréal, we act on two strategic and complementary dimensions: on the one hand, we reduce the impact of our business: by sustainably sourcing our ingredients, using more and more recycled materials,” a L’Oréal spokesperson explains.

“On the other hand, we contribute to addressing some of the most pressing environmental challenges the world faces. We believe that environmental impact investing is a very powerful means of action.”

“This is our way of giving back to society and demonstrating that companies can be part of the solution,” adds L’Oréal’s spokesperson. “We are allocating €100 million (US$107.2 million) to environmental impact investing with two Funds: L’Oréal Fund for Nature Regeneration and the Circular Innovation Fund.”

“Our objective with the CIF is fostering the circular economy at scale by helping entrepreneurs develop innovative circular economy solutions. We also contribute positively to the fight against climate change through innovation on a global scale.”

Industry’s environmentally-friendly moves
Also, tapping into the circular economy, LVMH Beauty and Origin Materials recently partnered to purchase carbon-negative PET for fragrance and cosmetics packaging.

Also, LVMH, Henkel, L’Oréal, Unilever and Natura &Co urged industry to create an environmental impact assessment and scoring system for cosmetics products.

By Nicole Kerr

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