Nestlé and Microsoft on financing circular innovations

February 22, 2021 by  
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Nestlé and Microsoft on financing circular innovations Elsa Wenzel Mon, 02/22/2021 – 01:30 A circular economy looks different within each industry, but its broad vision of healing the harm from the industrial economy’s extractive, polluting original sins is appealing more to a variety of businesses. A small number of influential large companies are creating internal funds to support sustainability goals specific to circular economy initiatives, such as designing out waste and recovering materials from products used internally or sold in the market. The eyes of traditional investors are widening to the landscape as well. It’s an early-stage, sometimes loosely defined space, where many solutions remain unproven, but the long-term payoffs in terms of sustainability and cost reductions could be enormous. That’s the hope of several early movers in circular economy investing, who shared their insights at the GreenBiz 21 virtual event in early February.  Nestlé and Microsoft are among the noteworthy corporations putting considerable investments behind circular programs involving products and services, in service of their sustainability targets and with an eye to spark broader change across their industries. “I would almost challenge people to not think of it as, ‘I have to set up a fund separate from,’ but it’s more of, ‘How do I set up our business to operate differently going forward?’” said Anna Marciano, head of U.S. legal sustainability at Nestlé USA. “If we’re going to make sure that we’re using more recycled content, if we’re going to ensure that we’re going to reduce carbon emissions, then we need to be tracking that. So then our procurement team needs to be monitoring that and they need to be held accountable for all of our ESG commitments.” If you’re going to use more recycled content, you’re going to use alternative materials for packaging, you have to be ready to make the capital investment needed in your infrastructure in your factories. One goal of Closed Loop Partners (CLP), entering its ninth year, is to bring together institutional investors with strategic corporate investors who seek to build a circular economy for their supply chains while helping their sustainability goals. (CLP’s private-equity Closed Loop Leadership Fund , launched in 2018, counts Nestlé, Microsoft and Nuveen among its investors.) “I have heard more in the last few years, probably than ever before, companies talking about investing off their balance sheets to achieve some of these goals, which I think is new vernacular for a lot of companies,” said Bridget Croke, managing director at CLP. Nestlé’s circular recipe Also about one year ago, Nestlé launched its $2 billion sustainability fund , to support companies developing innovative packaging and recycling technologies through 2025. (The company’s first investment was in the Closed Loop Leadership Fund.) The producer of coffee, candy and cocoa also created a nearly $260 million venture fund in support of planet-friendly packaging technologies. Its broader sustainability targets include getting to net-zero carbon emissions by 2050.  Nestlé’s circular plans include, by 2025, reducing virgin plastics in packaging by one-third and making all of its packaging reusable and recyclable. But goals aren’t enough without something to back them up, Marciano said. “If you’re going to use more recycled content, you’re going to use alternative materials for packaging, you have to be ready to make the capital investment needed in your infrastructure in your factories,” Marciano said. “And so it becomes really critical for this to be a mindset shift to say, yes, this is absolutely what we need to achieve.” Nestlé knew it had to invest in designing packaging for the future to meet its packaging commitments, so it established its Institute for Packaging Science in 2019 in Switzerland. One pocket-size result is new recyclable paper packaging for Smarties candies, popular in the U.K. “That’s really where the strong collaboration, the collective action of financial investments come into play,” Marciano added. ”So we’re really targeting investments to help transform the recycling infrastructure, so we could advance the circular economy at the end of the day.” Microsoft’s circular formula Similarly, as a corporate citizen, Microsoft aimed to look beyond the four walls of its own operations toward suppliers and customers, and other industries it touches, to enable circular markets to grow, said Brandon Middaugh, director of Microsoft’s Climate Innovation Fund.  Like Nestlé, Microsoft also looks at translating its goals into circular economy action in terms of designing out waste, reusing and recycling materials and products, and replenishing natural resources that it uses — three pillars reflected by the Ellen MacArthur Foundation. The investment strategy includes identifying and prioritizing the major areas of waste that apply to Microsoft’s own supply chains and operations, including its devices, cloud infrastructure and campus operations, Middaugh said. One new initiative is to build Microsoft Circular Centers  to further the reuse of computer servers and other hardware from the company’s data centers.  “We really recognized that it was not enough to set the operational goal and to do that work internally. We needed to be partnering externally and reaching outside into the market to try to be an advance team for the innovation in the industry,” she said. Microsoft is one year into its $1 billion, four-year Climate Innovation Fund . Carbon, water, waste and ecosystems are the core focus areas for the software juggernaut, which is aiming to carbon negative by 2030, removing all the carbon it has historically emitted by 2050. If you are not going to invest, what’s the cost of not investing? The fund, a joint finance-sustainability initiative, is one of three balance-sheet ESG funds at Microsoft, in addition to others around affordable housing and racial equity.  Middaugh said it’s useful to have a unified playbook toward a single goal, which may lean on products, operational investments, employee engagement and even advocacy, using partnerships in civil society. For Microsoft, the main points are about being carbon negative, water positive, zero waste — and building a ” planetary computer ” that harnesses artificial intelligence (AI) to recommend resource protection measures, tree by tree. Tangible examples of these include reducing electronic waste and packaging hardware without waste. “Then it’s also about giving the tools for traceability and transparency that we, our customers, need to be able to track circular economy themes,” Middaugh said. Those areas of strategic importance cascade to the investment strategy as well. How to prove circular success? For traditional investors, sustainability with a sound return on investment is key, according to David Haddad, managing director and co-head of impact investing at Nuveen , a subsidiary of TIAA. “We want there to be an economic viability, because our time horizon tends to be relatively shorter than many of these larger companies.”  And traditional institutional investors are challenged by the need to make a certain return within a relatively short time frame, maybe five or 10 years, which may not be enough for a market to mature.  Ways to reduce the risk around investments can include investing in research and innovation; proving that new business models are moving in a certain direction and integrating that into the business; and exploring longer-term contracts, according to Croke. Nestlé’s sustainability fund is already driving results, said Marciano, who is also division general counsel for Nespresso USA and International Premium Waters. “We have access to more recycled plastic already, we’re able to integrate it into our Stouffer’s business, into our Coffee mate business, into our water business,” she said. “So we see it working already. And it’s only been a few months in.” Middaugh noted that Microsoft focuses on metrics around the use of recyclable materials; landfill diversion in terms of solid waste and the construction and demolition waste at its campuses, and an overlapping focus on embodied carbon. “And in terms of how we integrate those with the rest of the decision process. It’s really around assessing the impact, assessing the risk and then looking for that impact and risk-adjusted return,” she said. For Nestlé, measuring circular economy success involves improving recycling rates beyond the company itself by spurring improvements in recycling infrastructure more broadly, encouraging consumers to recycle too. But that’s tricky. The question of measuring social impacts, not just the environmental ones most companies have prioritized, is another matter. Haddad noted that as an impact investor, there’s no cookie-cutter recipe, but Nuveen works closely with each young company to determine relevant metrics, and any failure to be able to report on those alongside financial performance will make it a no-go for funding. Croke agreed that limited tools for tracking certain metrics related to circular goals are difficult for companies or municipalities, but a bonus to working with large tech companies is being able to identify and address data gaps and useful technologies. Partnerships and collaborations are essential How does a sustainability advocate make the business case for investing toward circular, sustainable solutions? What’s the benefit of leveraging the company’s balance sheet or other capital? Early corporate movers may offer useful examples. Croke noted that some companies may find it hard to identify such investment opportunities and run up against limits to the size of deals they can take on. “And so the ability to invest through other funds helps sometimes open up opportunities to invest in things that might be too early-stage or small that need some de-risking,” Croke said. Partnerships with third-party leaders can help when trying to apply lessons to the rest of the business from initiatives around circular servers, recycling and reuse, Middaugh said. She, Marciano and Croke agreed that no organization should try to go it alone when addressing a systemic challenge as large as growing a circular economy. For example, it’s upon Nestlé to share its expertise in sustainable packaging, collaborating with other stakeholders to make sure it’s not introducing harmful materials into products. Such relationships can improve the wheel in multiple areas. And policy advocacy is another spoke of the wheel for Nestlé. Middaugh added that collaborations should involve early-stage innovations and pilots — such as sharing information with other companies exploring advanced materials — as well as later-stage infrastructure buildout. Microsoft is working with suppliers to update its supplier Code of Conduct to reflect its carbon and sustainability goals, also providing the tools to help its partners meet their goals.  The coming transition CLP draws connections across that ecosystem by backing circular efforts by municipalities, recycling facilities and material recovery facilities (MRFs). It has invested, for example, in Amp Robotics , which offers early-stage AI for recycling facilities, and PureCycle Technologies , whose technology turns polypropylene back into virgin-quality material. CLP started an innovation hub to support pre-competitive ideas. Croke agreed that data points around diversion of material and greenhouse gas impacts, to name just a couple, are relatively simple to understand. “What I think is sometimes more interesting, and a little bit harder to measure is the catalytic impact that’s being had, we’re all trying to completely transform a supply chain, the way that the supply chain works from being linear to being circular, and the linear supply chain is quite scaled,” she said. “The economics are very efficient today.” However, there’s going to be a lead-up time to building up the scale for new, circular models. In time, costs will expand for existing linear systems, becoming less attractive to newly affordable circular ones.  “But what we’re finding is that there are definitely specific investment opportunities today that are profitable, that makes sense for the institutional kind of partners make sense for our corporate partners, and hopefully create the levers that unlock, value and scale for the rest of the system,” Croke added. Haddad advocated for companies to recognize private equity firms as a force multiplier. “We can really bring capital to bear and our experience with boards and governance to scale those things,” he said. Marciano insisted that it’s not necessary to invest millions of dollars to get started. Pick up the phone and talk to people, and take other small steps to explore circular possibilities. “If you are not going to invest, what’s the cost of not investing?” she said. “Think of it that way, and really try to inspire others within your organization to take a chance … What’s the worst that could happen? You asked for the money and you’re told no or not yet. But at least you’ve already planted the seed, that you believe that the money is needed and could make a difference.” Pull Quote If you’re going to use more recycled content, you’re going to use alternative materials for packaging, you have to be ready to make the capital investment needed in your infrastructure in your factories. If you are not going to invest, what’s the cost of not investing? Topics Circular Economy Finance & Investing Corporate Strategy GreenBiz 21 Featured in featured block (1 article with image touted on the front page or elsewhere) On Duration 0 Sponsored Article Off  Illustration of circular economy in industry. Shutterstock MG Vectors Close Authorship

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Nestlé and Microsoft on financing circular innovations

Biden chooses his climate team here are the nominees

December 18, 2020 by  
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As president-elect Joe Biden continues to pick his Cabinet and agency heads, eco-conscious Americans watch to see what his choices will mean for the climate crisis. So far, it looks like Biden is surrounding himself with a strong climate team consistent with his top priority of quickly reducing U.S. greenhouse gas emissions. On Wednesday, Biden named former South Bend, Indiana Mayor Pete Buttigieg as transportation secretary. Auto workers, energy lobbyists and environmental groups supported this choice. “ Transportation is an issue that touches all Americans — urban, rural, coastal and in the heartland of our nation,” said Chris Spear , American Trucking Associations President and CEO. “Having served as a mayor, Pete Buttigieg has had an up close and personal look at how our infrastructure problems are impacting Americans, and how important it is to solve them.” Related: Biden promises US-led climate summit in 2021 Buttigieg also comes into the position with a plan that he developed during his time as a presidential contender. The plan, which he presented back in January, included $165 billion for the Highway Trust Fund to fix and update bridges and roads and create more union jobs. He championed electric vehicles and suggested dispersing $6 billion in loans and grants to cities and states for funding charging station networks. Biden has nominated former Michigan Governor Jennifer Granholm for energy secretary, and he said he will appoint former Environmental Protection Agency chief Gina McCarthy to lead domestic climate efforts. The Energy Department is in charge of regulating utility companies. Granholm has a good record on clean energy and has worked closely with chemical and energy firms in the past. As Michigan’s governor, she encouraged the increased manufacturing of electric vehicles. McCarthy was head of the EPA under President Barack Obama. She had a strong record of making rules to oppose climate change. Her new position would be coordinating and overseeing a federal interagency approach to climate issues. She is currently the president and CEO of NRDC . On Thursday, Biden nominated Michael Regan to lead the EPA. Regan began working as North Carolina’s environmental chief in 2017, and during this time, he focused on environmental justice. He has spent years helping low-income communities that were the most impacted by industrial pollution. Biden also announced his nomination of Deb Haaland, who would be the first Native American to lead the Department of the Interior. If confirmed, she will oversee the management of public lands as well as the protection and honoring of Indigenous communities. In a statement, the Biden-Harris transition team said Haaland will be “ready on day one to protect our environment and fight for a clean energy future.” Via Washington Post , AP and NPR Image via René DeAnda

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Biden chooses his climate team here are the nominees

4 tips for changing consumer behavior

November 23, 2020 by  
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4 tips for changing consumer behavior Lauren Phipps Mon, 11/23/2020 – 01:00 When I cover solutions to the plastic waste crisis, I typically focus on infrastructure development and bringing recycling systems to scale, standardizing materials, inventing new ones and designing out unnecessary single-use items, and rethinking business models and supply chains. But once these structures are in place, they only work if consumers embrace new models and ensure that materials move through the system as planned. Otherwise, the entire system breaks down. And if you thought it was hard getting your colleagues to recycle rigid plastic or compost paper towels, or to stop wishcycling — that whatever they throw into the bin will, in fact, be recycled — think about the complexity of changing consumer behavior across a city, country or beyond.  During a recent webcast, I had the pleasure of speaking with Dr. Natalie Hallinger, a behavioral scientist and behavior change adviser working to translate research on human motivation into real-world behavior change strategies.  Here are four tips Hallinger recommends for designing large-scale interventions:  Make it relatable: “People often think they need to force people to do something they don’t want to do,” Hallinger shared. But brute force is rarely the path of least resistance. “The easier route is to find a way to relate to them. What’s an intersection of a goal they already want that aligns with your goal?” For example, if your generic environmental appeal to an individual doesn’t resonate, perhaps an individual will relate more with a personal desire to visit a clean beach in the summer.  Make it desirable: Culture and social norms are strong drivers of consumer behavior. “The most desirable thing for humans is to fit in,” Hallinger explained. “If you design interventions that create community norms of waste reduction behavior, reusing and repairing, then everyone wants to be doing the same thing. You don’t want to stand out. You do it because of your desire to be part of the community.” Make it contextual: Behavior change interventions must be relevant and salient. Hallinger explained that if you’re engaging employees in a work context about actions they can take at home, it likely will go in one ear and out the other. Focus on actions that people can implement immediately.  Make it easy : The “right” choice from a sustainability perspective should also be the easy choice. “If you create the infrastructure and design built environments that make the behavior you want the default, then you have behavior without even needing to persuade the person.” To eliminate the guesswork that consumers face at the bin, Hallinger suggested that single-stream recycling with back-of-house sorting would design out confusion and contamination and lead to higher recycling rates in certain contexts.  I invite you to listen to the entire webcast here , which includes additional insights on behavior change from Jacob Duer, president and CEO of Alliance to End Plastic Waste; Jeff Kirschner, founder and CEO of Litterati; and John Warner, distinguished research fellow at Zymergen.  Topics Circular Economy Consumer Trends Featured Column In the Loop Featured in featured block (1 article with image touted on the front page or elsewhere) Off Duration 0 Sponsored Article Off

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Stemming the Tide: Investment, Infrastructure and Innovation in Ocean Plastics

September 16, 2020 by  
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Stemming the Tide: Investment, Infrastructure and Innovation in Ocean Plastics How can investment, infrastructure and innovation help solve ocean plastics? Speakers Dave Ford, Ocean Plastics Leadership Network Ellen Jackowski, HP Dune Ives, Lonely Whale Holly Secon Wed, 09/16/2020 – 01:06 Featured Off

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Stemming the Tide: Investment, Infrastructure and Innovation in Ocean Plastics

Reusable Packaging: Scaling Past a Pandemic

September 16, 2020 by  
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Reusable Packaging: Scaling Past a Pandemic How can companies shift to reusable packaging models while dissuading concerns for safety and contamination? Since the day of the milkman, companies have launched untold schemes to skip recycling for its less energy- and material-intensive cousin: reuse. While using packaging over and over again is no new concept, recent business model innovations have seen a resurgence of reuse-inspired services. But as health and safety concerns take center stage, the future of reuse has been called into question. This discussion introduces the multitude of ways retailers and brands are enacting reuse models, including systems for refill, returnable packaging or optimising the supply-chain with reusable transport packaging. The panel explores what opportunities reuse can afford, including brand loyalty, optimized operations, and reduced costs, while exploring how brands can address contamination concerns head on. Take a deep dive into the opportunities and obstacles to bringing resuse to scale today. Speakers Holly Kaufman, President, Environment & Enterprise Strategies Bridgit Croke, Managing Director, Closed Loop Partners John Hocevar, Oceans Campaign Director, Greenpeace USA Tom Szaky, Founder & CEO, Loop  Holly Secon Wed, 09/16/2020 – 00:22 Featured Off

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Reusable Packaging: Scaling Past a Pandemic

These gorgeous designs guard against flooding

March 11, 2020 by  
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Letting the water in poses no threat to these communities in these ingenious designs.

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These gorgeous designs guard against flooding

Sound investments to decarbonize the world’s industries

March 11, 2020 by  
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As much as $21 trillion is needed through 2050 to fully decarbonize the ammonia, cement, ethylene and steel sectors.

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Sound investments to decarbonize the world’s industries

How a new approach to America’s rapidly aging gas infrastructure can align with climate goals

January 30, 2020 by  
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Spending on America’s gas systems has grown dramatically in recent years. But that might not be the way to go.

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How a new approach to America’s rapidly aging gas infrastructure can align with climate goals

Reflections on Davos: Who solves ‘wicked problems’?

January 30, 2020 by  
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You know the answer.

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Reflections on Davos: Who solves ‘wicked problems’?

The great EV infrastructure challenge

November 13, 2019 by  
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And 10 things you need to know about the future of electrified transportation.

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The great EV infrastructure challenge

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