L’Oréal announces Circular Innovation Fund

A new fund to support companies in North America, Europe and Asia that are developing circular use of resources across various sectors, has been announced by consortium lead L’Oréal.

LOREAL Circular Innovation FundThe French cosmetics company has announced it will contribute €50m as the anchor investor of the €150m Circular Innovation Fund.  The scheme, to be operated by Demeter and Cycle Capital, will also receive support from chemical company Axens and investment companies including Haltra and Claridge.

Initiatives eligible for the fund include new materials from the bioeconomy, circular solutions for packaging, recycling and waste, logistics and eco-efficient processes.

Labelled by L’Oréal as an ‘impact investing fund’, the Circular Innovation Fund aims at employing a measurement methodology to monitor ‘non-financial’ Key Performance Indicators (KPIs) – including greenhouse gas emissions reductions, resource use and diversity beyond the investment horizons of portfolio companies.

Examples of projects that are supported by the Circular Innovation Fund include ‘circular fashion’ start-up For Days, that states it plans and designs "for the end of a product’s life at the beginning" – for instance, the recycling of its consumers' old clothes with the ‘Take Back Bag’.

Another project that will be supported by the fund is, ‘Aphea.Bio’, which develops new ‘agricultural biologicals’ to help reduce fertiliser application, and states its mission is "Applied Nature for better Agriculture".

Commenting on the new fund, Christophe Babule, Executive Vice-President and Chief Financial Officer of L’Oréal, said: “L'Oréal is the initiator of the Circular Economy Fund and its first investor with 50 million euros. I am convinced that finance can play a decisive role in mitigating the impacts of climate change and can be a vehicle for progress.

“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 a perfect illustration of sustainable finance, that is to say, the ability to combine financial value creation with environmental and social value creation.”

Andrée-Lise Méthot, Founder & Managing Partner of Cycle Capital and Stéphane Villecroze, Co-Founder and Managing Partner of Demeter, also commented: “As organisations and individuals are feeling the pressure of climate change, sustainable investing strategies will continue to soar. This strategic collaboration between impact investors and established institutions comes at a pivotal point as we need to re-think how we consume goods globally.

“The Circular Innovation Fund has the potential to drastically re-design how we extract, manufacture, consume and dispose of goods and materials. Together, we can deliver value to the market with returns and, most importantly, deliver purpose and new innovation-driven technologies developed by talented entrepreneurs that have the potential to mitigate the environmental crisis humanity faces.”

Alexandra Palt, Chief Corporate Responsibility Officer and CEO of the Fondation L’Oréal, added: “The latest IPCC report confirmed that “it is now or never” that we can act to stave off the worst impacts of global warming.

As a leader, we want to act in two complementary and strategic ways: on one hand, reduce the impact of our business – by sourcing our ingredients in a sustainable way, using more materials from recycled origin, etc.

On the other hand, contribute to addressing some of the most pressing environmental challenges, such as waste management, plastic pollution and also biodiversity loss. That is why, in addition to [being] the anchor investor leading the new Circular Innovation Fund, this year, we continue to invest to regenerate biodiversity through a new ambitious and innovative French tech project.”

In June 2020, L’Oréal announced its fund for Nature Regeneration, involving projects with the goal of ‘supporting the restoration of forests, mangroves, marine areas and degraded lands’. Following on from this, in July 2020 the cosmetic company announced its  Future Sustainability Program, highlighting its sustainability commitments for 2030.