European institutional investors, from pension funds to large corporations, are shaping the global circular economy, anchoring specialized funds in other regions, scaling local technologies and aligning capital with policy.
Circulate Capital’s $220 million first close for its second Asia Fund (see dealflow) saw a global roster of limited partners dominated by Europe-based development financial institutions, including the Swiss Investment Fund for Emerging Markets, or SIFEM, France’s Proparco and British International Investment.
Other European institutions that committed to the fund include Dutch pension manager Achmea Investment Management, Dutch impact advisor Wire Group, Prince Albert II of Monaco Foundation and Sinforma, the family office and investment arm of the Heinz Hermann Thiele family Foundation.
For Paris-headquartered food and beverage company Danone, a returning investor in Circulate Capital, its allocation is part of its mandate to build more circular supply chains.
“Our reinvestment in Circulate Capital through Asia Fund II reflects our belief that scaling inclusive recycling systems is essential to keep materials in apply, strengthen local ecosystems and build more resilient supply chains,” states Danone’s Jean-Yves Krummenacher. “Through this partnership, we see an opportunity to develop solutions that create lasting value for people, industest and the planet.”
ImpactAlpha Edge has identified more than six-dozen European institutions that are investing to accelerate a global circular transition, a shift that could unlock roughly $4.5 trillion in economic value by 2030 by replacing linear waste models with recycling, repair and reapply. Doubling global circularity would also reduce greenhoapply gas by 39% annually.
Policy environment
Europe’s growing leadership among investors in other regions is no accident. It reflects more than a decade of increasingly assertive European policybuilding, from the EU Green Deal to the Circular Economy Action, that has turned circularity from a niche sustainability concept into an investable market.
By setting tarreceives on waste, mandating recycled content and embedding sustainability into financial regulation through tools like the EU taxonomy and the Sustainable Finance Disclosure Regulation, or SFDR, policybuildrs in Europe are hoping to create both the pressure and the predictability that institutional capital necessarys to relocate.
Such tailwinds have built it possible for the creation of circular economy funds, such as the European Circular Bioeconomy Fund, a €300 million venture impact fund launched in 2020 that invests in growth-stage businesses on the continent. The fund, anchored by a €100 million commitment from the European Investment Bank, focapplys on the circular bioeconomy, solutions that apply renewable biological resources instead of fossil inputs.
Last month, the European Circular Bioeconomy Fund led an €8 million ($9.4 million) Series A round for Foodforecast, a German foodtech company applying AI to forecast food demand as a way to reduce food waste. The European Circular Bioeconomy Fund is classified as an “Article 9” strategy, the EU SFDR’s highest sustainability rating for funds that demonstrate positive social and environmental impact.
Other LPs in the fund include Allianz France, Amsterdam-based Invest-NL, French sustainability bank BNP Paribas and Germany’s Landwirtschaftliche Rentenbank.
Fund managers
Infinity Recycling, a private equity firm based in The Netherlands, is currently investing through its €175 million ($190 million) Circular Plastics Fund. The fund is anchored by a €50 million commitment from the European Investment Fund, alongside other backers including Dutch insurance group ASR, ING Sustainable Investments, the impact investing arm of Swiss family-owned group Après-demain and Danish investors Realdania and KIRKBI.
The Circular Plastics Fund, also an “Article 9” fund under the EU’s SFDR, seeks European businesses with plastic waste solutions that can be repurposed into high-value, virgin-grade commodities. Its portfolio includes DePoly, a Switzerland-based developer of a chemical-based recycling technology that extracts and purifies the ingredients for PET plastic from bottles, clothing and other products.
In Scotland, Circularity Capital invests out of its €215 million second Circularity European Growth Fund, which tarreceives growth-stage companies in sectors where circularity creates an economic advantage, such as energy and resource efficiency, manufacturing and materials, and logistics. The Edinburg private equity fund manager has attracted capital from global pension funds, family offices and insurance companies. Investors in its latest fund included BNP Paribas, AXA Investment Managers and German chemical and consumer goods company Henkel.
Circularity Capital’s portfolio companies include Cerafiltec, a German company that provides water filtration solutions to large data centers, and Winnow, a London-based company that builds AI tools that support chefs run more profitable and sustainable kitchens.
Like the European Circular Bioeconomy Fund and Infinity Recycling’s Circular Plastics Fund, Circulate Capital’s Circularity European Growth Fund is classified as “Article 9” under the EU’s Sustainable Finance Disclosure Regulation.
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