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L’Oréal Launches Circular Innovation Fund

The fund, anchored by L’Oréal and managed by Demeter and Cycle Capital, works to scale growth-stage circular innovations.

PARIS — L’Oréal has launched a Circular Innovation Fund with the aim of scaling circular innovation solutions from the world over.

The world’s largest beauty company is the fund’s initiator and anchor investor, contributing 50 million euros as part of its L’Oréal for the Future Sustainability program.

The Circular Innovation Fund will be operated by Demeter and Cycle Capital, French and Canadian funds that are experts in clean tech-focused capital management. There are also strategic investor Axens, the Haltra and Claridge family offices, as well as other private investors and the managers.

“There is an urgent need to scale up breakthrough circular innovative solutions,” said Christophe Babule, executive vice president, chief financial officer of L’Oréal, who called the Circular Innovation Fund “the first sizable worldwide investment fund dedicated to circular solutions and endorsed by a corporation.”

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The Circular Innovation Fund was developed to support start-ups and companies in North America, Europe and Asia that are creating circular use of resources in a wide range of sectors — including new materials from the bioeconomy, circular solutions for packaging, recycling and waste, logistics and eco-efficient processes.

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The fund will target companies such as For Days, a circular fashion start-up that recycles consumers’ old clothes with a “Take Back Bag” and has a catalogue of wholly circular, recyclable and eco-design clothing. There is also Aphea.Bio, which has a mission of “applied nature for better agriculture.”

In May 2020, L’Oréal unveiled its new solidarity program, called L’Oréal for the Future, which supports vulnerable women and the environment with 150 million euros-worth of investments. As part of that initiative, the group is deploying 100 million euros for impact investing, in addition to its ongoing Sharing Beauty With All sustainable development program. That sum was to be evenly divided, with 50 million euros earmarked to help regenerate damaged natural ecosystems and 50 million euros budgeted for preventing climate change.

“Within the framework of these funds, the investments we make or contribute to are made with the intention of generating a positive return, with measurable social and environmental impact, while providing a financial return,” Babule said. “This is a perfect illustration of sustainable finance — that is to say, the ability to combine financial value creation with environmental and social value creation.”

“As organizations and individuals are feeling the pressure of climate change, sustainable investing strategies will continue to soar,” said Andrée-Lise Méthot, founder and managing partner of Cycle Capital, and Stéphane Villecroze, cofounder and managing partner of Demeter, jointly in a statement released by L’Oréal. “This strategic collaboration between impact investors and established institutions comes at a pivotal point, as we need to rethink how we consume goods globally.”

The executives said the Circular Innovation Fund could drastically redesign how goods and materials are extracted, manufactured, consumed and disposed.

“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,” they said.

“The latest IPCC report confirms 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 the one hand, reduce the impact of our business by sourcing our ingredients in a sustainable way, using more materials from recycled origin, etc.,” Alexandra Palt, chief corporate responsibility officer and chief executive officer of the Fondation L’Oréal, said in the statement. “On the other hand, contribute to addressing some of the most pressing environmental challenges, such as waste management, plastic pollution and also biodiversity loss.”

L’Oréal’s first 50 million euro impact investing fund, the L’Oréal Fund for Nature Regeneration, was started in June 2020. For that, the group partnered with Mirova, an asset management concern focused on natural capital investment. This fund taps projects bolstering the restoration of forests, mangroves, marine areas and degraded lands.

Also last year, L’Oréal invested in Real Wild Estates Company, which works to restore up to 50,000 hectares of degraded landscapes across the U.K. and elsewhere in Europe.

In 2022, the company is investing in Rize, a French tech start-up that has as its mission to ramp up the low-carbon agricultural transition by helping farmers gain access to carbon financing.

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