Future Returns: Impact Investing Firm Expands to the Oceans of Latin America and the Caribbean

The Singapore-based impact investing firm Circulate Capital launched a US$65 million initiative on Tuesday to reduce plastic pollution in Latin America and the Caribbean.

The strategy builds on Circulate Capital’s efforts in South Asia and Southeast Asia to spur the so-called circular economy by investing in companies that turn waste into usable products. Circulate Capital Ocean Fund, which had its first close in 2019, today has US$112 million in assets.

Backing the Latin America and Caribbean initiative are major global corporations, some of which also invested in its previous financing. Among these investors are Paris-based Danone, Michigan-based Dow, and London-based Unilever, companies that depend on sourcing recycled plastic material to meet their own sustainability commitments.

The Inter-American Development Bank Group’s IDB Lab also invested, and, in fact, encouraged Circulate Capital to take its approach to Latin America and the Caribbean, says Rob Kaplan, the firm’s founder.

Wealthy individuals and family offices also have taken an interest in financing the circular-economy approach to the ocean, including Builders Vision, a philanthropic and impact investing platform founded by Lukas Walton—grandson of Walmart founder Sam Walton. Builders Vision has been a longtime supporter of Circulate Capital, which was created in 2018 by Kaplan, a former director of sustainability at Walmart.

After initially learning of Circulate Capital’s approach for reducing plastic waste, Builders Vision realised it needed to back its effort aggressively, says James Lindsay, principal at Builders Vision. Their goal is to make investing in the ocean as popular for investors as investing in clean-tech solutions for the energy transition from fossil fuels.

Ocean health is one of three areas of investing today for Builders Vision, in addition to climate and energy, and food and agriculture, given the critical role oceans play in climate change and the global food supply.

“It’s a major focus and we want everyone to go look at the ocean sector like it’s completely investable, with market rates of return, just like we would with clean tech or sustainable real assets,” Lindsay says. An endowment or foundation may easily be able to include a clean-tech fund in its portfolio, but with “oceans there’s still a lot of hesitancy.”

There are good reasons for that, Lindsay says. One is that there are few companies that have been sold or gone public and thus been able to return money to investors. That’s started to change in the last two years, and Circulate Capital’s investments are part of that story, he says.

Penta recently spoke with Lindsay and Kaplan about Circulate Capital’s latest initiative, and the investing opportunities emerging for cleaning up the ocean.

A ‘Chicken-and-Egg’ Problem

The waste-per-capita ratio in Latin America is one of the highest in the world, and Kaplan says, expectations are that it will increase by at least 25% in the next 30 years. One reason is that more than 40 million people lack access to basic waste collection.

Cleaning up that waste, however, is a “chicken-and-egg problem,” because the waste needs to be collected before it can be recycled, but “why would you collect it if no one’s going to recycle it?” Kaplan says.

Policy developments in Chile and Colombia, however, have begun to create economic opportunities for local recyclers to start up and scale up, he says. Governments in Brazil and Mexico are beginning to consider similar actions. “That is creating a level playing field for these companies to grow much more rapidly,” Kaplan says.

These developments are similar to what Circulate Capital has seen in India, where it has invested in companies such as Mumbai-based Lucro Plastecycle, which recycles flexible plastics into new materials, and Srichakra Polyplast, in Hyderabad, India, which converts old plastic bottles into food-grade quality resins for new plastic bottles.

An Ocean Portfolio

Builders Vision has made 45 investments so far to support oceans, about half with fund managers and accelerators (which fund new entrepreneurs), and another half in direct investments, Lindsay says.

In addition to plastics, Builders invests in aquaculture through, for example, the Yield Lab, an accelerator for entrepreneurs developing sustainable agriculture systems. It also invests in “monitoring, reporting, and verification” technologies that evaluate efforts such as planting mangroves or seagrass to improve the ocean’s ability to absorb carbon, in addition to technologies that filter microplastics and integrate the material into manufacturing processes.

Most of Builders’ ocean investments are in Europe, where there are more ocean-oriented venture funds. That’s because of a European Union initiative to invest in start-up vehicles so they reach a viable size, Lindsay says. Builders’ goal, however, is to invest more with firms such as Circulate Capital that are based closer to the problems they are trying to solve.

“Navigating country risk without having a sense of the landscape is incredibly challenging,” he says. “You’re going to end up deploying some capital pretty poorly.”

Spurring Economic Development

For Circulate Capital, investing in and growing companies that can rethink supply chains for recycling—“from collecting and sorting to processing and manufacturing”—has ancillary benefits.

Not only do these companies contribute to the fight against climate change, they also create jobs and help local economies.

“Across Latin America and the Caribbean there are millions and millions of people whose livelihoods depend on collecting and trading plastic waste,” Kaplan says. “As we develop the supply chains, and help them scale, that creates more economic opportunity for those vulnerable populations—if it’s done in a responsible way, which is a big part of how we invest.”

In Kaplan’s view, the problem of plastic waste and ocean health will only be solved when “we stop thinking about it just as an environmental issue and start thinking about it as an economic development opportunity.”

Companies such as Lucro and Srichakra are beginning to scale, but Kaplan says the plastics problem in South Asia and Southeast Asia alone will still require “many, many billions” of dollars of investment to solve. Part of Circulate Capital’s role is to catalyse capital by proving these investments can work.

The firm’s second ocean fund, for instance, brought in development finance institutions such as the World Bank Group’s International Finance Corp. and the European Investment Bank in addition to family offices and private investors.

“We’re seeing more investors getting interested in the space. We’re seeing these companies successfully hit their targets and their milestones,” Kaplan says. “Those are all positive directions. But there’s still a lot more work to be done before we can say we’re moving the needle.”

Former New Hampshire Gov. Chris Sununu delivered a warning to Treasury Secretary Scott Bessent during a recent visit to Washington: Already-high airfares will surge if the war in Iran doesn’t end soon.

Sununu, a Republican who represents some of the biggest airlines as president of the industry group Airlines for America, has for weeks sounded the alarm to Trump administration officials about the economic fallout from high jet fuel prices. The war, Sununu has argued, must come to a close soon, or things will get worse.

Administration officials have gotten the message.

Privately, President Trump’s advisers are increasingly worried that Republicans will pay a political price for the rising fuel costs, according to people familiar with the matter. Many of those advisers are eager to end the war, hoping prices will begin to moderate before November’s midterm elections.

The fallout from the U.S.-Israeli attack in late February has slowed traffic through the Strait of Hormuz, a vital shipping lane, triggering a sharp increase in oil, gasoline and jet-fuel prices.

That means consumers are grappling with high costs ahead of the summer travel season, as they consider vacation plans.

Sixty-three per cent of Americans said they put a great deal or a good amount of blame on Trump for the increase in gas prices, according to a new poll conducted by NPR, PBS and Marist.

More than 8 in 10 Americans said struggles at the gas pump are putting strain on their finances.

Jet-fuel prices roughly doubled in a matter of weeks after the war began, and they have remained high. Airlines have said that will add billions of dollars of additional expenses this year, squeezing profit margins.

U.S. airlines spent more than $5 billion on fuel in March—up 30% from a year earlier, according to government data.

Carriers have been raising ticket prices, hoping to pass the cost along to consumers, and they are culling flights that will no longer make money at higher price levels.

In March, the price of a U.S. domestic round-trip economy ticket rose 21% from a year earlier to $570, according to Airlines Reporting Corp., which tracks travel-agency sales.

So far, airlines have said the higher fares haven’t deterred bookings and they are hoping to recoup more of the fuel-cost increases as the year goes on.

Earlier this week, Trump said the current price of oil is “a very small price to pay for getting rid of a nuclear weapon from people that are really mentally deranged.”

Secretary of State Marco Rubio told reporters that if Iran got a nuclear weapon, the country would have more leverage to keep the strait closed and “make our gas prices like $9 a gallon or $8 a gallon.”

Trump has taken steps in recent days to bring the war to an end. Late Tuesday, the president paused a plan to help guide trapped commercial ships out of the Strait of Hormuz, expressing optimism that a deal could be reached with Iran to end the conflict.

Crude oil prices fell below $100 a barrel on Wednesday, after reports that Iran and the U.S. are working with mediators on a one-page framework to restart negotiations aimed at ending the conflict and opening the strait.

Sununu said Trump administration officials are conscious of the economic fallout from the war: “They get it…and I think that’s why they’re trying to get through the war as fast as they can.”

But he cautioned that it could take months for prices to return to prewar levels.

“Ticket prices won’t go down immediately” after the strait is fully reopened, Sununu said. “You’re looking at elevated ticket prices through the summer and fall because it takes a while for the prices to go down.”

Since the initial U.S.-Israeli attack in late February, Sununu has met in Washington with National Economic Council Director Kevin Hassett, representatives from the Transportation Department and senior White House officials.

A White House official confirmed that Hassett and Sununu have discussed the effect of increased fuel prices on the airline industry. The official said the conversation touched on how the industry can mitigate the impact of high jet fuel prices on consumers.

“The president and his entire energy team anticipated these short-term disruptions to the global energy markets from Operation Epic Fury and had a plan prepared to mitigate these disruptions,” White House spokeswoman Taylor Rogers said, pointing to the administration’s decision to waive a century-old shipping law in a bid to lower the cost of moving oil.

Rogers said the administration is working with industry representatives to “address their concerns, explore potential actions, and inform the president’s policy decisions.”

A Treasury Department spokesman pointed to Bessent’s recent comments on Fox News that the U.S. economy remains strong despite price increases. The spokesman said Treasury officials have met with airline executives, who have reaffirmed strong ticket bookings.

“We’re cognizant that this short-term move up in prices is affecting the American people, but I am also confident, on the other side of this, prices will come down very quickly,” Bessent told Fox News on Monday.

The war has already contributed to one casualty in the industry: Spirit Airlines. Company representatives have said they were forced to close the airline because the sustained surge in jet-fuel prices derailed the company’s plan to emerge from chapter 11 bankruptcy.

The Trump administration and Spirit failed to come to an agreement for the company to receive a financial lifeline of as much as $500 million from the federal government.

Transportation Secretary Sean Duffy has argued that the Iran war wasn’t the cause of Spirit’s demise, pointing to the company’s past financial struggles, as well as the Biden administration’s decision to challenge a merger with JetBlue.

Other budget airlines have also turned to the federal government for help since the U.S.-Israeli attack. A group of budget airlines last month sought $2.5 billion in financial assistance to offset higher fuel costs, and they separately wrote to lawmakers asking for relief from certain ticket taxes.

Future Returns: Impact Investing Firm Expands to the Oceans of Latin America and the Caribbean

Administration officials have spoken to the airline industry, which has voiced concerns about the rising costs.