Latin America’s Circular Economy Gains Investment Momentum

Latin America’s circular economy is experiencing significant growth, presenting lucrative opportunities for investors. The region is witnessing a surge in interest from private equity (PE) and venture capital (VC) firms, eager to capitalize on the region’s untapped potential. Here are four key developments signaling the rise of the circular economy in Latin America in 2024:

Abundant Capital Ready for Deployment

After a relatively quiet 2023, major private equity players like GSAM and General Atlantic, along with smaller VC funds, are gearing up to invest heavily in the region. According to a recent LAVCA newsletter, these firms are poised to inject fresh capital into companies focusing on climate technology and AI. The total number of disclosed deals increased by 43% in 2023 compared to 2020, with venture investment up by 40% in 2023 versus 2022. This trend is expected to continue in 2024, with investors eyeing opportunities in biotechnology, healthcare, and financial services.

Supportive Public Policies

Latin America is taking proactive steps to address plastic waste, with countries like Chile and Colombia leading the way. These nations have introduced Extended Producer Responsibility (EPR) laws, holding manufacturers accountable for the lifecycle of their products. Additionally, Colombia is set to host the next biodiversity COP in November 2024, followed by Brazil hosting COP 30 in 2025, highlighting the region’s commitment to sustainability.

Corporate Investment

Recognizing the urgency of the plastic waste crisis, corporates are increasingly investing in solutions. For instance, Delterra, in partnership with Amcor, Mars, and P&G, launched a $6 million alliance to combat plastic pollution in Argentina, Brazil, and Indonesia. This aligns with a $65 million initiative in Latin America to combat plastic pollution, involving IDB Labs, Builders Vision, Chevron Phillips Chemical, Danone, Dow, Mondelēz International, and Unilever.

Promising Opportunities

A comprehensive review of the circular plastics ecosystem in 13 Latin American countries and nine Caribbean islands revealed promising market-based solutions. These solutions integrate activities across the value chain of waste plastics, offering scalability and potential to reduce plastic pollution while improving working conditions and livelihoods.

These developments underscore the growing interest and momentum in Latin America’s circular economy. As new investment dollars flow into enterprises driving recycling supply chains, the region is poised to unlock significant value. Latin America is primed for sustainable growth, making it a region to watch closely in the coming years.