Spotlight on C4IF: Financing the Future of Circularity

This article is part of our ongoing series on circularity, building on insights from a recent piece in Financial Investigator,[1] which highlighted a key paradox: although the circular economy is widely recognised as essential to environmental and economic resilience, progress has yet to match the ambition.

Despite growing policy support, circularity rates have stagnated as resource consumption continues to outpace the deployment of circular solutions. The Circularity Gap Report found that the global circularity rate fell to 6.9%, with rising demand for virgin materials offsetting improvements in secondary material use.[2] While many circular economy businesses have proven technologies, an uneven playing field can limit customer demand and make commercial scale-up more challenging. This, in turn, can make it harder to secure the financing needed to build commercial facilities, expand production, develop supply chains and scale operations. Improving circularity therefore requires not only better sustainable technologies, but also greater investment in the businesses and infrastructure capable of keeping materials in productive use for longer and reducing dependence on virgin resources.

What is Circularity?

The ideal circular economy is a system in which materials remain in productive use for as long as possible and waste is minimised. Underpinned by a transition to renewable energy and materials, the circular economy is a resilient system that is good for business, people, and the environment.[3]

While some virgin inputs remain necessary in practice, circular economy approaches encompass two complementary cycles: keeping products and materials in circulation through maintenance, reuse, refurbishment, remanufacturing and recycling; and replacing finite, fossil-based inputs with renewable, biogenic alternatives, with biological materials ultimately able to return safely to natural systems through processes such as composting. Together, these approaches can reduce dependence on finite resources and help address interconnected challenges including climate change, biodiversity loss, waste and pollution.

The circular economy is based on three principles, driven by design: eliminate waste and pollution, circulate products and materials (at their highest value) and regenerate nature.

An Emerging Investment Opportunity

Circularity is increasingly recognised as an overlooked driver of value creation in private markets, supported by a growing awareness of resource security, supply chain resilience and the economic opportunities associated with more efficient use of materials and resources.[4]

For investors, exposure to circular economy businesses may help mitigate certain linear-economy risks, such as resource scarcity and price volatility, or risks related to the economy in transition such as regulatory risks, failure to adapt and the risk of stranded assets.[5] Meanwhile the transition to a more sustainable economy offers investment opportunities in providing tailored financing solutions to businesses as they scale. However, this is where a structural funding gap persists.

Businesses scaling sustainable technologies, for example within the circular economy, as well as those building portfolios of sustainable assets or growing sustainable companies, often require financing structures that sit between traditional venture capital and conventional bank lending. Specialist private credit can play an important role in providing the flexible capital needed to support their growth and commercial deployment.

Introducing the Colesco Circular & Climate Credit Impact Fund (C⁴IF)

The Colesco Circular & Climate Credit Impact Fund (C⁴IF) was created to support the commercialisation and
scale-up of circular and climate solutions, helping companies access the capital required to achieve commercial
scale. C⁴IF provides tailored debt financing to companies scaling technologies and business models that
contribute to a more resource-efficient and lower-carbon economy. By providing financing at this critical stage of
development, the strategy supports businesses as they transition from demonstration to commercial deployment.
In doing so, C⁴IF seeks to contribute to:

> The scale-up of circular or sustainable production technologies

> Reduced reliance on fossil-based resources

> Waste reduction and the productive reuse of materials

> The development of more sustainable value chains

> Measurable environmental outcomes across areas such as emissions, waste and resource efficiency

By targeting investments that seek to reduce reliance on fossil-based resources, minimise waste and develop
more sustainable production practices, C⁴IF offers investors exposure to businesses and infrastructure supporting
the circular economy. In doing so, the strategy has the potential to contribute to greater European resource
independence while supporting the transition towards a more sustainable, resource-efficient and lower-carbon
economy.

Investing in Circular Innovation

C⁴IF’s portfolio demonstrates how private credit can help scale commercially viable circular and climate businesses. Investments such as Circtec and Xycle illustrate this in practice, highlighting the role of tailored financing in supporting the growth of businesses delivering circular solutions at industrial scale.

Circtec: Tackling the Tyre Waste Challenge

End-of-life tyres pose a major environmental problem, with millions of tonnes incinerated or exported each year. Circtec uses advanced pyrolysis technology to convert tyre waste into recovered carbon black, circular fuels and chemical
feedstocks.

C⁴IF is supporting the construction and operation of a large-scale recycling facility in Delfzijl, demonstrating how waste streams can be transformed into valuable industrial inputs at commercial scale.

Xycle: Unlocking Value from Plastic Waste

Plastic waste remains a pressing environmental challenge, with most still ending up in landfill or incineration.

Xycle’s proprietary pyrolysis technology converts difficult-to-recycle plastic waste into pyrolysis oil, which can be used as feedstock for the production of new plastics, reducing the need for virgin fossil-based feedstocks. C⁴IF’s financing supports the construction and operation of Xycle’s first commercial-scale facility in Rotterdam, which will have the capacity to process 21 kilotonnes of plastic waste annually.

Bridging Capital and Impact

These investments are united by their environmental ambition and their position at a critical inflection point: the transition from innovation to industrial scale.

C⁴IF plays a vital role in this transition by:

> Structuring financing tailored to companies scaling circular economy and climate solutions

> Helping companies through the scale-up phase

> Supporting measurable environmental outcomes across waste reduction, emissions reduction and resource efficiency

Environmental performance is assessed using investment-specific impact metrics selected to reflect the activities and intended outcomes of each portfolio company, with progress monitored over the life of the investment. This approach reflects growing investor interest in strategies that seek to align financial returns with positive environmental and social outcomes.

Looking Ahead

As regulatory pressure intensifies and resource constraints become more apparent, the demand for scalable circular solutions is expected to grow. Yet without the right financing structures, many promising technologies and business models will struggle to achieve commercial deployment.

C⁴IF demonstrates how private credit can help address this challenge by supporting businesses as they scale circular and climate solutions, connecting capital with purpose.

Realising the full potential of the circular economy will require strategies that translate ambition into implementation, accelerating the adoption of commercially viable solutions with the potential to deliver measurable impact at scale.

[1] https://magazine.financialinvestigator.nl/p/financial-investigator/fi-1-2026/r/29/56-57/9967/2132967

[2] https://www.reconomy.com/the-circularity-gap/

[3] https://www.ellenmacarthurfoundation.org/topics/circular-economy-introduction/overview

[4] https://reports.weforum.org/docs/WEF_Circular_Transformation_of_Industries_2025.pdf

[5] https://www.wbcsd.org/wp-content/uploads/2023/12/Linear-Risks.pdf