Why we invested in Circulor
By: Sebastian Peck
Tags: Circulareconomy, Supply Chain, Sustainability, Battery, Electric Car

15 December 2020

Last week, the European Commission published its new battery directive, creating a strong regulatory framework to underpin both responsible sourcing of raw materials as well as recycling of EV batteries. Creating sustainable and transparent industrial supply chains is critical to eliminating unethical sourcing practices and meet ambitious climate policy goals as well as to underpin circular economy business models. In 2017, a Harvard Business Review article highlighted that 80% of US public companies did not know if their products contain conflict materials despite the introduction of legislation in 2010 by the US congress that mandated companies listed on US stock markets to disclose whether their products contain conflict materials such as tantalum, tin, tungsten, and gold originating in the Democratic Republic of Congo or adjoining countries. From 1 January 2021, the EU will enforce its own conflict minerals regulation, which will require selected importers of minerals and metals to comply with, and report on, supply chain due diligence obligations if the minerals originate (even potentially) from conflict-affected and high-risk areas.

Tracking every input represents a massive challenge for large manufacturers given the complexity of large and globally dispersed supply chains. Consumer-facing brands are typically several tiers removed from actual smelters and mining sites that produce the minerals that go into their products. One supply chain manager interviewed by the authors of the HBR article said that his firm had over 1,000 first-tier suppliers, and these suppliers had 8,000 second-tier suppliers, and the second-tier suppliers had perhaps 30,000 third-tier suppliers. Critical minerals might be three, four, or more steps back in the supply chain.

Consumers and regulators rightfully demand more transparency, prompting supply chain managers to invest in tracing solutions to eliminate conflict materials and encourage ethical sourcing practices across their supplier base, and tighten the standards to which they hold their suppliers.

Enter Circulor. The UK-based company has developed a cutting-edge software platform to trace the movement of materials and components in industrial supply chains, from source to manufacturer. The system applies multiple verification methods at each step in the process to spot errors or attempted manipulation of supply chain data. Their first application traced tantalum, a conflict mineral essential for making capacitors for devices like smartphones and laptops. The system went live in three mines and an ore-sorting facility in Rwanda in the fall of 2018, and they were able to demonstrate tracing from mine to end-manufacturer for the first time. The company has since then signed up major global mining and manufacturing companies, delivering for example solutions to track CO2 emissions resulting from battery production and tracing recycled cobalt from a Chinese recycling plant.

As part of its commitment to be a responsible business, Jaguar Land Rover is always innovating to reduce the environmental and ethical impacts of its products across their lifecycle. The investment in Circulor will enable Jaguar Land Rover to source premium materials with greater transparency as to the provenance, welfare and compliance of suppliers throughout its networks, as well as assessing the carbon footprint of its supply chain.

As VCs, we are driven to invest in companies that solve really big problems and have a positive impact on society. Creating a transparent and sustainable global industrial supply chain that eliminates all potential entry points for unethically sourced materials is as big as it gets. We are very excited to work with Douglas Johnson-Poensgen and his team at Circulor to build a world beating business with true societal impact.

Sebastian Peck | Managing Director, InMotion Ventures

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InMotion Ventures is a leading early-stage investor powered by Jaguar Land Rover. To learn more about us and our investments, visit us.