Investing in Circulor: the Future of Industrial Supply Chain Traceability

Managing ESG for Supply Chains

Manufacturing and recycling supply chains are complex, global, and often deal with human rights or environmental issues. The raw materials in a supply chain are difficult to tag and the material transforms on its journey from source to end use or re-use, so that a new identity needs to be added after each transformation. Most industrial companies don’t have full visibility into their supply chains, and without knowing the provenance of goods or materials, it’s difficult for companies to ensure ESG standards across their supply chains, account for risks, and manage the reduction of GHG emissions.

A number of trends are driving the need for manufacturers to get full visibility into their supply chains:

1. The increasing pressure on manufacturers and recyclers to account for their ESG impact
   Regulatory, financial and consumer pressure is amplifying reputational risks and the need to account for ESG data across a company’s supply chain. New regulation in Europe, like the EU’s Battery Passport Directive, requires companies to report on the ESG provenance and impact of battery metals. Global companies, representing $6 trillion of revenue, have made net-zero commitments and need to capture more accurate information on the GHG emissions in their supply chain. The EU has introduced regulation that requires ESG disclosures from financial institutions, and in the US, the SEC is expected to follow suit, requiring banks to report on how risky their investments are from a sustainability standpoint.
2. The growing demand for metals to power electric vehicles (and other clean energy technologies)
   Bloomberg estimates that EV sales will increase from 1.7M in 2020 to 26M by 2030. The primary metals in electric vehicles are cobalt, nickel, copper, and lithium, and demand for these metals will increase to >4M metric tons by 2030. Cobalt and lithium, among other raw materials, have been associated with human rights and environmental issues. Intermediate suppliers and industrial brands need these materials but are coming under pressure to ensure they are more sustainably produced. Circulor has established itself as the leading provider of traceability for lithium, cobalt, nickel, copper, and more, offering the only solution for automotive companies to get full visibility into their EV supply chains for responsible sourcing, in-life, and end-of-life recycling. Their solution also extends to metals in other clean energy technologies, like wind turbines and transmission lines, where companies increasingly need to demonstrate that their sustainable products are ‘clean.’
3. The accelerated digitization of supply chains
   The COVID-19 pandemic revealed weaknesses in corporate supply chain management. This has become more evident with the continued delay of goods and supplies over the last several months. Companies are urgently focused on accelerating the digitization of their supply chains to improve performance.

Circulor’s Solution

Circulor provides an enterprise SaaS platform that assigns a unique identity to a commodity and tracks the flow of the material as it changes state through processing and manufacturing. The solution helps identify anomalies, combat fraud, identify supply chain weaknesses, and track the supply chain data and embedded carbon at each stage of production, recycling and end-of-life. This provides full visibility across traditionally opaque and complex supply chains, helping companies address anomalies in the transport of materials from mine through manufacturing. While other solutions use locational and GPS tracking that are easier to tamper with, Circulor tracks the change of state of the material itself. Circulor’s solution is able to dynamically calculate GHG emissions including the attributed and inherited emissions at each stage of the supply chain.

The Westly Group Invests in Circulor

When our firm met the Circulor team, we were struck by the significant commercial traction. We scanned the universe of companies in the emerging ‘ESG data’ space and found a number of promising but early solutions with no proof that customers were willing to buy. Circulor has the most complete and mature solution in the space and is partnering with leading brands across automotive, mining, and electronics including Volvo to trace the cobalt used in the XC40 Recharge P8, its first fully electric car, Polestar, to assess the risks behind sourcing nickel, lithium, and mica, BHP to trace the entire value chain of commodities including the CO2 footprint, Vulcan Energy Resources to track the production and embedded carbon of lithium, and other traceability use cases with LGChem, Jaguar, Trafigura, and several global electronics companies.

The Circulor founding team has known and worked together for the past decade across different enterprise SaaS and entrepreneurial roles, exuding the type of team trust and harmony only shaped by time and shared experience.

We’re excited to lead the Series A investment in Circulor with participation from Salesforce Ventures, BHP Ventures, Future Positive Capital, 24HayMarket, and Sky Ocean Ventures.

We believe Circulor is leading a global transformation in ESG traceability. We hope you will read more on their vision and join in the revolution to demand more sustainable products.