The Toxicity Awakening

Every day, we encounter toxic chemicals in the products we use, from plastics and electronics to personal care items.¹ An awakening about these chemicals is underway, spurred by findings that linked toxic chemicals to alarming health trends, including declining sperm count and rising miscarriage rates in the Western world. These chemicals disrupt hormones, degrade anatomical development, impair brain function, and weaken the immune system, from as early as in utero.² Their impact extends beyond human health, driving biodiversity loss and damaging ecosystems worldwide.³ The chemical sector, as the largest industrial energy consumer and carbon emitter in the United States, plays a significant role in climate change.⁴ The bottom line? The health and survival of many species, potentially including humans, depends on the detoxification of our economic system.

Market Drivers

The rising awareness of chemical toxicity is fueling a demand for sustainable chemistry, as companies face growing litigation risks, increased regulations, and consumer pressure.⁵ High-profile cases like 3M’s $8.9 billion payout for water contamination⁶ and Johnson & Johnson $10.3 billion settlement over cancer-causing talc products underscore the financial stakes of toxic exposure.⁷ The regulatory landscapes are evolving, with stricter restrictions around chemical use at the state and international levels, and incentives for sustainable chemistry through initiatives like the Inflation Reduction Act.⁸ Meanwhile, consumers are voting with their wallets, choosing to pay for non-toxic products, causing green chemistry marketed consumer products to outperform their conventional counterparts.⁹ These factors create powerful momentum for investment in detoxification solutions.

Opportunity Set

Investors may focus on toxicity in hope of improving environmental or human health, or for potential financial upside or risk mitigation. This makes toxicity a highly intersectional theme for impact investors. The availability of investable opportunities is growing as innovation catches up with the demand for products and processes that help detoxify our planet. These opportunities can be segmented into the following categories.

1. Venture funds invest for safer chemistry innovations

One venture fund partners with sustainable brands to identify safer chemistry needs, then co-invests in potential solutions, and helps bring those solutions to market. They have invested early capital in companies delivering solutions like:

• Safer active ingredients in insect repellent
• Compostable food service products
• Plastic-free personal care products
• Safer, more sustainable cleaning products

Another venture fund targets companies who use green chemistry and advances in safety toxicology to design products that present lower risk to human health. Some examples of these investments include:

• Filtration technology for indoor air pollution and air-based pathogens
• Company using organoids on a chip to support safety toxicology
• Cleaner nicotine alternatives
• Novel biomaterials

2. Circular economy funds aim to reduce waste and increase re-use

One private equity firm is focused on circular supply chains, investing in companies with recycling infrastructure and supply chain technologies. This approach not only seeks to reduce waste but encourages the sustainable reuse of materials in industries like electronics, apparel, and home goods. Portfolio companies include:

• Electronics repair, resale and recycling companies
• Recycling plants
• Technology that delivers sustainable reuse and recovery of Information Technology assets to businesses

Another venture fund invests for cleaner innovation in the apparel, footwear, outdoor, and home goods spaces. This fund invests in technologies such as:

• Tools that transform the lifecycle of everyday products—from production to use to end-of-life.
• Feedstock innovations that do not depend on petroleum and land-use intensity.

3. Direct investments in sustainable chemistry companies

A leading foundation at the forefront of investments in climate solutions is pioneering an approach for lower toxicity investments. This foundation and its partners (including CapShift) are investing in a portfolio of companies that combine potential planetary impact, scientific innovation, and suffer from a lack of investment from traditional funders. This catalytic approach hopes to help high potential innovations that might have never made it out of the lab grow to potentially transformative companies. Sample investments include:

• RNA innovation for crop protection, safer alternatives to insecticides, fungicides, and herbicides
• An alkali recycling process recovers critical minerals from old batteries so they can be reused
• A company reducing the cost of measuring the nutrition quality of food

Take Action

Investors have had exposure to sustainable chemistry and circular economy innovations for years as innovative companies have worked to reduce waste, costs, and emissions. As consumers, corporates, and governments awaken to the dangers of toxicity to human and planetary health, the opportunity for investors to contribute to the development of less toxic practices and products is likely to grow. We may look back at this toxicity awakening as the beginning of a macro trend that forward-thinking investors were able to capture, while also catalyzing the development of a less toxic environment.

Safer chemistry, the circular economy, and detoxification are growing areas of interest, with the possibility for positive environmental, health, and financial outcomes. We expect to see these areas continue to grow as research, regulation, and technology advance, and consumer interest in non-toxic products increases.

Ready to help your clients invest in detoxification? CapShift’s platform offers tools and resources tailored to help advisors explore investments similar to the examples shared above. Contact us today to learn more and demo our products.

¹ Count Down, Shanna Swan. 2021.
² Count Down, Shanna Swan. 2021.
³ PFAS Explained | US EPA
⁴ Department of Energy Industrial Decarbonization Roadmap
⁵ 4 ways to spark more financing for sustainable chemistry
⁶ 3M reaches $10.3 billion settlement over contamination of water systems with ‘forever chemicals’
⁷ Johnson & Johnson Reaches Deal for $8.9 Billion Talc Settlement
⁸ Biden-⁠Harris Administration Advances Cleaner Industrial Sector to Boost American Manufacturing and Cut Emissions
⁹ Green Chemistry