The rise of sustainable packaging funds

Mon, Aug 18, 2025, 4:48 AM 4 min read

Investors once saw packaging as an unglamorous corner of the market. Today, it has become a focal point of the transition to a circular economy, with sustainable packaging funds attracting growing attention.

Rising consumer demand for eco-friendly products, combined with government regulations on waste reduction, is driving capital into companies that are redesigning how goods are wrapped, transported and recycled.

The global packaging industry is worth trillions of pounds, yet much of it relies on single-use plastics that clog landfills and oceans.

As awareness of the environmental cost mounts, both venture capitalists and institutional investors are recognising that innovation in packaging is not only essential for the planet but also a lucrative opportunity.

The surge of interest in sustainable investment reflects a broader shift in finance. Pension funds, private equity firms and impact investors are under pressure to align portfolios with environmental, social and governance (ESG) principles.

Packaging sits at the intersection of these themes: it affects carbon emissions, waste management and consumer behaviour.

Several dedicated funds have emerged to capture this opportunity. For instance, the Emerald Sustainable Packaging Innovation Fund supports start-ups developing recyclable and compostable materials.

Meanwhile, Collateral Good’s Packaging Innovation Fund in Europe is channelling capital into companies working on circular packaging systems. Large consumer goods firms such as Mars have also established corporate funds to accelerate research and scale solutions that can replace traditional plastics.

The attraction is clear. Markets are being reshaped by legislation such as the EU’s Packaging and Packaging Waste Directive and the UK’s Extended Producer Responsibility scheme.

Companies that fail to adapt face mounting costs, while innovators stand to benefit from regulatory tailwinds. For investors, this creates a rare alignment of sustainability goals with strong financial incentives.

Investment is targeting a wide range of technologies. Biodegradable films made from plant starches, compostable beverage holders, and reusable container systems are just a few of the breakthroughs attracting funding.

Recycling infrastructure is also a priority, with funds backing digital platforms that track materials through supply chains and facilities capable of handling mixed or difficult-to-recycle plastics.

Geographically, Europe has taken the lead due to stringent regulations and consumer activism. However, funds in North America and Asia are rapidly catching up, driven by both policy changes and corporate sustainability pledges.