Closed Loop Partners at the United States Senate Environment and Public Works Committee on Recycling
June 19, 2020
Launched in 2014, Closed Loop Partners (CLP) is the first investment firm primarily focused on building the circular economy. Our vision is to help build a new economic model focused on a profitable and sustainable future that aligns the interests of shareholders, brands and local communities and the environment that we all share. Closed Loop Partners provides equity and project finance to scale products, services and infrastructure at the forefront of the development of a circular economy. We have over the past 5 years built a development system that connects entrepreneurs, industry experts, global consumer goods companies, retailers, financial institutions and municipalities.
On June 17, 2020, Bridget Croke, Managing Director, at Closed Loop Partners spoke at the United States Senate Environment and Public Works Committee as they held a hearing on “Responding to the Challenges Facing Recycling in the United States.” The following text is drawn from her testimony.
Today, we have over 40 investments in companies and municipal projects in the United States, all focused on helping Americans avoid landfill disposal fees while generating good jobs in the recycling and manufacturing sector. Our investors are a combination of some of the largest American based consumer brands in the world including 3M, Coca-Cola, Colgate Palmolive, Johnson & Johnson, Keurig Dr. Pepper, PepsiCo, Procter & Gamble, Unilever and The Walmart Foundation, as well as the American Beverage Association, institutional investors, family offices and environmental foundations. CLP proves that public–private partnerships are critical to unlocking the capital needed to build robust recycling and circular economy infrastructure needed to create jobs, reduce waste and build the supply chains of the future.
Despite some of the headlines we’ve all seen, recycling is big business in America and should create the manufacturing feedstock for future packaging. In 2019, the recycling industry in America generated over $110 billion in economic activity, $13 billion in federal, state, and local tax revenue and 530,000 jobs. In spite of COVID and market challenges in recent years, 2020 is shaping up to be a year of major innovations in the recycling industry as it becomes central to circular economy business models that major consumer goods companies and cities are deploying. Transitioning US manufacturing to circular supply chains could unlock a $2 trillion opportunity.
Recycling continues to be the most cost-effective option for the vast majority of American cities. The economics are simple. Cities have two choices when it comes to disposal: recycle or landfill. While the value of recycling is generally reported as the amount that a city can be paid for its recyclables, the core economic value of recycling is actually the opportunity for a city to avoid costly landfill disposal fees. Economic analysis conducted has shown that the U.S. scrap recycling industry is a major economic engine powerful enough to create 531,510 jobs and generate $12.9B in tax revenue for governments across the US.
New York City, the largest market in the United States, is an example of how advanced recycling infrastructure and strong local markets create long term profits. New York City has a long-term public-private partnership with Pratt Industries that converts all of its recycled paper locally into new paper products sold back into the NYC market. Via its contract with Pratt, New York City is paid for every ton of paper its residents recycle, as opposed to a cost of over $100 per ton to send paper, plastics and metals to a landfill.
Minneapolis is another good example. Eureka Recycling and the City of Minneapolis invested in local community outreach focused on keeping their recycling stream clean of contamination, defined as non-recyclable material. The result is one of the lowest contamination rates of any municipal recycling program in the country. With a clean stream of valuable recyclables, Eureka consistently shares with Minneapolis the profits earned from the sale of their recyclables. In many other cities, unfortunately, approximately 15% of the material that arrives at the municipal recycling facility is considered contamination. Municipal recycling programs that keep contaminants out of the recycling stream via strong community outreach or enforcement realize lower costs and better revenue opportunities. Municipalities that recognize that recycling is part of the commodities industry, not the waste industry, generate value.
Along with the examples of Pratt Industries in New York City and Eureka Recycling in Minneapolis, Recology in San Francisco and Balcones in Austin, among others, continue to provide their municipal and commercial customers robust recycling service. In addition, municipalities like Pensacola, Florida and Davenport, Iowa that manage their own best in class recycling facilities consistently reduce landfill disposal costs and create local economic value for their constituents.
The value of recyclable commodities continues to have a wide range. The cost to process municipal recyclables at a recycling facility is, on average, $70 per ton. That means that for a recyclable commodity to have value, it must have a market that pays the recycling facility over $70 per ton of that material. A sample of the commodities that are usually profitable to recycle include PET plastic (beverage containers), HPDE plastic (laundry detergent and soap containers), rigid polypropylene (bottle caps, some yogurt containers), cardboard and aluminum.
In 2020, three innovations are driving the increased profit potential of recycling in America and the development of a vibrant and growing Circular Economy.
- The introduction of robotics and artificial intelligence. The future of the industry will be led by the recycling facilities that produce the highest quality commodity bales of materials. Companies like AMP Robotics have introduced robotics (robots) with artificial intelligence systems that enable the sorting and production of high-quality commodity bales, supply chain tracking and safeguards against contamination that were never before imagined in the industry.
- Packaging innovation. We are seeing the emergence and growth of smart refillable packaging systems like Algramo that makes it cheaper and more convenient for consumers to use packaging more than one time. We are also seeing a growth in packaging that is designed to be recycled for value. Temperpack, for example, is a packaging technology that uses recycled cardboard to keep packaged food cold, replacing a significant amount of low value plastics like Styrofoam peanuts, which are both not recyclable and a common contaminant in the recycling system.
- Advanced plastics recycling technologies, including purification technologies and chemical recycling technologies. Purification is an enzymatic process that improves the quality of recycled plastics so they can more easily be used again in packaging. P&G invented a technology and helped launch a company, PureCycle Technologies, that will significantly increase the value of recycled plastic by removing color and smells. Chemical recycling is a process whereby plastic is depolymerized back to the base monomer, intermediary or carbon state in order to remanufacture a new plastic. Some plastics, like PET, HDPE and rigid polypropylene have significant value and are very profitable for the recycling industry, but they can degrade after a number of recycling cycles while some other plastics currently have limited value or are challenging to recycle. Chemical recycling has the potential to create an infinite circular economy value loop for all plastics. Some of the leading innovators are backed by major consumer goods companies. In 2020, we expect a number of emerging companies to move from pilot to commercialization phase.
These and other circular advancements are attracting significant private capital from leading investors. The industry saw investments from leading investors across asset classes. Google and Sequoia invested in AMP Robotics, Goldman Sachs is now the largest shareholder in Lakeshore Recycling Systems, Citi is largest investor in rPlanet Earth, a bottle-to-bottle plastics recycling facility in California and SJF Ventures invested in TemperPack.
The emerging leadership demonstrated by a number of retailers and consumer brands is driving the growth of the circular economy and improvements in recycling. Leadership means designing products and packaging that are free of any non-recyclable material and profitable for recycling. These packages are manufactured with recycled content, while reducing raw material inputs. Brands are telling their consumers that their commitment is to use recycled content in their packaging. Leaders are transparent in their progress, reporting in their annual reports the use of different recycled feedstocks. They know that any product or package that is not recyclable is destined for a landfill (or even worse, a river or ocean), and that cost is passed to the taxpayer.
Walmart has developed design for recycling guidelines for their suppliers to ensure the products sold in their stores are recyclable and piloting refillable packaging models. Unilever’s Seventh Generation Brand uses mostly recycled HDPE plastic in its packaging and recycled paper in its paper products. And over 10 global companies have invested over $150m in CLP’s investment funds so together we can help spur more innovation and create more tons of recycled feedstock coming through systems in the US.
We are also seeing a major trend amongst consumer goods companies looking to increase their use of recyclable material in the packaging and products they sell. It makes sense. At scale, along with the considerable environmental benefits, it should be less expensive for companies to manufacture using recycled material. That is why most major beverage companies including Coca-Cola, Keurig Dr. Pepper, PepsiCo, Nestle and Danone as well as the world’s largest consumer goods companies such as P&G, Unilever and Colgate Palmolive are publicly communicating aggressive goals for the use of recycled materials in their products and packaging.
For Americans, recycling is a matter of economic self-interest. Recycling our cardboard, paper, beverage bottles, rigid plastics containers, and aluminum cans has three important outcomes. First, it reduces the cost to manufacture the products we buy. Second, it reduces the amount of our taxpayer dollars used every year to pay landfills. Third, it generates revenue for our communities via the sale of recyclable commodities. A recent analysis reported the average cost to dispose of a ton of municipal waste in the US in 2019 was $55 per ton, and disposal fees in some states average more than $100 per ton.
Despite these economic incentives, large parts of the United States still have little or no recycling collection or processing infrastructure. Much of the economic activity generated by recycling is accomplished by long standing recycling programs on the West and East Coast as well as the upper Mid-West of America. For those who live in parts of the country with limited or no recycling infrastructure, their tax dollars are wasted on the cost of sending valuable commodities to landfill that could otherwise be sold. While the 90m tons currently recycled in the United States saves American taxpayers and businesses over $3 billion annually in landfill disposal fees, over 180 million tons of recyclable materials are landfilled, costing American taxpayers and businesses over $5 billion annually in landfills fees. We are literally throwing money in the garbage.
It is also important to recognize how China, which has received much press as of late for their role in the American recycling ecosystem, impacts the industry. For much of the past 20 years, the U.S. recycling industry was dependent on China as the leading export market. As consumption and waste has increased in China, the Chinese government has decided to develop their own domestic recycling infrastructure. This may cause some short-term pain in some parts of the United States’ recycling industry, but leading companies in the recycling industry, consumer goods and packaging industry, as well as a number of investors, see this as an opportunity to further develop and profit from domestic recycling and manufacturing infrastructure.
These are exciting times in the recycling industry as the development of the circular economy continues to expand. Major innovations are entering the industry ranging from robotics to supply chain mapping to advanced technologies that recycle plastics. Like any major industry analysis in the U.S., there is no one or two cities that should be extrapolated to define the industry. There are cities where recycling is profitable and a major economic engine and there are cities where the recycling program is struggling. What is clear is that the cities that focus on limiting contamination in their recycling program, build efficient and effective material recovery facilities and who contract with best in class recycling companies benefit from recycling programs that are both profitable and produce good local jobs.
Leading municipalities, recyclers, manufactures and brands are starting to partner together to establish, and profit from, a circular economy in the United States where goods are continually manufactured using recycled material from local recycling programs. This partnership in developing a circular economy will result in one of the largest investment opportunities in the United States over the next decade, major reduction in landfill disposal fee paid by municipalities, and become a primary driver of job creation in local economies.
We encourage policy makers to build incentives and develop policy to spur the market for recycled content and product and system innovation that reduces waste, creates jobs and makes recycled content competitive with the raw material market.
4 Key Drivers Accelerating Resilient and Circular Supply Chains
May 13, 2020
COVID-19 has disrupted inertia around the existing linear system, forcing a re-evaluation of the status quo and highlighting the risks of opaque and global supply chains. The timeframe of transformation is unprecedented, happening in months rather than years. The current circumstances emphasize the need for a transition to a more resilient circular economy. This sentiment was echoed in our webinar this month on Trends in Circular Innovations for Resilient Supply Chains.
Panelists from seemingly unrelated fields: fashion, recycling/technology, and logistics identified four themes that resonate across industries, build resiliency to system shocks, like COVID-19, and propel the circular economy forward: transparency, localization, digitization and automation.
Fast Tracking Transparency
The movement towards a circular economy cannot be accomplished by one actor, one company, or even one industry. Therefore, transparency and collaboration are essential. This means data sharing within and across industries and thoughtful collaborations.
Opaque supply chains prohibit stakeholders from understanding where, how and when ingredients or products are sourced, in transit, at a store or where they go after use. Identifying these gaps creates opportunities to reduce waste and increase efficiencies; all foundational elements of a circular economy.
Ocean freight shipping is a USD 115 billion industry with significant environmental impacts. Reports note that shipping accounts for about 3.1% of the world’s greenhouse gas emissions annually. Our portfolio company, TradeLanes, is transforming the industry that operates behind the scenes to supply many of our products. They are enhancing transparency by providing an online platform that addresses inefficiencies, digitizing and managing trade execution for bulk shipping of commodities (e.g., meats, grains, paper, plastics).
By digitizing the process, TradeLanes enables greater transparency. Parties are able to ensure timely negotiations, delivery and tracking of products. This reduces unnecessary wastage from mismanaged or spoiled goods and reduces error rates for clients. For exporters still reliant on outdated paper filing systems (a shockingly large proportion of the industry today), COVID-19 is shining a spotlight on how a lack of transparency creates industry-wide problems as critical shipments are delayed, poorly routed or lost amidst the chaos. TradeLanes is just one example of an innovator disrupting an industry through increased transparency in a complex multi-stakeholder process.
From Global to Local
As global supply chains are disrupted and industries experience supply shortages as a result of COVID-19, localization becomes increasingly attractive. By bringing production closer to end markets, supply chains can be more resilient to system shocks. Much like the eat local movement, companies are looking to source, manufacture and produce closer to market. An ancillary benefit includes a reduced product carbon footprint. With mounting pressures for greater ESG disclosures from investors, corporates and the public, among others, more companies are recognizing that localizing their supply chains has multifold benefits.
In the United States, the world’s largest apparel market, 97% of clothing is made abroad. The path of one cotton t-shirt may be thousands of miles, with the cotton grown in India, milled in Mexico and sewn in South Africa. As awareness grows around the carbon footprint and resource intensity of the industry there is a growing movement to lessen the miles traveled. Our portfolio company, The Renewal Workshop, discussed how localization is built into their business model. Their team helps brands repair and resell clothing, keeping materials that would otherwise be landfilled in play. The Renewal Workshop showcased its agile business model as it was able to quickly source local materials and pivot to respond to the demand for gowns and other personal protective equipment during the pandemic. The team is distributing gowns to hospitals in their home state of Oregon, while continuing to provide repair services for their brand partners.
Automating for Efficiencies
Like other themes enabling the circular economy, automation plays an essential role in creating change. AMP Robotics CEO, Mantanya Horowitz, discusses how his company’s AI and robotics system improves the efficiency of materials recovery facilities (MRF). Their robotics system is rapidly learning to identify material types and “picking” them off the conveyor belts. With the adoption of automated recycling systems, facilities increase the accuracy and purity of sorted recyclables, and thereby improve the economics of the industry. Furthermore, when system shocks like COVID-19 span industries and require immediate change, like social distancing, robots give businesses the flexibility to adapt and reorient to new circumstances; in doing so, ensuring their employees health and safety. Automation can also enable staff to dedicate time to the most pressing responsibilities.
Doubling Down on Digital
Transparency, localization and automation could not be possible without the digitization of systems. Digitization closes the gaps in systems by providing accurate and real-time data on the location, availability and condition of materials. With unwavering agreement, our panelists remarked on how systems devoid of digitization are likely to lag in a transition to the circular economy.
As COVID-19 brings the world economy to a sudden and grinding halt, it highlights the existing pain points in our current system. There is no better time to reflect on the fragility of the linear model. Resiliency lies with a transition to the circular economy, an economy that is transparent, local, automated and digital.
4 Companies Addressing Today’s Challenges & Building a Better Future
April 22, 2020
We interviewed four of our portfolio companies’ CEOs to hear how their circular solutions are addressing COVID-19, how their business models are being impacted and what lies in store for the future. Together, they are championing robust, sustainable systems that help to accelerate our transition to a more resilient circular economy.
AMP Robotics: Matanya Horowitz, CEO
AMP is an AI and Robotics company focused on increasing the quantity and quality of sortation processes at recycling facilities.
What are the impacts of COVID-19 on your business today?
Demand for our A.I. sorting technology has significantly accelerated. Our technology directly addresses COVID-19 workplace safety risks, keeping people out of harm’s way, and keeping the public service of recycling going. We’re seeing repeat orders from existing customers and much larger orders from new customers.
How are you keeping people safe while still operating?
As an ‘essential business’, we’ve continued to deploy robots in customer facilities. Logistics are challenging, but we’ve worked closely with our customers to vigilantly adhere to COVID-19 safety protocols.
What developments in the recycling industry will accelerate as a result of COVID-19?
Recycling is vital to the supply chain. This is evidenced as producers race to meet demand for packaging, tissue, and medical supplies. Without recycling there wouldn’t be enough raw materials to keep up. We expect infrastructure investment to increase addressing this vulnerability, while further elevating the importance of recycling.
For Days: Kristy Caylor, CEO
For Days is a direct-to-consumer apparel brand, operating with a fully circular business model.
What does the fashion and apparel industry look like post COVID-19?
Sustainability will be more important than ever before as customers reevaluate their personal priorities and make decisions based both on value and values. Digital sales will continue to grow and there is a good chance we will all be wearing masks for a while…
What are you doing to help frontline workers today?
Over 4 weeks ago, we pivoted manufacturing to make masks based on requests from front line workers. We have been both selling and donating masks and total volume has exceeded 70K masks.
How has your business model been impacted?
We have an authentically optimistic message that is resonating with our community and we are a digitally based business, so that has not changed. Our branded product is doing really well and the mask project has been a big success. We’ve seen strong engagement across all channels and will continue spreading the good vibes!
HomeBiogas: Oshik Efrati, CEO
HomeBiogas creates modular household anaerobic digester units that convert household food and yard waste into renewable energy and liquid fertilizer.
Where do you see the most need for HomeBiogas systems?
There are 3 billion people around the world who are still cooking on firewood and charcoal, inhaling toxins from the smoke and suffering from indoor air pollution. Having free and clean cooking gas from HomeBiogas systems would drastically improve and extend the lives of these people.
How does HomeBiogas reduce the risk of disease in emerging markets?
Unfortunately, epidemics and natural disasters will always happen. HomeBiogas systems provide families with independent and reliable access to energy, food security, and sanitation. Families that can make their own fuel and food, and have a solution for waste management will be more resilient and prepared to face challenging times.
What is the change that you would like to see in the world post COVID?
I hope that the world, both governments, and private consumers alike, will wake up to our collective need to take better care of our planet. It’s time we widely adopt green technologies and renewable energies that use the resources we already have like, biogas, solar, wind, rain, etc. COVID showed us that it’s also possible to lessen our impact- we are all capable of consuming less and recycling more. Let’s keep going and keep awareness post-COVID as well.
Algramo: José Manuel Moller, CEO
Algramo builds a “smart dispensing system” for CPG products that incentivizes the reuse and refilling of packaging.
What are the impacts of COVID-19 on your business today?
COVID-19 has pushed us to turn our efforts to our delivery system. Our sales in this area have increased since our service allows people to buy essential cleaning products from their homes, reducing any unnecessary exposure to health risks.
How are you keeping people safe while still operating?
We are taking all the necessary measures to take care of our team and our customers. We have protocols in place that promote social distancing and reduce human contact while interacting with our services. Also, we have equipped our sellers with overalls, masks, gloves, hand sanitizer and we clean our tricycles constantly.
What developments in the recycling industry will accelerate as a result of COVID-19?
Recycling services that include home collection are experiencing accelerated growth and so are product refill systems as fewer people touch the containers, therefore reducing the possibility for spreading the virus.
The Journey to Innovate How We Drink on the Go: 2 Years into the NextGen Consortium
February 20, 2020
This week, we hit a major milestone nearly two years after we launched the NextGen Consortium, our multi-year journey to solve for the waste associated with to-go cups: four of the winners of the NextGen Cup Challenge are piloting their solutions in cafes in the Bay Area.
After a six-month innovation challenge that identified 12 promising sustainable cup solutions out of hundreds of submissions, the hard work began to help innovators scale their solutions to address the global waste challenge while creating an equal or better customer experience. A six-month Accelerator provided six winning companies with mentorship, networking, and exposure to the end-of-use recovery systems their solutions need to navigate. And this week we are thrilled to start putting some of those cups to the test in the real world.
Two winning reusable cup innovators from the NextGen Cup Challenge — CupClub and Muuse — will start piloting their “smart” cup systems in Palo Alto and San Francisco respectively over the coming weeks. While Muuse is piloting a cup made of stainless steel, CupClub is using a cup made of polypropylene, demonstrating the diversity of material solutions out there. Footprint and PTT MCC Biochem Company Limited will also begin piloting their recyclable and compostable fiber cup solutions this month.
The beginning of this journey in 2018 coincided with a time when the movement to stop waste generated by single-use packaging began to take hold. We launched a Consortium to leverage the power of the world’s biggest food and beverage brands (Starbucks, McDonald’s, Taco Bell, KFC, Pizza Hut, Wendy’s, The Coca Cola Company, and Nestlé are all partners in the NextGen Consortium) and to create a market signal to drive scalable solutions for recyclable and compostable cups. And while expanding the recycling of food packaging is still a critical and primary focus of this ambitious endeavor, the dark horse in this race has been reusable and refillable cup systems.
We are seeing a growing demand from consumers and policy makers – and therefore an opportunity for brands – to completely rethink how we deliver products. And eliminating the need for single-use packaging in the first place is part of the suite of tools that can reduce waste and climate impact. From “naked” stores with no packaging to tech-enabled reusable packaging that tracks and recirculates items, sometimes with a consumer incentive, these models are growing. And cups are the next frontier, with a goal of making reusable cups as convenient as single-use. With these emerging cup models, consumers can simply get a cup at the cafe, drop it off at drop spots around the city or return them to the cafe for their next use. Companies like CupClub, Muuse, ReCup and others also work with the cafes and/or offsite washing facilities to collect and sanitize the cups.
Designing reuse models that can work in the complex ecosystems of a Starbucks or McDonald’s and creating an optimal customer experience across the US is no small task. Our testing and pilots over the last year have helped us identify pitfalls that have made past ideas fail. Innovation is a messy, iterative process and often failure leads to learnings, and learnings lead to success. Through the public-facing pilots launching this week, we are testing the cup’s technical feasibility, business model viability, user desirability and circular resiliency, among other things.
Lessons learned from these trials will be shared with NextGen Consortium partners, further honing and testing their systems to bridge the gap between prototyping and in-market testing and broader rollouts.
We see a bright future for pioneers in the reuse revolution like NextGen Cup winners CupClub, Muuse, and ReCup. We are equally excited to watch the innovation flood gates open thanks to the market signal created by the global brands in the NextGen Consortium coming together to find new solutions. We are seeing an unprecedented number of promising market entrants in reusable cup models. While we don’t yet know which models or businesses will be able to meet the operational needs and scale of today’s marketplaces, we know that the NextGen Consortium has been successful at bringing talent to the table. Just as ride-sharing, e-commerce and smart-devices have disrupted legacy business models that had dominated for many years, beverage containers and cups are ripe for the new models that help us improve the drinking experience without the negative consequences of today’s throwaway culture.
To advance the circular economy, we need the space to make and learn from mistakes and to bring together unlikely bedfellows to enable systems change. Today, we are at a tipping point, with an increased sense of urgency to address the global crises of climate change, ocean plastic pollution, and waste. We have the building blocks to scale a solution for cups, and can leverage and build upon the NextGen model to design out waste. First up it’s the cup, but the opportunities for pushing the bounds of sustainable design are endless.
Bringing the NextGen Cup to Life
November 18, 2019
We interviewed four of our portfolio companies’ CEOs to hear how their circular solutions are addressing COVID-19, how their business models are being impacted and what lies in store for the future. Together, they are championing robust, sustainable systems that help to accelerate our transition to a more resilient circular economy.
The NextGen Consortium is working to change the future of beverage consumption. Together, brands, industry experts, and innovators are aiming to bring a waste-free to-go cup to market. With 250 billion fiber to-go cups produced annually, the majority of which end up in landfills today, this is not a small task that one stakeholder can solve alone. And that is the spirit in which the multi-brand NextGen Consortium was formed, launched by Closed Loop Partners in 2018 to advance the design, commercialization, and recovery of sustainable food packaging alternatives.
NextGen Cup is the Consortium’s first initiative, which began with an open call for solutions from around the world to redesign the fiber cup so that it’s fully recoverable at a global scale. Twelve winning teams were selected from the 480 submissions, and six of those teams recently completed an accelerator focused on getting their solutions ready to go to market. The accelerator led to significant progress for each of the teams, as they move along the journey from concept to tangible solution—Accelerator teams have now tested their solutions in a live environment, developed scalable manufacturing plans with 1-3 year rollouts, and have made improvements to their cup design to meet specific circular design criteria.
As we reflect on the learnings of brands, innovators, experts, and designers coming together to tangibly move the needle on a global issue, there are three conditions that have continuously contributed to measurable progress.
AMP Robotics: Matanya Horowitz, CEO
AMP is an AI and Robotics company focused on increasing the quantity and quality of sortation processes at recycling facilities.
What are the impacts of COVID-19 on your business today?
Demand for our A.I. sorting technology has significantly accelerated. Our technology directly addresses COVID-19 workplace safety risks, keeping people out of harm’s way, and keeping the public service of recycling going. We’re seeing repeat orders from existing customers and much larger orders from new customers.
How are you keeping people safe while still operating?
As an ‘essential business’, we’ve continued to deploy robots in customer facilities. Logistics are challenging, but we’ve worked closely with our customers to vigilantly adhere to COVID-19 safety protocols.
What developments in the recycling industry will accelerate as a result of COVID-19?
Recycling is vital to the supply chain. This is evidenced as producers race to meet demand for packaging, tissue, and medical supplies. Without recycling there wouldn’t be enough raw materials to keep up. We expect infrastructure investment to increase addressing this vulnerability, while further elevating the importance of recycling.
For Days: Kristy Caylor, CEO
For Days is a direct-to-consumer apparel brand, operating with a fully circular business model.
What does the fashion and apparel industry look like post COVID-19?
Sustainability will be more important than ever before as customers reevaluate their personal priorities and make decisions based both on value and values. Digital sales will continue to grow and there is a good chance we will all be wearing masks for a while…
What are you doing to help frontline workers today?
Over 4 weeks ago, we pivoted manufacturing to make masks based on requests from front line workers. We have been both selling and donating masks and total volume has exceeded 70K masks.
How has your business model been impacted?
We have an authentically optimistic message that is resonating with our community and we are a digitally based business, so that has not changed. Our branded product is doing really well and the mask project has been a big success. We’ve seen strong engagement across all channels and will continue spreading the good vibes!
HomeBiogas: Oshik Efrati, CEO
HomeBiogas creates modular household anaerobic digester units that convert household food and yard waste into renewable energy and liquid fertilizer.
Where do you see the most need for HomeBiogas systems?
There are 3 billion people around the world who are still cooking on firewood and charcoal, inhaling toxins from the smoke and suffering from indoor air pollution. Having free and clean cooking gas from HomeBiogas systems would drastically improve and extend the lives of these people.
How does HomeBiogas reduce the risk of disease in emerging markets?
Unfortunately, epidemics and natural disasters will always happen. HomeBiogas systems provide families with independent and reliable access to energy, food security, and sanitation. Families that can make their own fuel and food, and have a solution for waste management will be more resilient and prepared to face challenging times.
What is the change that you would like to see in the world post COVID?
I hope that the world, both governments, and private consumers alike, will wake up to our collective need to take better care of our planet. It’s time we widely adopt green technologies and renewable energies that use the resources we already have like, biogas, solar, wind, rain, etc. COVID showed us that it’s also possible to lessen our impact- we are all capable of consuming less and recycling more. Let’s keep going and keep awareness post-COVID as well.
Algramo: José Manuel Moller, CEO
Algramo builds a “smart dispensing system” for CPG products that incentivizes the reuse and refilling of packaging.
What are the impacts of COVID-19 on your business today?
COVID-19 has pushed us to turn our efforts to our delivery system. Our sales in this area have increased since our service allows people to buy essential cleaning products from their homes, reducing any unnecessary exposure to health risks.
How are you keeping people safe while still operating?
We are taking all the necessary measures to take care of our team and our customers. We have protocols in place that promote social distancing and reduce human contact while interacting with our services. Also, we have equipped our sellers with overalls, masks, gloves, hand sanitizer and we clean our tricycles constantly.
What developments in the recycling industry will accelerate as a result of COVID-19?
Recycling services that include home collection are experiencing accelerated growth and so are product refill systems as fewer people touch the containers, therefore reducing the possibility for spreading the virus.
What’s next for the NextGen Cup?
As each of the six teams stepped off the stage during the final accelerator pitch event, the NextGen Consortium entered the next phase of this work: pilot readiness testing.
After the initial prototyping at Google campuses, select teams will now work to increase the size and complexity of their testing locations, looking at universities and offices, among other locations. Additionally, these teams will now begin to prototype alongside select teams from the NextGen Consortium’s “Advanced Solutions Program,” later-stage teams from the NextGen Cup Challenge that did not require the initial accelerator programming. As these teams work to reach market readiness, their greatest need is additional data points that will prove their concept’s ability to operate at scale.
The pilot readiness tests aim to provide much of that data and help setup teams for next steps around scalability. In parallel, the NextGen Consortium will continue its work convening experts and identifying opportunities to align new cup designs and materials with the infrastructure like MRFs, paper mills, and other recyclers that would process them at end-of-use.
From 480 innovative ideas to live prototyping to preparing for pilot readiness and beyond, these next generation cups are paving the way for a waste-free future. These are not solutions that will be ready overnight and require multiple layers of testing and iteration. That’s why NextGen Cup has a multi-stage, multi-year approach to identifying, testing, and scaling sustainable cup solutions to integrate into the global supply chain.
NextGen Cup is designed to both acknowledge the complex journey of the cup, from design through to cup recovery after-use, and accelerate it by de-risking the process in its collective efforts and creating methods for effective prototyping and pilot readiness.
The Latest Insights and Analysis from Chris Cui, Director of Asia Programs
Chris shares her latest thoughts and takeaways from a recent trip to China where she attended the 14th China International Plastics Recycling Conference & Exhibition and visited a local MRF.
China’s Material Recovery Facilities Are Fast Adapting To A Post National Sword World
We gained valuable market insights from policy makers and market practitioners at the 14th China International Plastics Recycling Conference & Exhibition in September in Shanghai. The discussion focused on how stakeholders across the recycling system should work together to develop a domestic closed-loop ecosystem. This means doubling down on collection, transportation, and reprocessing efforts to enable brands to reach their circularity goals. It became clear that the Chinese government is determined and committed to supporting the development of the circular economy in the coming years by carrying out the following policies:
- Implementing a tax to support the recycling industry
- Creating green standards for recycled plastic and for the production of recycled plastic
We saw firsthand the rationale behind these policies that are being considered. Mr. Wang, the Secretary of CRRA, was also quick to note the number of new faces in the room, including brand owners and capital providers, like Closed Loop Partners and the Alliance to End Plastic Waste. This helped to send a strong signal to the recycling industry around the business case for the circular economy.
Chris promoting the circular economy to brand owners & the recycling industry in China, Shanghai.
Witnessing The Transformation Of A Traditional MRF Into A Tech Enhanced One
It’s been three months since mandatory trash sorting was enforced in Shanghai and other big cities across China. We visited a local MRF to see how the new laws have impacted business. Tianqiang, led by CEO Mrs. Hu, has transformed its business model from a MRF to an all encompassing solutions provider, adding collection, reprocessing and production capacity.
- Tianqiang has implemented technology enabled collection services. They have set up café style smart collection centers with digital scales that are linked to real time commodity prices. Residents get paid immediately by cash or credit according to the commodity price on a given day. Also, operators of the MRF are able to see the exact amount of recyclables collected from each transaction and accumulated at each center on a dashboard. This data helps inform the local government’s waste reduction targets for different communities.
Weighing paper recyclables at Tianqiang.
- Tianqiang is embracing vertical integration. Although their recycled plastic is sold mainly to car and furniture manufacturers, they are also producing their own products such as clothes hangers to sell to retailers. Their recycled paper is being sold directly to the no. 1 and no. 2 paper products manufacturers in China.
- Tianqiang’s collection centers are rent free, strengthening an earlier point that the Chinese government is supporting the development of local recycling infrastructure, for example by providing free land to encourage private sector growth.
Locals separating and sorting recyclables at Tianqiang.
A Linear Take-Make-Waste Economy Has Prevailed For The Last 50 Years, But The Circular Economy Is Where Value Will Be Created In The 21st Century
This week, we hit a major milestone nearly two years after we launched the NextGen Consortium, our multi-year journey to solve for the waste associated with to-go cups: four of the winners of the NextGen Cup Challenge are piloting their solutions in cafes in the Bay Area.
After a six-month innovation challenge that identified 12 promising sustainable cup solutions out of hundreds of submissions, the hard work began to help innovators scale their solutions to address the global waste challenge while creating an equal or better customer experience. A six-month Accelerator provided six winning companies with mentorship, networking, and exposure to the end-of-use recovery systems their solutions need to navigate. And this week we are thrilled to start putting some of those cups to the test in the real world.
Two winning reusable cup innovators from the NextGen Cup Challenge — CupClub and Muuse — will start piloting their “smart” cup systems in Palo Alto and San Francisco respectively over the coming weeks. While Muuse is piloting a cup made of stainless steel, CupClub is using a cup made of polypropylene, demonstrating the diversity of material solutions out there. Footprint and PTT MCC Biochem Company Limited will also begin piloting their recyclable and compostable fiber cup solutions this month.
The beginning of this journey in 2018 coincided with a time when the movement to stop waste generated by single-use packaging began to take hold. We launched a Consortium to leverage the power of the world’s biggest food and beverage brands (Starbucks, McDonald’s, Taco Bell, KFC, Pizza Hut, Wendy’s, The Coca Cola Company, and Nestlé are all partners in the NextGen Consortium) and to create a market signal to drive scalable solutions for recyclable and compostable cups. And while expanding the recycling of food packaging is still a critical and primary focus of this ambitious endeavor, the dark horse in this race has been reusable and refillable cup systems.
We are seeing a growing demand from consumers and policy makers – and therefore an opportunity for brands – to completely rethink how we deliver products. And eliminating the need for single-use packaging in the first place is part of the suite of tools that can reduce waste and climate impact. From “naked” stores with no packaging to tech-enabled reusable packaging that tracks and recirculates items, sometimes with a consumer incentive, these models are growing. And cups are the next frontier, with a goal of making reusable cups as convenient as single-use. With these emerging cup models, consumers can simply get a cup at the cafe, drop it off at drop spots around the city or return them to the cafe for their next use. Companies like CupClub, Muuse, ReCup and others also work with the cafes and/or offsite washing facilities to collect and sanitize the cups.
Designing reuse models that can work in the complex ecosystems of a Starbucks or McDonald’s and creating an optimal customer experience across the US is no small task. Our testing and pilots over the last year have helped us identify pitfalls that have made past ideas fail. Innovation is a messy, iterative process and often failure leads to learnings, and learnings lead to success. Through the public-facing pilots launching this week, we are testing the cup’s technical feasibility, business model viability, user desirability and circular resiliency, among other things.
Lessons learned from these trials will be shared with NextGen Consortium partners, further honing and testing their systems to bridge the gap between prototyping and in-market testing and broader rollouts.
We see a bright future for pioneers in the reuse revolution like NextGen Cup winners CupClub, Muuse, and ReCup. We are equally excited to watch the innovation flood gates open thanks to the market signal created by the global brands in the NextGen Consortium coming together to find new solutions. We are seeing an unprecedented number of promising market entrants in reusable cup models. While we don’t yet know which models or businesses will be able to meet the operational needs and scale of today’s marketplaces, we know that the NextGen Consortium has been successful at bringing talent to the table. Just as ride-sharing, e-commerce and smart-devices have disrupted legacy business models that had dominated for many years, beverage containers and cups are ripe for the new models that help us improve the drinking experience without the negative consequences of today’s throwaway culture.
To advance the circular economy, we need the space to make and learn from mistakes and to bring together unlikely bedfellows to enable systems change. Today, we are at a tipping point, with an increased sense of urgency to address the global crises of climate change, ocean plastic pollution, and waste. We have the building blocks to scale a solution for cups, and can leverage and build upon the NextGen model to design out waste. First up it’s the cup, but the opportunities for pushing the bounds of sustainable design are endless.
Team Spotlight: Allison Shapiro, Executive Director
Allison joined the Closed Loop Partners team this year and is responsible for strategic partnerships, capital formation, and fund structuring at the firm. We sat down with her to hear more about her journey into the circular economy world where profitability and sustainability meet.
I was ready to transition to a role where I could enable systemic change in a work environment where risk-taking was encouraged. I had already decided the circular economy was the right next sector — it was a matter of finding an exciting role that would blend investing, industry influence, and a triple-bottom-line ‘systems thinking’ manner of evaluating problems.
Tell us a little bit about your previous life and what brought you to Closed Loop Partners?
As a college student, I became excited by the possibility of capital markets enabling social and environmental change across national borders. I was a student at Georgetown University’s Foreign Service School studying Science & Technology Policy. I loved everything involved with social and environmental finance: from measuring impacts, to pricing them, to setting up schemes to finance and trade them, all with the goal of finding the most most efficient ways to protect and enable them.
After graduating, I became a carbon markets analyst at a D.C.-based non-profit, studying and reporting on voluntary carbon market trading regimes around the world. At the time, the economy was booming; there were several cap and trade bills in the U.S. Congress; and a carbon price seemed imminent — we could finally decouple greenhouse gas intensity from economic growth! Alas, the financial crisis happened the following year — and with it, so did the near term prospects for a national carbon price.
So, I returned to school in 2009 to study finance and the business of sustainability at the University of Michigan’s Erb Institute, receiving an MBA and an MS in sustainable systems science. After graduating in 2012, I joined JPMorgan in a rotational management training program. Following the program, I became a structured finance banker to alternative investment funds, creating custom financing solutions for alternative investment funds. I enjoyed the product development and also the sophistication of my clients. Most interesting of all, I was seconded to JPM’s Sustainable Finance team for part of my last year at JPM to set up two social impact funds.
After these secondments, it became clear that I was ready to transition to a role where I could enable systemic change in a work environment where risk-taking was encouraged. I had already decided the circular economy was the right next sector — it was a matter of finding an exciting role that would blend investing, industry influence, and a triple-bottom-line ‘systems thinking’ manner of evaluating problems. Having become aware of Closed Loop Partners (CLP) through friends in impact investing two years earlier, the decision to join was an easy one. We’re at a tremendously exciting phase in our platform growth, and I am thrilled to be a part of it.
What excites you most about the circular economy?
Two things: the urgency of the waste / conservation problem, and the fact that circular economy solutions make so much sense! Also, I’ve been obsessed with recycling since college. I even went ‘dumpster diving’ for a month on Georgetown’s campus to try to figure out the right combination of bin siting and labeling that would encourage people to recycle. Yeah, I was cool.
What are you most looking forward to in your role at Closed Loop Partners?
Being able to apply my finance and systems analysis experience to helping Closed Loop Partners grow. The impact, network, and respect that CLP has built in the recycling, sustainability, and impact investing industries is impressive.
LOLIWARE: The Seaweed Straw of the Future
We caught up with Chelsea Briganti, founder and CEO of LOLIWARE, while onboard the National Geographic’s ship, SeaBird, for the first week of the Sustainable Ocean Alliance’s (SOA) Accelerator at Sea this September. LOLIWARE was part of the inaugural cohort of SOA’s ocean-tech focused accelerator in 2018.
Chelsea Briganti, Founder & CEO of Loliware
LOLIWARE is a Closed Loop Ventures’ portfolio company that is pioneering biomaterials derived from seaweed to replace plastics; healing the planet by making single-use plastics obsolete.
Born in Hawaii, Chelsea grew up feeling a strong connection to the ocean, where she was baptized, nourished, and calmed by the waves throughout her childhood. This, along with her industrial design background and desire to use her skills to create a better planet, have helped propel LOLIWARE forward. The company is now working with several Fortune 500 companies and partnering with Marriott and Pernod Ricard to disseminate millions of plastic-free straws.
We sat down with Chelsea to catch up on the latest news. This interview has been condensed and edited for clarity.
With the help of a team of material scientists, food technologists, seaweed biologists, and biopolymerists, LOLIWARE wants to replace the 360 billion plastic straws used globally every year. How far along on this journey are you?
We’re currently underway with a massive scaling effort. This is where most startups completely drop the ball. They have a great idea, it could be world-changing, but they struggle to take it from the lab to mass scale.
Fortunately, I learned a lot from our initial work at LOLIWARE on the cup. We were creating a cup that you could eat rather than throw away. It was an interesting idea and helped put us on the map, but we dropped the ball on the manufacturing side. I learned that LOLIWARE’s strength and core competency, our real sizzle as a company, is our material technology and innovation pipeline, it’s not that we’re manufacturing geniuses.
What we are is a leading materials innovation technology company. This means that we continue to pioneer biomaterials derived from seaweed to replace plastics at scale. We’re doing this by inventing new materials and inventing the process to scale these new materials. We can then take these two blueprints to a plastic manufacturer, for example, and license them. Plastic manufacturers will be dinosaurs unless they evolve with current regulatory and market forces. There are tons of bans on plastics and millennials don’t want plastic anymore. We’re pitching a new technology to help manufacturers evolve with the times.
LOLIWARE’s straw feels just like a traditional plastic straw, but it’s 100% plant-based, hyper-compostable, and marine degradable. What’s the significance of seaweed in your mission to heal the ocean?
The reason seaweed is so special is because it sequesters carbon as it grows and has a fast, renewable lifecycle of four to six weeks. What comprises the seaweed is cellulose, naturally occurring polymers, and proteins. All of these represent opportunity. They can be used for other packaging innovations, for example, you can create a SeaPulp™ by extracting cellulose from seaweed. This can be formed into any shape, with the added benefit of avoiding any health issues associated to PFAs.
When you look at our competition, the only consequential one is paper. You’ve got tons of fiber companies on the scene and China has said that their solution to plastic is paper. But, you’re going to start seeing backlash against paper. In some cases, paper has a worse carbon footprint than plastic because of its inputs: Trees have a long lifecycle and often you have to transport them thousands of miles for processing. We are tree-free and rainforest-free, believing that these precious carbon sinks should remain intact versus be used for packaging.
Seaweed is definitely part of the future of replacing plastic. All of our seaweed is sustainably sourced. Our supplier in Europe harvests it in accordance with strict regulations. Right now, less than 1% of it is harvested and, in turn, LOLIWARE only uses a fraction of that.
LOLIWARE has already built a strong and recognizable brand, appealing to consumers who want to avoid plastics, toxins, and GMO products, among other things. How important has branding been for growth?
You have to have a killer technology, but you also have to have a killer brand, especially given the current climate. I got a lot of push back from early-on investors in LOLIWARE. They felt like we were wasting time, asking “Why do you even have a social media presence?” But I always knew they were wrong. We’re B2B2C and we’re a movement to go plastic-free. We’re also a technology to replace plastic. Both of these things come together. That’s the secret sauce. There is no brand of paper straws or corn-based plastics that people identify with, yet people connect with LOLIWARE. It’s important to be clever, to be fun, and to have beauty in sustainability when it comes to branding.
We also really focus on being a women-empowered brand. For the longest time, women’s inventions have been sitting on the sideline – underfunded and underdeveloped. Yet, women have a lot of buying power and care about sustainability. Now is the time to rally them. We need more women in leadership to solve the problems of the ocean and the planet.
And lastly, we can’t ignore the incredible natural environment we’re in right now as we head toward Sitca, Alaska. How do natural backdrops like this help to inspire your work?
When you’re an entrepreneur you can easily sequester yourself in the office and become hermetic. For me, I’m inspired by nature’s vast expanse. I love how Charles Eisenstein expresses the importance of being in places where the dream of the planet still lives. You definitely feel that here. It’s the dream of the planet, a pristine natural environment. You get the visceral sense that you are on the planet versus in a manmade landscape like New York City. Too often we’re in landscapes where everything is made by us and we can quickly become disconnected from the natural world. It’s important to be able to take the mental image of the dream of the planet back to your work. It’s what we’re trying to protect or even recreate in places where the dream of the planet is dead or dying.
The Latest Insights and Analysis from Chris Cui, Director of Asia Programs
The revision of China’s Solid Waste Management and Pollution Prevention Law could have far reaching impact on brands and recyclers.
A proposed revision to the Solid Waste Management and Pollution Prevention Law in China could affect the operations of brands and recyclers. The revised law entered the review phase at the 13th National Congress on June 25, 2019 and is now seeking public opinion. Below are some key implications of the clauses:
Impact on the packaging industry
Clause 2.13: Companies that produce, use, and store solid waste (SW) should publish their waste management information. Publicly listed companies must also publish their preventive measures against SW pollution.
This represents a significant departure from current protocol. Increased transparency and mandatory reporting requirements for public companies will incentivize companies to invest in SW prevention, potentially providing reputational rewards to those best-in-class. This kind of impact oriented investment fits nicely with the growing interest in ESG investing in China.
Clause 3.20: Producers of SW must pay Environmental Protection Tax.
This would add a new expense for manufacturers that could be passed onto consumers too. The commercial real estate sector in China recently had to adjust to the introduction of this, where previously they did not have to worry about their waste management expenses.
Clause 3.21: The design and production of packaging must follow green production standards that will be set up by the State Market Regulation to reduce waste generation. Producers of materials that fall under mandatory recycling categories must be responsible for the recycling of their materials. The list of mandatory recycling materials will be produced by NDRC (National Development and Reform Committee).
Clause 3.22: The government will encourage R&D institutes and producers to develop and use materials that can be easily recycled, safely stored, and that can decompose in a natural environment. Packaging materials that can’t be easily composted will be banned.
Clause 3.21 and 3.22: It’s encouraging to see that the government is not only promoting recycling, but also the reduction of waste through circular design and materials innovation. This will force brands to adopt circular packaging principles, so there will be a lot of room for innovation in eco-friendly packaging.
Clause 3.42: There will be EPR for electric appliances and other products.
Since 2018, this kind of EPR has been in effect for electric vehicle manufacturers, requiring better lifecycle management across the value chain – from product design and consumption to the recycling and waste management related to electronic vehicles at end-of-use.
Impact on the recycling industry:
Clause 3.28: Permits must be required for the transportation of SW across cities.
Demand for distributed, modular recycling units will grow so that waste can be processed more locally. The need for smart logistics will grow in tandem to optimize for more efficient transportation routes, among other things.
Clause 3.29: There should be a complete solid waste import ban by 2020.
While there has been a lot of speculation in the U.S. regarding whether or not China will implement a total waste import ban by late 2020, as declared in 2017, it is clear that the Chinese government plans to move ahead with this.
Clause 3.57: There will be differential charging schemes for residential waste.
The mandatory sorting of residential waste was introduced in certain pilot cities in China on July 1, 2019. In a district in Shanghai, it now costs $17 USD to dispose of 120 liters of food waste. You can read more about this on our blog on Recycling Rises to Power in China.
Although we do not know how likely it is that all of the proposed revisions will pass or when, the fact that there are so many proposed changes to the current law, which came into force in 1995, and that they’ve gone all the way to the desk of the National Congress, is a signal that waste management is a high priority for the central government. By reviewing the proposed changes, companies in China and abroad can better prepare for what’s coming down the line.
Unlike Europe, where the circular economy is championed by investors, the government, and consumers, in China it’s the government taking the driver’s seat. The proposed revisions to the law illustrate the steps the government is willing to take to develop the circular economy in China. In turn, industries are taking note and are seizing the subsequent business opportunities.
I would encourage brands that consider China as one of their key markets to give serious thought on how they can create a circular advantage to meet the growing demand for sustainable products in China before their competitors do. This will be critical in a context where a country is implementing increasingly strict solid waste management laws.
The reform on plastic pollution in China, the next big thing after National Sword?
At the 10th meeting of the Central Committee for Deepening Overall Reform on September 9th, chaired by the Chinese President, plastic waste reform was listed as a key issue. The following was cited:
“Actively responding to plastic pollution by restricting the production, sale, and use of some plastic products, actively promoting recyclable and biodegradable substitute products, and regulating plastic waste.”
We are still waiting for a detailed reform plan, but this is another huge boost for the development of a circular economy in China, supported by the government. Brands and recyclers in China and overseas should start to prepare for the changes brought by a reform like this.
The Key Takeaways from Fortune’s First Global Sustainability Forum:
This September, in Yunnan, China, I attended Fortune’s first Global Sustainability Forum, speaking on a panel on Waste Not. The Forum dived deep into the business opportunities and challenges that arise from the transition from a linear to circular economy, highlighting the following key points:
- There are three key driving forces behind circularity: increasing shareholder activism and interest in public companies’ ESG commitments; public awareness among consumers on the environmental footprint of products and services; and growing regulation in Europe and Asia to tackle waste issues, especially plastic pollution.
- Finance is slowly but surely reckoning with the economic risks posed by climate change and other environmental threats. ICBC, the world’s largest bank by assets, ran a stress test in 2015 and, we learned, issues higher interest loans to firms that are over-exposed to environmental hazards. The stress tests began in 2015, and have changed the way Chinese banks look at the businesses they fund, now reducing their exposure to coal projects and increasing their exposure to renewable energy.
- Building sustainable supply chains is challenging due to limited transparency around data, a lack of focused financing, and water and waste management typically being too cheap to account for negative externalities. Labor specific issues also often take precedence.