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.

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.

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 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.