Closed Loop Partners at the United States Senate Environment and Public Works Committee on Recycling

By Bridget Croke

Jun 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.

  1. 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.
  2. 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.
  3. 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.

The Latest Insights and Analysis from Chris Cui, Director of Asia Programs

By Chris Cui

Nov 18, 2019

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.

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.

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.

Six Companies Graduate from the NextGen Circular Business Accelerator Ready to Scale Their Sustainable Cup Solutions

The NextGen Consortium, a pre-competitive collaboration managed by Closed Loop Partners in partnership with Starbucks and McDonald’s, accelerates towards a more circular cup system.

Contact: [email protected]

September 25 – NextGen Consortium Partners, investors, and other stakeholders convened during Climate Week in New York City for a Demo Day in which six participants in the NextGen Circular Business Accelerator showcased their manufacture-ready prototypes and pitch-ready business plans for growing their sustainable cup solutions.

The Accelerator follows Closed Loop Partners’ announcement of 12 NextGen Cup Challenge winners in February 2019. Six winning teams entered the NextGen Circular Business Accelerator, launched in partnership with global design firm IDEO to help companies further refine their cup solutions through rapid learning and iteration. The diverse solutions include cutting-edge plant-based materials, new innovative liners for cups, and reusable cup systems that redesign the fiber to-go cup so that it is more widely recoverable or remains in circulation for multiple uses. The six teams participating in the Accelerator are Colombier, CupClub, Footprint, Muuse, RECUP, and SoluBlue.

During the rigorous, six-month Accelerator program, companies accelerated their learnings through live in-context prototyping across four distinct Google campus locations, each housing multiple cafes. Progress for each cup solution was measured across four key categories: customer experience, server experience, performance, and disposal. Companies were able to see first-hand how customers and servers interact with their cups in a restaurant-like environment, capturing real-time feedback in a low-risk setting and identifying areas for refinement.

Companies also visited materials recovery facilities and explored the recovery side of the cup value chain, learning about the systems and infrastructure in place to ensure that their solutions are in alignment. Additionally, companies studied the value of materials recovered post-processing of their cups in order to make the economic case for more circular approaches.

Throughout the Accelerator, companies gained invaluable feedback through direct engagement with NextGen Consortium Partners, including founding partners Starbucks and McDonald’s, supporting partners The Coca-Cola Company, Yum! Brands, Nestlé, and Wendy’s, advisory partner WWF, and innovation partner IDEO. Feedback included insight into what it would take to roll out their solutions at a large scale.

“We are proud of the NextGen collaboration underway with so many companies championing greener cup technologies. We applaud Closed Loop Partners’ continued, on-track progress to determine what’s most viable, and we are excited for our own customers to try greener cups in our stores in the near future.”

John Kelly, senior vice president, Global Public Affairs & Social Impact at Starbucks

The companies were also welcomed behind the scenes of a McDonald’s restaurant to better understand how cups work within a store’s layout and staff operations.

“We were thrilled to have participants in the NextGen Circular Business Accelerator experience. Having these next gen solutions in our restaurants to see first-hand how our crew members manage through our restaurant operations is an important step. Compatibility with the fast pace of a QSR setting is critical, and it was great to see Accelerator teams jump at the opportunity to better understand these in-restaurant conditions. These cup solutions are helping shape the future of packaging, and we want to set them up for success while keeping valuable materials in circulation and, importantly, out of landfills and our oceans.”

Marion Gross, Senior Vice President and Chief Supply Chain Officer, McDonald’s USA

“Seeing how far participants in the NextGen Circular Business Accelerator have come is truly rewarding. The NextGen Consortium will continue to work with winning teams to ensure that when their solutions do enter market at scale they’re set up for success and recoverability.“

Kate Daly, Managing Director of the Center for the Circular Economy at Closed Loop Partners

The other six winners of the NextGen Cup Challenge, which are later-stage in their development, are working with the NextGen Consortium to identify in-market piloting opportunities in regions across the globe. Some participants in the NextGen Circular Business Accelerator are also expected to announce in-store pilots as early as 2020.

The Cup Challenge and the NextGen Circular Business Accelerator are just one part of the NextGen Consortium’s efforts to address single-use food packaging waste globally by advancing the design, commercialization, and recovery of food packaging alternatives. The Consortium is also focused on infrastructure and consumer engagement, supported by stakeholder collaboration across the value chain.

“Watching the aggregation of innovative ideas turn into real progress has been exciting to watch. Now we’ll look to the members of the NextGen Consortium to take these solutions into the marketplace and watch real change happen.”

Erin Simon, Director, Sustainability R&D, World Wildlife Fund

About NextGen

Each year, an estimated 250 billion fiber to-go cups are distributed worldwide. Most of these are not recyclable or compostable. The NextGen Consortium and Cup Challenge launched in 2018 to bring together entrepreneurs, industry, and recyclers to identify and commercialize the next generation of recyclable and/or compostable cups. Closed Loop Partners, Starbucks, McDonald’s, The Coca-Cola Company, Yum! Brands, Nestlé and Wendy’s invite the industry to join this effort to identify a global solution to this shared challenge.

About Closed Loop Partners

Closed Loop Partners is an investment firm that invests in sustainable consumer goods, recycling, and the development of the circular economy. Investors include many of the world’s largest consumer goods companies and family offices interested in investments that provide strong financial returns and tangible social impact.  In 2018, Closed Loop Partners launched the Center for the Circular Economy, a New York City-based collaboration center for innovators to commercialize products, services, and technologies that are leading the transition from a linear take, make, waste economy to a restorative one in which materials are shared, re-used, and continuously cycled. Learn more at www.closedlooppartners.com.

About McDonald’s

McDonald’s is the world’s leading global foodservice retailer with over 37,000 locations in over 100 countries. Over 90 percent of McDonald’s restaurants worldwide are owned and operated by independent local business men and women. This year McDonald’s announced a series of commitments demonstrating how it will use its Scale for Good to positively impact the planet and the communities it serves. You can read more about McDonald’s Scale for Good initiatives here.

About Starbucks

Since 1971, Starbucks Coffee Company has been committed to ethically sourcing and roasting high-quality arabica coffee. Today, with stores around the globe, the company is the premier roaster and retailer of specialty coffee in the world. Through our unwavering commitment to excellence and our guiding principles, we bring the unique Starbucks Experience to life for every customer through every cup. To share in the experience, please visit us in our stores or online at http://news.starbucks.com or www.starbucks.com.

NextGen Consortium Partners

NextGen Consortium partner logos

How to Use Design Thinking to Advance Systemic Change, One Cup at a Time

Amid burbling espresso machines and towering stacks of cups, six teams in the NextGen Circular Business Accelerator are taking waste-free cup solutions to the next level. Venturing back of house at restaurants and into the world of waste management, see how teams use five design thinking practices to advance solutions for a more circular future.

The NextGen Consortium is a global initiative convened by Closed Loop Partners’ Center for the Circular Economy. Starbucks and McDonald’s are founding partners of the Consortium, together with supporting partners The Coca-Cola Company, Yum! Brands, Nestlé and Wendy’s, as well as WWF as an advisory partner. OpenIDEO is the Consortium’s innovation partner.

NextGen Circular Business Accelerator teams. From left to right: Joe Tighe of Solublue (UK); Francis Carroll, Lizzie Horvitz, and Brian Reilly of Muuse (Indonesia); Jeff Bassett of Footprint (USA); Safia Qureshi and Simon Millman of CupClub (UK); Henrik Björnberg of Colombier Group (Finland); Fabian Eckert and Alexandra Gurstmeier of RECUP (Germany).

If you’re looking for a systemic challenge in need of some new thinking, look no further than your morning cup of coffee. Worldwide, 250 billion to-go cups are produced each year, and there’s an increasing need for recoverable alternatives. Most fiber cups have a plastic liner to prevent leaks. The fiber and plastic are recyclable once separated, but limitations and inconsistencies in recycling infrastructure around the world mean that in most markets these materials aren’t easily recovered. The trouble is, as OpenIDEO Circular Program Lead Chris Krohn explains,

“When we have a systems design challenge, we can’t expect to solve it using the same approach that created the problem. It’s essential to understand the issue from perspectives across the entire value chain, and then work across that system to develop a holistic solution.”

In pursuit of some fresh ideas, Closed Loop Partners launched the NextGen Consortium: a multi-year partnership of food and beverage industry leaders that aims to address global single-use food packaging waste. Up first, the ubiquitous hot and cold, fiber-based, to-go cup. The NextGen Cup Challenge identified twelve innovators with the most promising cup solutions – from new cup liners to reusable cup systems. Of those, six winning teams (pictured above) joined the NextGen Circular Business Accelerator, an initiative to help prepare the teams for testing and scaling their solutions to meet the needs of today’s biggest brands and consumers worldwide.

Before rolling out new cup solutions in a real-world setting, it was essential for Accelerator teams to understand the customer needs, business realities, infrastructure challenges, and people at the core of the cup ecosystem. In a week-long design Bootcamp that took us behind counters and across the San Francisco Bay Area, OpenIDEO, with support from Closed Loop Partners, led teams through five design thinking practices to quickly surface new insights and inspiration. Try them out yourself the next time you’re working on a complex problem.

1. Center on a plan for informed, effective research

Design a fresh perspective. An essential part of the design thinking process is design research: exploring what people say, think, do and feel to help build human-centered solutions. This often means getting out into the field to meet people where they are, which helps us understand real needs and imagine what’s next. As Nina Montgomery, an IDEO design researcher, shared with NextGen Accelerator teams at the start of the Bootcamp,

“The power of design research is that—through empathy and inspiration—it is able to surface new thinking.”

Start with what you know. Before jumping into the field, it’s helpful to curate some background knowledge. We worked with each Accelerator team to compile insights from desk research—across internal documents, datasets, and market, competitor and business plan analysis—to get a sense of what was known and what we needed to test. Some teams, like RECUP from Munich, Germany, plan to roll out systems involving reusable cups, while others, like Solublue from London, UK, are building biodegradable cup solutions from new materials. Despite this diversity in business models, every team needed to know how consumers and distributors would respond to their particular cups. We also took into consideration the needs of Consortium Partners like McDonald’s and Starbucks to help identify any gaps and inform the key questions each team had to answer to set themselves up for scale.

NextGen Circular Business Accelerator teams make a plan for their design field research.

Develop a research game plan. With this in mind, we kicked off the Bootcamp by developing a design research plan. This included deciding on research methods, team roles, and questions to ask in the field, and ensuring we were integrating research ethics. Building on background research, we helped Accelerator teams identify and schedule time to visit the kinds of people and places that would surface valuable, diverse insights about the to-go cup ecosystem. Together, we synthesized research questions in a discussion guide that was shared with each team member, ensuring that field research focused on what mattered most. Armed with a plan, a notebook, Sharpies, and lots of Post-Its, we were ready to hit the streets of San Francisco.

Try it:
  • Explore a variety of design research methods in Design Kit.
  • Focus in on your key research questions using this Design Research Discussion Guide.
2. Gain micro-level insights through observation

Watch and learn. That’s how, on a bright Tuesday morning, a group of IDEO designers and Accelerator entrepreneurs found ourselves attentively watching a stream of cups dance between hands and over counters at a San Francisco McDonald’s. Observation is a key method of design thinking. By taking a step back and looking carefully, we can better understand systems at a micro level.

At McDonald’s, observing employees interact with cups soon surfaced some fresh insights. To keep up with the lunch rush, cups must be easy to grab with one hand, nest well but also release easily from a stack, and communicate branding. Through observation, Accelerator teams quickly built empathy for the employees and identified how their new cups would or would not meet McDonald’s needs. By allowing us to observe their operations, McDonald’s was able to easily communicate their business realities and product requirements in a way that would have been impossible through words alone.

“Everyone knows McDonald’s, but how many people can say they’ve experienced the back of house logistics required to operate one? The Bootcamp provided opportunities like this that startups only dream about, and catapulted our growth potential in ways we’ll still be processing months later.”

Lizzie Horvitz, one of the Accelerator participants

Try it:
  • Observation is simple. Grab a notebook, a pen, & scope out a good place to watch & listen.
  • Find tips for getting started in this quick Design Research Field Guide from IDEO. ‍
3. Uncover disconnects and trends with interviews and intercepts

Listen for gold. To fully understand what someone is thinking or feeling, we’ve found it’s often best just to ask. Building on our observations, we set up interviews with baristas, managers, and more, asking open-ended “how” and “why” questions that encouraged them to speak freely.

What we heard was a surprising amount of confusion around cup disposal best practices. In one coffee shop, baristas were told to compost cups, while the trash bins in the shop had signs instructing customers to recycle—both instructions contrasting with San Francisco waste management company Recology’s guidelines. User interviews helped teams identify pain points and systemic disconnects which would have been tough to spot without talking to the people on the ground.‍

Teams gather user feedback on their cup designs and systems during intercepts and interviews.

Intercept for quick insights. The trouble with interviews: they can take time to set up. That’s why we also practiced intercepts— brief moments of connection with users that allowed us to capture impressions and test assumptions in real time. Conducting an intercept is as simple as walking up to a friendly face, introducing yourself, and asking a single important question.

The Footprint team—offering fully formed fiber-based cup solutions—tried out intercepts in a coffee shop, surveying customer opinions on their brown fiber cup vs. their more traditional white cup. The responses were intriguing. In general, millennials seemed to prefer the brown cup, describing it as “natural,” while older generations felt it looked “dirty.” By compiling responses, intercepts helped our teams quickly identify demographic trends and interests that would help define their future product offerings.

“Field research during the bootcamp showed us that there is potential to improve our cups and lids both for convenience and recyclability. We also got better insights into how logistics and incentives around the cup system might need to be adapted for the US market.”

Alexandra Gurstmeier of ReCup

Bring it all together. After every field research session, it’s important to debrief to ensure insights aren’t lost. With each Accelerator team, we’d synthesize—transferring notes from observations and interview guides onto post-its, sticking them up on a board, and grouping where we saw trends. This process helped the teams identify the essential flags, opportunities, and business considerations that surfaced in their research.

Try it:
  • Use this Interview Guide to shape consumer conversations and ask strong questions.
  • Fill out an Intercept Worksheet to get set up for these quick moments of connection.
‍4. See a challenge with fresh eyes through analogous experiences

Learn from others. Paradoxically, sometimes the best way to think differently is to seek what’s similar. Analogous research takes a look at different industries to find inspiration in the ways others have tackled similar challenges. During the Accelerator, we paired teams with organizations that have successfully worked through an issue our teams were currently facing. For example, the Solublue team—offering a plant-based, biodegradable cup solution—is currently preparing to ramp up its production. The team toured the Dandelion Chocolate factory for an inside look at how they set up and scaled their manufacturing process.

The Solublue team and IDEO design researchers explore the manufacturing systems of Dandelion Chocolate as analogous research.

Meanwhile, the CupClub team, which creates reusable cups people can pick up in a coffee shop and deposit at dedicated drop points around their city, found inspiration from an unusual source: rentable electric scooters. While cups and scooters may not seem to share much in common, CupClub learned from the Spin team how they managed the “economies” that popped up around their scooters, which provided quick cash for people willing to collect and recharge the scooters at home. This insight led to an interesting question for the CupClub team: how might we build economies of support around a reusable cup model that promote sustainability and job creation?

As the teams found, analogous research is a great way to gain a new perspective, learn from other’s struggles and successes, and help break through entrenched thinking.

Try it:
  • Brainstorm: what other industries are tackling problems similar to the ones you are facing? What can you learn from their approach? Use this analogous inspiration exercise as a guide.
5. Map the existing infrastructure to define the path forward

Get real. To design sustainably, it’s essential to understand and integrate into the existing ecosystem that will touch a product over its lifecycle. Mapping how each team’s solution fit within the broader cup recovery infrastructure was crucial to ensure their cups would be fully recoverable down the line.

NextGen Circular Business Accelerator teams tour San Francisco’s waste recovery center, Recology.

‍Seek an informed perspective. Learning from experts, Accelerator teams toured waste management expert Recology’s facilities to better understand the technological capabilities and market forces affecting the local Bay Area recovery infrastructure. During the visit, teams had the opportunity to run their products through Recology’s recycling lines to gather real-time performance data. Teams also heard from Kate Daly, Managing Director at Closed Loop Partners, who shared a macro-perspective on global trends in recovery and reuse, and helped the teams think big picture—connecting upstream innovation to downstream recovery.

“Alignment between the design of cups and infrastructure is critical for capturing materials at every phase of a cup’s life cycle. It’s also important that as we continue to design for a better, more sustainable future, our infrastructure evolves too.”

Map the journey ahead. With these insights in mind, it was time to pull it all together. To get started, we helped teams consider their product journey, including all the people engaged along the way. The teams created a Post-It to represent every actor—from raw material producers and manufacturing technicians to corporate and distribution partners, consumers, and waste management experts—and made note of their specific needs as identified through research. Between actors, we drew lines to represent relationships: those that already existed, and those that each team needed to build in order to scale their solutions.

Ecosystem mapping with Henrik Björnberg, Chair of Colombier Group. Winning Cup Category: Innovative Cup Liner

The takeaways from the ecosystem mapping process set the Accelerator teams up with an actionable roll-out plan that identified their place within the existing infrastructure and who they needed to build partnerships with in pursuit of a fully circular, sustainable cup system.

Try it:

All together, these five design thinking practices helped our NextGen Accelerator teams gain a deeper understanding of the complex micro systems and macro infrastructure their products need to serve, while enabling Consortium Partners to quickly surface business realities and sticking points, helping to de-risk and accelerate the roll-out of new cups worldwide.

While not everyone can embark on a research sprint through futuristic waste recovery facilities and McDonald’s back-of-house experiences, anyone can apply design thinking practices to uncover fresh insights.

When addressing a problem that requires systemic change—prep, observe, interview, seek analogous inspiration, and map it out. The result could be some powerful new thinking, or perhaps even the holistic, circular cup of the future.

 

What’s Going on in China: Recycling’s Rise to Power

Chris Cui, Director of China Programs, builds bridges between the U.S. and Asia in order to advance the circular economy. She brings 13 years of cross-sector experience in financial service and philanthropy sectors in Asia, Europe and the U.S., advising Fortune 500’s emerging market strategies to capture growth potential from Asia.

The U.S. as well as other developed countries were taken by surprise when the Chinese government implemented a ban on the importation of recyclables on January 1, 2018. However, the Chinese government had been sending signals for the past decade of their future plans around both the importation of recyclables and the development of domestic recycling infrastructure.

Eight cities in China were selected as pilot cities for pilot recycling programs as far back as 2000 in order to study the most effective programs. Recycling gained significant attention in June 2019 when Chinese President Xi stressed the importance of cultivating the good habit to improve the living environment and to contribute to green and sustainable development.

“Trash classification is related to the people’s living environment and the economical use of resources. It is also an important embodiment of the level of civic-mindedness. Extensive education and guidance should be carried out to make the people realize the importance and necessity of garbage sorting.”

Chinese President Xi

It’s very rare that the top leader, rather than the Ministries in charge of the industry, make such strong statements about recycling.

Importantly, it demonstrates the priority that China has placed on the development of its own domestic recycling programs and infrastructure, as part of its effort to combat environmental issues that threaten the health of its 1.4 billion citizens. It also explains why China carried out the ban in the first place; they are continuing to shift their focus to developing domestic recycling infrastructure to feed their massive manufacturing base. Xi has made clear that the public sector will support the private sector to develop infrastructure to turn “waste” into opportunity.

So, what does this look like?

The Chinese government aims to increase recycling rates to 35% for residences by 2020, they’re building basic trash sortation systems and starting to charge waste management fees for both residential and commercial waste for 46 major cities by the end of 2020. They’re also expanding their trash classification system to all cities by 2025.

The four new trash sortation categories in China.

Image source here.

Case Study: Shanghai

Shanghai is one of the first cities to start responding to the policies from Central Government. Twenty-three million people must learn to sort their trash according to four labels – recyclables, dangerous goods, kitchen waste and other waste – under a mandatory sorting scheme starting on July 1. Misclassification will result in a fine of up to USD 30 for individuals, USD 7,200 for commercial entities and USD 70,000 for recyclers (and the potential revoking of their licenses). How to sort trash correctly is not just in the news, it’s the talk of the town and it’s even included in exam questions for schools.

For individuals who fail to sort their trash, their social credit rating, which not only determines their mortgage rate and insurance premium, but also their eligibility to purchase flight tickets and even send their kids to public schools, will be lowered.

Unsurprisingly, these new developments in recycling bring challenges, particularly around education and infrastructure. The Shanghai government has hired 1,700 instructors, conducted 13,000 training sessions, and created an app to handle enquiries to help citizens meet the requirements.

Meanwhile, the policy highlights the current lack of infrastructure for this kind of scheme. There needs to be significant investment from both the public sector and private sector to sufficiently grow the collection and sortation capabilities of the country. This especially applies to rural regions, which constitute a large proportion of China and lack the necessary infrastructure to deal with trash, especially tricky waste such as fertilizers and pesticides.

Yet all of these shifts have culminated in, and created, a significant business opportunity. Recycling needs investment now. China’s planned economy means that every five years, the central government will create an economic development plan for the country for the next five years. Key sectors that are targeted in the five-year plan will receive support, from specific policies to financial subsidies, that attract significant interest from the private sector. The recent emphasis on the recycling sector is a good example of this and, importantly, sends a positive signal to the market.

Residents in Shanghai search the internet for guidance on how to sort trash correctly.

Image source here.

The Business Opportunity Is Vast and Growing

At Closed Loop Partners, we know that keeping valuable commodities circulating in supply chains is good business. The current developments in China are spurring interest, excitement and investment in the space, which will continue to grow. There is room for both startups and bigger companies, domestic as well as foreign players, traditional players in the recycling industry and new players from other sectors like tech, marketing or consumer goods companies; all of whom are ready to innovate and embrace the change.  We’re seeing a new structure of supply and demand around recyclables worldwide. Shanghai is just the beginning; more cities and business opportunities will arise in the coming years as a result of the combination of favorable factors:

The public markets are all in
With preferential policies and hundreds of billions of dollars to support the campaign, stocks have been rising for companies that supply equipment, chemicals and other services related to recycling.

The private sector is paying attention
More and more startups are emerging to solve the waste management problem in China, with some managing to raise money from mainstream VCs such as Alibaba, Baidu and Tencent. Robots for sortation, like AMP Robotics, or mobile apps for smart recycling stations or second hand mobile phones are just some examples of the innovations applicable in the field.

Demand for recycling related equipment and services is growing
As more cities follow the example of Shanghai and start mandatory urban trash recycling, related sales will jump significantly; sales of the smart trash bin on JD.COM soared by 613% between June 1-13 and it’s estimated that Shanghai residents bought 12% of the smart trash bins sold nationwide.

Sustainable packaging will be encouraged
Innovations in sustainable packaging will be welcomed by brands. Policies have been drafted on EPR in China for the packaging industry.

Opportunities for completely new business models are emerging
Challenges in the enforcement of trash classification means there are opportunities for entirely new business models to solve for the new pain points. For example, startups are offering online booking services for on-demand trash pickers and sorters that will come to your home.

If you’re interested in learning more on this topic, get in touch with Chris Cui and join us at these upcoming events:

Key Takeaways from the Largest North American Circular Economy Conference

It was a momentous moment in Minneapolis last week as more than 800 people convened for Circularity 19, the largest conference in North America devoted to advancing the circular economy. In acknowledging the world’s finite resources and increasingly volatile supply chains, transitioning to a system that keeps valuable materials in circulation at their best and highest use has become a no brainer. In fact, it’s what many companies have been doing for a long time; Caterpillar has been remanufacturing products since the nineties.

Although not an entirely new concept, supporters of the circular economy are now reaching a critical mass. Consumers and companies alike want a more sustainable economic model. Now we have the appropriate framework: the circular economy. This doesn’t predicate itself on infinite resources; it reduces costs, creates jobs and protects our environment. From large brands like Google and 3M to students, NGOs, financiers and community activists, there was significant momentum behind Circularity 19.

Together, conference attendees watched startups pitch circular solutions such as reusable cup systems, explored the potential of materials marketplaces, and learned about transformational technologies that turn waste plastics back into the building blocks for new materials. All of these examples demonstrated the benefits of keeping valuable materials in circulation.

What was clear was that the circular economy isn’t a nice to have, it’s a need to have. Companies and individuals can’t afford to throw away the valuable rare earth elements in their phones or to ignore the intrinsic value of waste plastics that can reduce our dependence on oil extraction.

An overarching theme of Circularity 19 was around the power and responsibility that inevitably comes with advancing any new system; the importance of making sure the circular economy doesn’t suffer from the same ailments of the past linear “take-make-waste” system. Three areas in particular continued to come up in conversation:

The need for a just and equitable circular economy from the start
There needs to be a greater focus on the social elements of the circular economy; historically underrepresented groups, particularly lower income communities of color, are often disproportionately affected by environmental injustices. In a panel on Power, Privilege and Bias in a Circular Economy, speakers highlighted the importance of including everyone at the table from the very beginning, flagging the need for awareness and intentionality around what signals are being sent when developing a new system.  There is also a need for thinking about how the success of circularity is measured from both a business and social standpoint; defining shared metrics for a truly regenerative, healthy, circular society is critical.

The importance of healthy materials and safe chemistry in the circular economy
It’s simple. In a circular economy valuable materials are kept in play, cycling in perpetuity, so the materials of choice must be safe and high quality. What does this really mean? Materials must be evaluated, tested and designed with their next life in mind – what happens when these materials come into contact with your skin? What about with the soil? If something is comprised of mixed materials, for example treated for flammability to serve a particular purpose in their first life, can these materials ever be food grade quality in their second life? These are the kinds of questions that were facilitated and fostered at Circularity 19, helping attendees to think through unintended consequences.

The urgent need for industries to collaborate outside of their comfort zones
A common thread throughout Circularity 19 was the need for unlikely bedfellows in order to achieve systemic, circular change. It takes more than just one industry. For example, the fashion industry can and must learn from the chemicals industry. The technologies emerging from the latter have important applications for the former, including chemical recycling technologies to process polyester garments at the end of their first life. Similarly, the tech industry has spent years investing in the development of RFID technologies and other tracking systems for the digital economy. But not enough organizations are applying these learnings to fashion. There is huge potential for weaving RFID technologies into garments so that stakeholders can keep track of their products’ lifecycles.  Scanning tags and seeing that a garment is made of 100% linen and from a certain brand is valuable information that can influence the next life of a product – is it best for resale? Or is it best to recycle the product into fibers to create a new garment?

Throughout Circularity 19, it was encouraging to see how much progress has been made on circularity, as well as important to see how far we still have to go on this journey. By sharing knowledge and continuing to have productive conversations with diverse stakeholders, the conversation can be pushed forward. It was heartwarming to be a part of Circularity 19 this year and we look forward to Circularity 2020 in Georgia.

Investable Opportunities to Stem the Tide of Ocean Plastic Pollution and Build a Circular Economy

With only 9% of the world’s plastics getting recycled and global plastics demand forecasted to triple by 2050, we’re in desperate need for tangible, investable solutions to avert a crisis. Where ten years ago, the urgent need to broach this subject was met with resistance, today the conditions are altogether different.

Across the globe, movements such as Break Free From Plastic and legislation like the EU’s Circular Economy Action Plan have galvanised the public. Shocking images of sea turtles maimed by straws or statistics about there being more plastic than fish in the sea by 2050 have struck a chord.

It’s clear we must rethink our current leaky, linear system and shift to something more circular. We need a system that’s consciously designed to use less materials in the production and delivery of products and that keeps materials in circulation at their highest value for as many generations as possible, if not infinitely. This way we can reduce our waste and our extraction of raw materials.

Sometimes plastic is the most appropriate material to serve a purpose, given its particular properties, other times it’s not. There is no silver bullet approach.   We need to invest in both near term solutions and long term solutions with clear paths to scaling to tackle the problem of ocean plastic pollution and reduce overall environmental impacts.

The good news: we’re already seeing clear, investable solutions that can shift us in the right direction.

There are at least 60 technology providers developing transformational technologies that purify, decompose, or convert waste plastics into renewed raw materials in North America, representing a $47 billion opportunity in North America alone. Many of these technologies mean there is no limit to the number of times plastics can be recycled, thereby helping us to shape a more circular economy for plastics.

Other companies are exploring innovative new delivery models or alternative materials science. Their outputs could supersede the need for plastic packaging altogether, whether through vending machines that dispense exact amounts of product into reusable containers like Algramo, new feedstocks replacing styrofoam packaging like TemperPack or through hyper-compostable, edible straws made of sustainably harvested seaweed like Loliware.

Large banks and brands are getting on board too, recognizing the need for change. Institutions like Goldman Sachs, Citi, Comerica Bank and Engie have co-invested in our funds in order to catalyze the development of the circular economy.

If we’re to stem the tide of plastic pollution in our oceans, it’s critical that we invest across the value chain and in companies that are rethinking the system for a more sustainable future. With the current enabling conditions, from policy to consumer engagement, now is the time to do it.

This blog was inspired by the discussion in Confluence Philanthropy‘s webinar on Exploring Investor Solutions to Restore the Ocean, which I participated in with Mark Spalding, President of The Ocean Foundation, Conrad MacKerron, Senior Vice President of As You Sow, and Angela Howe, Legal Director of Surfrider Foundation.

3 Reasons Why Recycling is Good Business in America and a Key Driver of the Circular Economy

It’s Earth Day 2019 and it’s time to celebrate one of our best traditions: recycling. There’s a lot happening in our industry today: from new robots that sort recyclables to technologies transforming recycled plastics into valuable commodities. Other big themes to celebrate: opportunity and profit.

Last year, Closed Loop Partners, and firms that co-invested with us including Goldman Sachs, Citi, Google and Engie, invested over $210 million dollars in companies that are building a circular economy. The world’s largest consumer goods companies are on board too, many making public commitments to use recycled content ratios of up to 50% in their products.

Why? Because they see opportunity – and value. Natural resource extraction is expensive and landfills are unsustainable. As we shift towards a regenerative, circular economy and unlock the embodied $1 trillion value, we know that recycling is a crucial piece of the puzzle.

Today of all days, let’s take a minute to appreciate the true value of recycling in America – and let’s commit to keep going. Here’s what you need to know to celebrate recycling when talking to friends, family, and colleagues:

Recycling is Profitable: It’s good for taxpayers, municipalities, manufacturers, and investors

The recycling industry is an economic engine, providing over 500,000 jobs in America and creating more than $100 billion in revenue. The metal, paper, plastics, electronics, textiles and glass in the recycling stream are inherently valuable. While commodity markets do fluctuate, most of our waste still commands high prices, especially materials like PET, used in water bottles, which sold for $309 per ton, or clear HDPE, used in milk jugs, for $734 per ton, on average in 2018. Let’s think about the alternatives. If these materials end up in landfills, it’s taxpayers’ money that foots the bill. With a national average disposal cost of more than $50/ton, communities would have to pay over $3 billion annually in additional landfill disposal fees if these materials weren’t recycled.

Case in Point: Lakeshore Recycling Systems (LRS), Illinois. LRS serves greater Chicago and Northern Illinois, providing residential and commercial collection of recyclables, single stream recycling and construction and demolition processing services. LRS has been so successful in the past 5 years that Goldman Sachs is now their biggest investor. In their Heartland facility in 2018, they achieved revenues of approximately $65/ton and now they employ over 150 people. This best in class operation is the manufacturing feedstock for circular supply chains.

Recycling Reduces Costs & Volatility: That’s good for business

With scarce resources and increasingly volatile markets, many of the world’s largest corporations are shifting toward circular supply chains that are stable, protect the environment and reduce costs.  In doing so, they avoid the volatile extraction costs embedded in manufacturing materials, like plastic. The demand for recycled materials is growing.

Case in Point: Public commitments by 37 major corporations. Thirty-seven of the world’s largest consumer brands and retailers, including Coca-Cola, Danone, Nestlé, PepsiCo, Unilever, Walmart, and others have made public commitments to use recycled plastics in their packaging within the next 10 years. Current projections indicate new real demand in North America of 5 million to 7.5 million metric tons annually by 2030. Even better? There are technologies transforming plastics waste into the building blocks for new materials that are ready to meet this demand. As these scale, a potential revenue opportunity of $120 billion in the U.S. and Canada awaits.

The Industry is Growing Here at Home: The opportunities are endless

When China stopped importing foreign scrap, the recycling industry was shaken. Business as usual no longer sufficed. But this wasn’t an end to the industry, it was a wake-up call. It pushed us to invest in domestic infrastructure, process our own waste and deliver higher quality bales of recycled materials. Materials Recovery Facilities (MRFs) that were already doing this, like Eureka Recycling in Minnesota, were less vulnerable to China’s bans. The residual contamination rates of their operations are less than 8 percent and 90 percent of their recovered material goes to markets in the state, supporting regional growth. MRFs are now identifying opportunities to up their game and invest in new equipment and technologies to enhance their performance.  Innovative companies like AMP Robotics are gaining traction; they use AI and robotic arms to effectively sort materials. More and more investment opportunities are materializing. Global companies like Nine Dragons, one of the largest paper manufacturers in China, are now investing hundreds of millions of dollars on recycling infrastructure in the US.

Case in Point: Pratt Industries, Georgia. Pratt Industries is the world’s largest, privately-held 100% recycled paper and packaging company, headquartered in Georgia. This year they’re opening a new paper mill outside of Columbus, Ohio, and also opened a paper mill in Indiana. They’ve also relocated some of their MRFs to larger facilities to accommodate high demand and have pledged to invest $2 billion in the company’s U.S corrugated box manufacturing. Pratt Industries also pays New York City for all of its recycled paper and cardboard in order to meet restaurants’ demand for pizza boxes made from these recycled materials.  The City of New York generates revenue of approximately $15/ton for cardboard while reducing waste, landfill costs, and greenhouse gas emissions.

Our message this Earth Day? Keep recycling as a simple way to support a circular economy.

It’s good for the planet, it’s good for cities, and it’s good for business.

Learn more at: www.closedlooppartners.com