How global leadership and impact investments can stem the rising tide of ocean plastic



ImpactAlpha, June 11 – Plastic straws suck. Just ask my seven-year-old daughter, who saw a photo of a sea turtle with one stuck up its nose and swore never to use them again.

Images of the world’s oceans awash in plastic are indeed powerful: Pristine bays and beaches turned to garbage dumps.

A bottlenose dolphin struggling to free itself from a plastic bag wound around its snout. Albatrosses feeding chunks of plastic to their chicks. A dead whale’s sliced-open stomach packed with plastic debris.

Most, but not all, of the G7 leaders who met in Charlevoix, Quebec, last week have reacted much like my daughter did. Germany, France, the U.K. and Italy all signed on to an oceans plastics “charter” led by Canada’s Justin Trudeau. Only President Trump and Japan’s Shinzō Abe refused to agree to the non-binding pledge, which set goals to curb the estimated eight million metric tons of plastic waste that enters the oceans from land each year. Canada pledged $100 million for the effort.

“This is an important step towards achieving a life-cycle economy in which all plastics would be recycled and re-purposed,” Trudeau said.

The growing sense of urgency about the marine plastics crisis will likely expand opportunities for established companies and startups alike that have been working to find solutions to the problem. These include companies like France’s Suez SA, which has pioneered plastic bottle recycling by converting polyethlene terephthalate (PET) into food packaging, and U.K. startup MacRebur Plastics Road Co., which has begun early customer testing of its asphalt mixture made with recycled plastic bottles and bags.

On Monday, the U.S. investment firm Closed Loop Partners announced an investment in PureCycle Technologies, a Chicago startup that produces recycled polypropylene with virgin-like properties. PureCycle’s technology could help increase recovery of contaminated and colored polypropylene streams, Closed Loop said in a statement.

For impact investors, opportunities exist to invest in individual companies in areas such as alternative materials for single-use plastics, circular business models, and waste collection, tracking and sorting innovation, according to the 2017 report, “Sea of Opportunity,” from investment firm Encourage Capital, which catalogued supply-chain investment opportunities to address marine plastic pollution.

Recycling disruption

The pressing need to find better ways to deal with the world’s growing mountains of trash erupted into panic in January, when China banned most imports of foreign waste, including plastic. China was by far the world’s biggest buyer of plastic scrap. The U.S., the U.K., the E.U. and Japan were among those that sent most of their waste there. China’s ban, part of the country’s “war on pollution,” has thoroughly disrupted the world’s recycling markets.

In the immediate to short term, it’s terrible news for U.S. recycling companies—as well as the municipalities that sell them their recyclable materials—but in the long run it could accelerate innovation and lead to improved waste management and recycling.

“In North America, there’s going to be a lot of short-term pain,” says Closed Loop’s Rob Kaplan. However, China’s policy changes are creating “a number of opportunities here to invest in new sorting and processing projects,” he said.

The investment firm is also working on one of the first funds focused specifically on ocean plastic mitigation. The Closed Loop Ocean initiative launched last fall with the goal of raising $150 million to invest in preventing plastic waste from flowing into waters in Southeast Asia. Capital commitments from corporate investors—including founding partners of the initiative such as PepsiCo, 3M, Procter & Gamble, the American Chemistry Council and the World Plastics Council—are meant to help crowd in additional funds from other corporates, as well as impact investors.

Closed Loop Ocean is now spinning out into a new ​fund that will seek to invest in waste collection, sorting and processing companies, as well as manufacturers that use recycled plastic material in their products, primarily in Indonesia and India, as well as the Philippines, Thailand and Vietnam.

The geographic focus is crucial. The Ocean Conservancy, another Closed Loop Ocean partner, has estimated that improving waste management solutions in Southeast Asia could cut the flow of plastic into ocean in half by 2025. Just 20 rivers around the world contribute two-thirds of the plastic pollution that comes from inland populations, largely in Southeast Asia, according to research done by The Ocean Cleanup, published last year in Nature Communications. The study’s models showed that rivers in China, India and Indonesia are the three largest contributors.

Singling Out Single-Use

A global analysis last year determined that only 9% of all the plastic ever thrown away has been recycled. Part of the problem is quality. China used to accept our messy bundles of trash, which U.S. recycling companies exported at a lower cost than cleaning and sorting it themselves. China now frowns on plastic contaminated with gunk, hence the ban.

Because developed countries have robust waste collection systems, they contribute far less to ocean plastic pollution than emerging economies. But the plastic waste they do contribute overwhelmingly comes from the “on the go” or single-use category, which includes bags, food and beverage containers, and straws/stirrers.

This has made single-use plastics a prime target for municipal and national governments. It also makes this part of the plastics industry ripe for disruption.

Plastic bag fees or bans have been increasing around the globe for a decade. But more recently, and very quickly, banning other types of single-use plastic has become a full-on global trend. France was the first country to announce a total ban on plastic cups, plates, and cutlery in 2016. The European Union, Great Britain and New York City are among those considering various restrictions on single-use plastics. In February, Taiwan announced one of the farthest-reaching bans on plastic in the world, restricting the use of single-use plastic bags, straws, utensils, and cups. And India just moved to ban all single-use plastics by 2022.

“The concept of addressing single-use plastics is really compelling,” says Lou Shick, a partner at New World Capital. “The business opportunities that get generated from that will be dominated by those closest to having ‘form, fit and function’ equivalent replacements, all the people who’ve been laboring away at making alternatives”

Material alternatives

Some alternative products have been on the market for ages, such as food containers and coffee stirrers made from paper and cardboard, and bamboo and wood utensils, while others are still in development. For example, marine algae is a promising substitute for water bottles, the Encourage report notes.

Another bio-benign material further along in development is seaweed. A London-based startup called Skipping Rocks Lab makes the bottled-water alternative Ooho!, transparent water pouches you pop in your mouth.

New York’s Loliware uses seaweed as the base for its colorful, fun, compostable and edible flavored cups, straws and lids. The startup has raised a total of $2 million in two rounds of funding. If you’re a fan of Shark Tank, you may have seen Loliware founders Leigh Ann Tucker and Chelsea Briganti walk away with a $600,000 commitment from sharks Mark Cuban and Barbara Corcoran back in 2015. After Shark Tank, Loliware had more demand for their original cup design than they could keep up with, Briganti says. But at nearly $4 a unit, it was too expensive for mainstream penetration.

A new material, Lolizero, is cost-competitive with paper and PLA, a bioplastic derived from corn. This year, Loliware focused on straws, with deals with Marriott Hotels and liquor manufacturer Pernod Ricard, that has given them an order queue of 55 billion. This puts them on track to bring in $1.3 million in revenue for 2018, Briganti says. With Lolizero cups and lids on the way, Briganti expects to triple revenues next year.

Loliware is even on the radar of officials in Taiwan, who are searching for a replacement for boba (or bubble tea) straws. Taiwan’s EPA Minister Lee Ying-yuan has recently recommended the company in outlining the island’s plans to go plastic-free.

“I’m not at all naïve that this is addressable overnight,”  Brianti says. “The scale is our biggest challenge. No one company can be the solution. We need all the companies.”

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