Circulate Capital eyes opportunities to tackle plastic waste in Latin America

Guest Author

Dan Keeler

ImpactAlpha, December 7 — Singapore-based investment fund Circulate Capital has spent the past two years backing projects in South and Southeast Asia focused on tackling the regions’ swelling plastic-waste problem. In a new study, it breaks down the opportunities for creating a plastics circular economy in Latin American and the Caribbean.

The $175 million fund, which was launched in 2018 with investment from some of the world’s biggest plastics producers and users including PepsiCo, Procter & Gamble, Dow and Mondelēz, says many countries in the region already have robust circular policies – which aim to eliminate waste by reusing, repurposing or recycling materials – but efforts to implement those policies are limited. That leaves a window open for investors to engage the private sector in tackling plastics pollution.

The report demonstrates how “this is an investable space to crowd in additional different types of funders that are needed to truly unlock the billions of dollars in opportunity,” Circulate’s April Crow told ImpactAlpha

Big Four

Circulate’s study found four countries – Chile, Colombia, Mexico and Brazil –are well positioned to rapidly move toward a circular plastics economy, but the remaining countries, including Argentina, Peru and most of the Caribbean and Central American nations, present limited opportunities for investment as they are far from ready to scale up. 

The four most promising countries are attractive in part because they generate the most plastic waste. Brazil, for example, churns out almost 10 million tons of plastic waste per year. But while it has a well-developed waste collection sector and international recycling companies are moving into the market, it remains fragmented, presenting opportunities for investors focused on catalyzing an integrated recycling supply chain, the report says. 

By contrast, with their smaller populations and lower plastics consumption, countries in the Caribbean are unlikely to attract significant foreign investment in the plastics circular economy.

Globally, pressure is growing from regulators to reduce plastic waste. The EU recently unveiled its strategy, which included measures to encourage reuse rather than recycling and to ban packaging deemed unnecessary, such as miniature shampoo bottles in hotels. The move also includes measures to force companies to reduce the amount of packaging they use and to include a significant proportion of recycled materials in new packaging.  

For Latin America to catch up, “investors and catalytic capital are urgently needed to advance the sector and build the plastics circular economy at scale, by connecting all actors across the ecosystem and capturing the full potential of businesses,” Circulate says.