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Reuse, Recycle, & Profit: Funding A Circular Economy

Marta Ortigosa

Transitioning to a circular economy is more vital now than ever before. Yet, according to a report from Beyond Plastics and Last Beach Cleanup, the US recycled only 5 to 6 percent of post-consumer plastic in 2021. The Department of Energy notes that this also represents a missed opportunity for value generation: $7.2 billion could have been garnered in 2019. 

However, there is plenty of room to take advantage of what will be a $1 trillion opportunity by the end of the decade. In the words of Harold Henrikson, Head of TOMRA Collection Solutions, “We need to stop viewing plastic as waste, and instead treat it as a resource – and an opportunity. . . In a circular economy, it is possible to collect and recycle without impacting on the product’s quality, so that products can be used again and again in a never-ending closed loop.”

Investing in waste and recycling infrastructure is essential to ensuring that discarded products or components can generate such value. By working together, multiple organizations are reaching for this goal. 

Photo Courtesy TOMRA Collection Solutions

For example, Closed Loop Partners is a New York-headquartered investment firm whose goal is “to modernize recycling facilities across the U.S. to close the loop on valuable materials and create a waste-free world,” according to senior director of strategic initiatives and partnerships, Georgia Sherwin. This transition, says the company, is “the most significant restructuring of global commerce since the industrial revolution.” 

Last year, the firm launched the Closed Loop Circular Plastics Fund, which aims to provide $100 million in catalytic flexible financing to expand plastic collection systems, optimize recycling processes for more effective sorting, and create new products out of recycled polyethylene and polypropylene. Dow, LyondellBasell, and NOVA Chemicals initially invested $25 million last May, with hopes to recycle more than 500 million pounds of plastic through the fund and use such materials in their manufacturing processes. This presents a huge opportunity for the $4.7 trillion chemical industry

This March, the Closed Loop Circular Plastics Fund marked its first investment by acquiring a majority stake in Sims Municipal Recycling (SMR), a curbside recycling company formed as part of Australia-headquartered Sims Ltd. in 2003. SMR recycles over 600,000 metric tons of waste annually, collected from over 10 million people. Other investors in the transaction included the Partnership Fund for New York City and Closed Loop’s managed buyout fund, the Closed Loop Leadership Fund, whose investors include the Microsoft Climate Innovation Fund, Nestlé, PepsiCo Beverages North America, and Unilever. Together, these major players bought 50.46 percent of SMR for $45.4 million. 

Photo Courtesy Closed Loop Partners

SMR operates one recycling facility in Florida and three in New York and New Jersey. North America’s biggest municipal recycling contract is a 20-year deal for New York City’s residential recycling. The most recently built facility, the Sunset Park Material Recovery Facility (MRF) in Brooklyn, was completed in 2013 and is the biggest commingled recycling facility on the continent. It alone processes over 15,000 tons of glass, metal, and plastic provided by New York’s Department of Sanitation each month. It is also ahead of the game on other sustainability initiatives, featuring a 100 kW wind turbine that was the first to be commissioned on a commercial scale for the city and a 600 kW solar installation spanning 60,000 square feet that is one of the city’s biggest. 

Photo Courtesy Closed Loop Partners

Alistair Field, CEO and managing director of Sims Ltd., expects that this acquisition and partnership will take SMR “to the next level in expanding recycling beyond New York City;” Field added, “Together, we look to expand materials accepted by SMR, optimize recycling accessibility across New York City and significantly grow SMR’s service areas across the United States.” It will also lead to more local job creation

Other groups are also getting in on the action. Lombard Odier Investment Managers (LOIM) and the Alliance to End Plastic Waste announced last month that they would be launching a circular plastic fund with the goal to raise $500 million “for scalable solutions to remove plastic waste from the environment, increase recycling, and drive the global transition towards a circular economy for the plastic value chain.” The Alliance, acting as both a cornerstone investor and technical advisor, mandated LOIM to develop and manage the fund, which will focus on projects like building infrastructure for collection and sorting or designing more durable and recyclable plastics. 

These stakeholders will likely continue investing in recycling facilities and infrastructure. As Diego Donoso, President of Dow Packaging & Specialty Plastics, reflected in the press release for the SMR deal, “I know this is just the first of several significant projects that will grow and improve recycling infrastructure in the U.S. as a result of the Fund.”

Photo Courtesy Jack Church 
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