Closed Loop Partners, industry and environmental groups are ready to put money into projects to improve waste management in Asia and help reduce marine pollution.
The group launched a new investment fund July 18, with support from the plastics industry, called Circulate Capital. It follows a move last year from Closed Loop, environmental groups and the plastics industry to raise $150 million to reduce plastics litter in the ocean.
The effort said it will focus on Asia because half of the estimated 8 million metric tons of plastics waste that flow into the oceans annually come from developing Asian economies with inadequate waste management.
Circulate Capital will be led by Rob Kaplan, co-founder of Closed Loop, which used a similar investment model to raise $100 million from retailers, major corporations and others to finance waste management improvements in North America.
"South and Southeast Asian countries produce the most plastic waste, but largely because they lack the necessary waste infrastructure to manage the problem," said Kaplan. "Financing innovative, local companies that are working to address the challenge is a critical step to reducing the flow of ocean plastics and also key to improving economic development and public health outcomes."
Seed money for the group has come from the American Chemistry Council, the World Plastics Council and DowDuPont Inc.'s Dow Chemical business, along with consumer product makers including Coca-Cola Co., Kimberly-Clark and PepsiCo.
"With the growing economies across Southeast Asia comes increased demand for more consumer packaged goods, but unfortunately the development of waste management infrastructure has not kept pace with the increased amount of waste that is being generated," said Diego Donoso, president of Dow Packaging & Specialty Plastics. "This initiative can serve as a model for how we can bring solutions to bear on this problem with the goal of keeping all waste out of the ocean."
The firm, which will operate independently from Closed Loop, expects initial investments in the first quarter of 2019. It sees itself as trying to prove the concept for potential investors.
"Our goal is to remove capital as a barrier," said Kaplan. "Circulate Capital seeks to fill capital gaps and prove the investment market by financing opportunities that collect, sort, process and manufacture using waste in areas known to contribute to the ocean plastic crisis.
"Our firm isn't the only solution to ocean plastic, and we depend on enabling policies, regulatory environments, supply chains, and strong partnerships in the ecosystem," he said.
Circulate Capital estimates that investing in waste management can reduce plastics leakage in the ocean by 45 percent by focusing on China, Indonesia, the Philippines, Vietnam and Thailand.
The firm will seek to leverage other investments — it said there's a $26 trillion need for infrastructure investments in Asia through 2030, but that less than 5 percent of Asia's infrastructure needs have been allocated for investment by the continent's 100 largest institutional investors.
The environmental group Ocean Conservancy is also a partner.
"While a suite of solutions across sectors will be necessary to truly stem the tide of ocean plastic, science shows that investing in waste management and collection in Southeast Asia is one of the single most impactful ways companies can step up to help solve the ocean plastic crisis," said Susan Ruffo, managing director of international initiatives for Washington-based Ocean Conservancy.
"From Buckingham Palace to Starbucks' board room, we are truly seeing a paradigm shift on the ocean plastic issue, with consumers, governments, and industry all recognizing the problem and searching for solutions," Ruffo said.
Washington-based ACC said it welcomed the effort and hopes it leads to more investments and systems to collect and reuse recycled plastic.
"We believe Circulate Capital can help expedite critical advancements where they are needed most by providing seed funding that can potentially unlock additional investments," said Steve Russell, ACC's vice president of plastics and a member of the Closed Loop Ocean steering committee. "Growing and improving systems to collect used plastics and convert them into valuable products is the fastest and most certain means to clean up our ocean and improve peoples' lives."
Circulate Capital also announced a request for proposal process for applications for financing for companies and projects.
