Record-low Covid-era oil prices have made virgin plastic much cheaper than recycled plastic, forcing many recycling plants around the world to close. But some of the worst-ever market conditions for recyclers didn’t stop an investment company backed by multinational brands from pumping millions into Asian recycling businesses last week.
Circulate Capital, a Singapore-based investment firm that launched with a US$100 million war chest to tackle marine pollution in South and Southeast Asia in 2018, has invested US$6 million in an Indonesian and Indian recycling firm to help them weather the pandemic-induced financial crisis, and to grow and scale their businesses once market conditions improve.
One of the recyclers, Mumbai-based Lucro, converts low-value flexible plastic such as shrink wrap into plastic granules that are sold to manufacturers in India. The other, Jakarta-headquartered Tridi Oasis, turns Polyethylene terephthalate (PET) bottles into plastic flakes which are used to make packaging and textiles in Indonesia.
The companies funding Circulate Capital, which include PepsiCo, Coca-Cola, Unilever, Danone, Chanel and Procter & Gamble, are increasingly using recycled plastic in their products following consumer, civic society and regulatory pressure to take responsiblity for the marine pollution their products contribute to.
Circulate Capital chief executive Rob Kaplan said that when Covid-19 developed into a global crisis, the company questioned the timing of the investments—which are the first it has made. “We said [to the funders] that our purpose is to improve the resilience and investability of the recycling sector, do you agree with us? It’s your money, not ours. Their answer was resoundingly yes, we have to keep going, because we are going to need these companies to be successful to meet our demand [for recycled plastic].”