It’s not a question we ever thought we’d ask. However, a study carried out last year by Australia’s University of Newcastle suggests that humans may be ingesting five grams of plastic per week – the equivalent of consuming a credit card every seven days. It could be argued that the modern world was built on plastic, to the extent that the material is now ubiquitous and found in places we might not ever think to look: from pharmaceuticals and cosmetics to teabags and chewing gum. Two-thirds of the clothing we wear is made from synthetic fibers, like polyester, acrylic, and nylon – all plastics. And that’s before you even start to look at plastic in its most prevalent form: packaging.
When the plastic bag was invented in the early 1960s, one of its many aims was to protect the environment. Swedish engineer Sten Gustaf Thulin was concerned about the significant deforestation required to produce paper bags, and saw the durable, reusable plastic alternative as a potential solution. He didn’t anticipate that reusable plastic would become the exception, and “single-use”, the rule. He certainly couldn’t have predicted that by 2020, we would be consuming 240,000 plastic bags every ten seconds.
Today, approximately 40% of all plastics produced go into packaging, which is used just once and then discarded. It’s estimated that we have produced 6.3 billion metric tons of plastic waste since the material was invented; of that, only 9% has been recycled. This means that the majority of plastic waste is either being incinerated or ending up in the oceans, in landfill, in our food – even in our bodies. Why? Because there’s nowhere else for it to go.
“The miracle material”
An early 20th-century invention, plastic took the world by storm. And it’s not surprising. Here was a revolutionary material that had unique qualities and seemingly endless applications in everyday life. What might happen to it after it had outlived its usefulness became an afterthought, however. We never built the infrastructure needed to deal with the inevitable waste – and we’re suffering the consequences.
While plastic recycling systems have been implemented worldwide, they are largely inefficient; in part, because they rely heavily on individual responsibility, but also because it’s an incredibly complex process. All plastics must be sorted into their different types before they can be recycled mechanically, and even then, certain types – such as some multi-layered plastics – are currently impossible to recycle. This complexity means that only 15% of plastics produced worldwide each year are recycled. The remainder is either incinerated or stays in landfill, which in itself represents a staggering waste of a material resource.
It’s too simple to claim that we just need to “eradicate plastic”. Not only are we left with the question of what to do with the plastic waste that already exists, but we’re also faced with the reality of life without the low-cost convenience and enhanced hygiene that plastic currently affords us – the critical importance of which has been highlighted by the COVID-19 pandemic.
A new approach
We should attempt to reduce our plastic consumption in the first instance – that’s a no-brainer. However, a practical intervention for reducing plastic pollution should look at the entire value chain. We need to rethink how plastic is designed from the ground up, so that all new plastics can be recycled; we need to develop eco-friendly plastic substitutes which are equally as effective, and finally, we need to invest heavily in end-of-life solutions such as waste collection, sorting, and high-quality recycling infrastructure which will allow us to recapture lost value. These are critical actions that will enable us to transition towards a closed-loop system – a circular economy for plastics.
The first step is to secure substantial investment into waste management practices. This is already taking place across the US and Europe, albeit not yet at scale. In emerging markets, however, investment has been extremely limited and the infrastructure for dealing with plastic waste is close to non-existent.
South and Southeast Asia are among the biggest global contributors to marine plastic waste. In many of these regions, the waste is collected and sorted by informal workers: waste pickers, and small scrap aggregators at landfill sites, who are unfairly paid for their work. At this point, traders sell it in large volumes to recyclers, where it is fed through low-quality recycling processes which produce cheap plastics that cannot be recycled again.
There is a significant opportunity here: to build a transparent supply chain, where local workers are paid fairly to collect and sort plastic waste in the right way, before carrying out high-quality mechanical recycling which will result in better plastics that can be kept within the plastic circular loop. And this is not simply an environmental opportunity; research conducted by McKinsey & Co. suggests that by 2030, recycled plastics could represent a global profit pool for the plastics industry of as much as USD 55 bn a year. Just recently our partner, Circulate Capital, announced four investments in waste and recycling companies in India, bringing their portfolio to seven investments and over USD 40 m across South and Southeast Asia.
An exciting prospect
Widespread coverage of the “plastic problem” has sparked a deep shift in public opinion in recent years, and has seen increasing demands for real action – not just from consumers, but from brands, businesses, and regulators. This demand is accelerating interest in an industry that has been historically overlooked. At Sagana, we have identified several exciting businesses already operating – and thriving – in this space, offering both tangible positive impact and attractive financial returns.
Nepra
Our first example is Nepra, a home-grown business based in India. Driven by the ambitious vision of founder Sandeep Patel, Nepra has found effective ways to solve the three critical problems of waste management in the region. Firstly, instead of alienating waste workers (who often experience social exclusion), Nepra treats them as legitimate suppliers and partners, paying them fairly for their work. Secondly, Nepra has created a way to sort waste efficiently and at scale, which ensures that the quality of recycling is always high. Finally, they have adopted a “zero-waste to landfill” approach, which eliminates the pollution of local ecosystems. Nepra’s model is now ready to scale; it has raised USD 18 m and will need more investment in the coming years.
Solidu
Another great example is Solidu, a brand developed by Shapemetics in Lithuania. Shapemetics manufactures environmentally-friendly, solid cosmetics that are packaged using entirely natural, biodegradable materials. This cradle-to-cradle model reduces water and plastic consumption to zero, and dramatically reduces CO2 emissions from transportation due to the compact, lightweight nature of the product. Solidu is going from strength to strength; demand for their product is extremely high, and they are looking for investment in order to scale.
Dalmia
One of the largest polymer recycling companies in India, Dalmia collects plastic waste from waste suppliers across the country and converts it into plastic flakes and granules for new applications, using high-quality recycling processes. In the last 14 years, Dalmia has seen great success, and significantly extended its operation. Now, it aims to expand capacity by 5x in the next 5 years, in order to move toward a true closed-loop recycling model.
What next?
It’s easy to feel overwhelmed when we are inundated with image after image of plastic waste. Plastic bottles on pristine beaches and vast islands of plastic floating in the sea; a constant reminder of a very real threat to our delicate ecosystems, and our own health.
But we believe that there is now a real cause for optimism: great strides toward a circular economy for plastics are already being made, and pioneering, innovative solutions are being developed every day. A recent analysis by The Pew Charitable Trusts and SYSTEMIQ found that we “have today all the solutions required to stem plastic flows by more than 80%…if key decision-makers are willing to make system-wide changes.”
With better regulation, better infrastructure – and crucially, better investment – we can finally turn the tide on plastic pollution. The world is calling out for action because this is no longer simply a moral imperative, but an existential one. So it’s not a question of if, or even when, this transition will happen, but rather – how quickly.