Circulate Capital Takes Aim at Ocean Plastic

Our oceans are in crisis. Never before have we seen such an exponential rise of a global issue like we have in plastic waste and ocean plastic. What seemed like a blip on the radar screen only a year ago, the ocean plastic crisis now invades our social consciousness — from posts about plastic drinking straws on our Facebook feeds and favorite documentaries to global publications such as National Geographic and the Economist. Everyone seems ready to take action — from your local coffee shop to Buckingham Palace.

For those of us who have been working on the problem for some time, this collective awakening feels long overdue.

Did you know that:

• An estimated eight million tons of plastic flows into the ocean every year.
• Plastic production and consumption is predicted to double over the next 10 years and, without intervention, by 2028 there will be 250 million metric tons of marine plastic pollution in the ocean.
• More than 1,200 animal species are now affected, as demonstrated by seemingly endless images of birds with bellies full of plastic or turtles with straws blocking their noses.
• Recent reports have even found evidence of plastic showing up in our local fish markets.

However, the good news is that ocean plastic is possibly the dumbest environmental problem we face. Unlike most other issues today, there is no opposition or political divide. We know why we need to solve this problem, the question is how.

So what’s the solution to ocean plastic and plastic waste?

We must go to the source. More than half of the plastic flowing into the ocean comes from South and Southeast Asia — rapidly developing economies, like Indonesia and the Philippines, where infrastructure and investment has not kept pace with pollution from expanding populations and industrial growth.

Investing in infrastructure
We know that investing in infrastructure is critical to solving the problem of ocean plastic pollution. According to the Ocean Conservancy, which has managed International Coastal Cleanup Day for the past 30 years, the three most impactful solutions are:

• reducing plastic in the waste stream;
• improving solid waste management; and
• increasing capture and reuse.

The Ellen MacArthur Foundation estimates that improved recycling will be required to contribute 50% to achieve a circular plastics supply chain — in other words, if we want to close the loop on plastics, we need recycling to take care of half of the solution.

As co-founder of Closed Loop Partners, I saw firsthand the powerful impact of investments in recycling infrastructure and the circular economy in the United States. Leveraging $40 million to finance nearly 20 projects, we unlocked more than $125 million in additional capital, re-valued recycled materials, and diverted more than 200,000 tons of waste from landfills.

In partnership with Ocean Conservancy, Trash Free Seas Alliance, and many leading global corporations and intergovernmental agencies, Closed Loop Partners closely examined what it would take to invest in solutions at the root of the problem.

The Problem
In Southeast Asia, analysis from the Asian Development Bank shows that an estimated $26 trillion is required to develop infrastructure improvements through 2030. Yet, currently, just $65 billion — a mere 5% of the funds required — has been allocated by the region’s top institutional investors. Of these projects, a lack of evidence-based reporting and intermediated investment often results in the failure to connect capital to operators.

The Solution
Our analysis shows that catalytic capital can fill this gap. By applying blended financing mechanisms to demonstrate investment viability, impact-focused investment management strategies can facilitate connections to public and private sources and unleash unlimited additional funds.

Enter Circulate Capital: Dedicated to Financing Solutions to Ocean Plastic

In October 2017, our partners committed to create a financing vehicle to address this capital gap and, today, I’m proud to announce a key next step in fulfilling that commitment: Circulate Capital.

Circulate Capital aims to amplify the catalytic capital concept to finance solutions to the problem of ocean plastic pollution in South and Southeast Asia. Created in collaboration with Closed Loop Partners, The Ocean Conservancy, and companies like 3M, The Coca-Cola Company, Kimberly-Clark, Dow, PepsiCo and P&G, our goal is to finance companies and initiatives that focus on waste collection, processing, sorting and manufacturing. We seek investments that demonstrate that these projects can not only keep plastic out of the ocean and that returning recycled commodities to the supply chain is profitable, but also that the sector is investable.

In support of new technologies and recycling infrastructure that advance the circular economy, Circulate Capital will provide risk capital for entrepreneurs, help build investment track records, and prove business models during the growth phase. We will test at scale and reflect commercial needs as the project expands and prepares for acquisition, and support the handoff to institutional investors.

Prioritizing local innovation
Prioritizing local innovation is critical. Over the past year, we’ve begun to develop relationships with local entrepreneurs, investors and non-governmental organizations in South and Southeast Asia. We understand that challenges and resources differ from location to location, and that solutions must be nuanced and sensitive to existing leadership and expertise.

This is why we’re sharing a Request for Proposals (RFP) on our website. We are keen to share our investment criteria and encourage applications from anybody looking for investment capital to support their waste and recycling work in South and Southeast Asia.

Through Circulate Capital, our goal is to develop an infrastructure that can invest in local innovation, rather than imposing a solution simply because it may have worked in another place. By removing capital as a barrier, we aim to demonstrate how investments can work with policy, existing supply chains, and strong partnerships to solve a global problem — once and for all.

If you (or someone you know) is raising capital for solutions to ocean plastic or would just like more information on Circulate Capital, please visit our website, connect with me on Linkedin or get in touch!