Transitioning to a circular economy has been advocated by academics and policy professionals as a means to sustainably address the world’s rising waste and pollution issue for some time now. The goal is to swiftly transition away from the linear “take-make-waste” economic paradigm and toward the circular “reuse, repair, refurbish, and recycle” one. Zero waste would be the perfect outcome.
But how can forward-thinking businesspeople and corporations make sense of the circular economy beyond the phrases now circulating in the media? In what ways may corporations utilize this approach to lessen their environmental impact and maximize their utilization of recycled materials? And, particularly in developing countries, where capital is scarce, where do small enterprises who are testing out novel circular models get the capital they need to expand?
Mongabay spoke with Ellen Martin, chief impact officer of Circulate Capital, a Singapore-based investment management company that finances circular business models in developing countries, to discover some of the answers to these issues. Circulate Capital is an investment firm that launched in 2018 with a $100 million fund to support businesses in South and Southeast Asia who are working to commercialize circular solutions.
The core of the circular economy business model is the redefinition of the connection between raw resources and trash by businesses. By creating useful items from discarded materials, the technique helps lessen the need for new raw resources.
This “whole way of creating value” involves “decoupling the extraction of resources from the environment and finding ways to make those resources more productive,” as Martin put it.
In addition to helping with recycling, this idea has the potential to be a game-changer in the fight against climate change. That’s because cutting down on new-from-scratch production lowers emissions of greenhouse gases linked with materials procurement and production. The prospect of imminent raw material shortages may also be mitigated by companies operating in the circular economy.
Positive effects on biodiversity may be seen at both ends of production processes. When extraction of raw materials is reduced, freshwater consumption, greenhouse gas emissions, and other forms of pollution are all reduced as a result. That’s great news for animals, which will no longer have to contend with human-caused threats like toxic mining waste, habitat loss, ecosystem pollution due to plastics, and so on.
But obviously, a large influx of investment money is required if such a sweeping cultural shift is to be realized, and that money has to go to the proper enterprises. It is crucial to find businesspeople all around the globe, but notably in the Global South, who are implementing creative circular concepts, and to provide them the resources they need to expand their operations from pilot projects to full-scale enterprises.
That’s why businesses like Circulate Capital make investments.
A close-loop system is achieved via “investment across the value chain to recover more material, as well as process it and upcycle it,” as Martin put it.
In the real world, how does it manifest itself?
Here’s a case in point: In 2012, the company Lucro was founded in Mumbai, India to produce plastic flexible film. However, Circulate Capital provided essential funding in 2020. According to Martin, Lucro’s founders quickly recognized they were wasting a valuable resource by discarding their garbage. The firm was able to expand thanks to funding from Circulate Capital, and it is now making efforts to recycle consumer goods that might otherwise wind up in landfills or waterways.
Milk may be packaged in a plastic milk bag in India. They [Lucro] have an integrated mechanism that gathers this from villages throughout India and transports it back to their plant, where it is transformed into mixed recycled pellets. Or they use it to create new, flexible films,” as Martin put it.
She said that Lucro’s yearly recycled plastic production was just 1,000 tons when Circulate Capital made an investment. That number is currently upwards of 15 thousand tons every year.
Another True Incident: Polyethylene terephthalate (PET) is a strong and lightweight plastic, and Circulate Capital has backed an Indonesian firm run entirely by women that recycles PET bottles. Those bottles are recycled into rPET (recycled PET) flakes, which are subsequently utilized in the production of new packaging and textiles. Since its inception in 2015, Tridi Oasis has recycled 250 million plastic bottles, as stated on the company’s website. When a German recycling business bought the company a year ago, Circulate Capital pulled out of the agreement. To be sure, Martin just used this as an example of how it may “help a company grow their capacity and become ready for that type of engagement.”