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Catalyzing the Circular Economy

The biggest climate change conference, the COP26 conference, is just close by, reminding the leaders, countries, public and media, of the urgent necessity to combat climate change to ensure a sustainable future for all of us. Without action, the climate change (GHG) emissions resulting from the lifecycle of plastics will account for 20 percent of the world’s carbon budget in 2040. Though they are not often linked to plastic pollution, addressing the issue is crucial to achieving climate goals and, over time, assuring a carbon-neutral future.

Circular economy that helps keep plastics in use and prevents the extraction of additional natural resources is a viable option to solve the issue of plastic pollution and increase the worth of recycled plastic. Through the reuse of materials in the circular economy, it can transform waste into a resource which can produce billions of dollars of economic output around the world.

Asia’s potential to propel in the area of circular economics

The spotlight is currently focused on Asia, and Asia is the center of the plastic and climate pollution problem. Research by Accenture estimates that the circular economy will create another $4.5 trillion in production globally in 2030. Because Asia is the world’s largest producer of goods and services and a major producer of goods, it is the ideal place to showcase the benefits of a circular economy on a large scale.

“A 45 percent reduction in plastic leakage into the oceans is possible by improving the waste management systems in only 5 Asian countries,” says Rob Kaplan, Founder & CEO of Circulate Capital, “By deploying circular solutions and setting circularity as the default operation, the region stands to create USD 324 billion in economic growth and generate 1.5 million jobs in the next 25 years.”

With such profound financial, social and economic results as incentives for businesses, the big question in the literal sense is where the cash will be sourced to make them happen. To generate the capital required to realize the benefits, we need to prove it is possible to invest in the field can be scalable and yield appealing returns while also meeting sustainability and ESG goals.

Organisations take on the challenge of doing their part

We’re seeing companies large as well as small, taking action with their net zero targets as well as their commitment to recycle and recyclable materials and incorporating an environmental ethos in the DNA of their business.

“At Potato Head, our main business is hospitality, art, fashion and music – and today, a zero-waste lifestyle is at the core of our business,” says Ratna Kartadjoemena, Entrepreneur & Impact Investor.

Danone, the multinational food company, has set a lofty goal to cut down on the use of non-recyclable plastic packaging materials for their operations throughout Asia and around the world.

“Our aim at Danone is to make our packaging 100% circular,” says Corine Tap, the President of Asia, Africa and Middle East at Danone, “as part of our efforts to increase the amount of recyclable packaging, which currently comprises one third of our portfolio globally and 70 percent from our inventory in Indonesia. This means that all of our products will be reused or recyclable or compostable in 2025.”

Impact investing generates momentum across the entire board

In recent times, the investor community including the investment funds, VCs, and family offices, have become more enthusiastic about catalytic capital as well as impact investing. To maintain the momentum, we must prove the fact that investment in this field will yield competitive returns so that we can attract more funding to support solutions on a large scale.

That’s why companies like Circulate Capital invest in companies throughout the value chain that create social, economic ecological and economic value. In both the Circulate Capital Ocean Fund as well as Circulate Capital Disrupt have been committed to securing innovation, businesses and infrastructure that will stop the leakage of plastics into our oceans, thus enhancing and encouraging the circular economy. The funds have financed a number of startups that are in the process of being launched across South as well as Southeast Asia such as RecikiSrichakra Polyplast and others, that are working on different levels of the recycling value chain to help advance in the direction of a circular economy.

Catalytic capital for a more vibrant and more sustainable future

The capital is coming into the market from large-scale institutional investors, but there’s still a lot to be completed. The most important thing is to fill the “missing middle” – the lack of funding for mid-sized to small-scale opportunities that exist on the ground.

In order to achieve this, we have to join with each other and show the world community that catalytic capital. It’s possible to tackle pollution from plastics and climate change simultaneously and generate a return on investment.

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Jane S. King

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