The Circulate Initiative launches world-first investment tracker for plastics circularity, with the goal of mobilizing further capital.
Plastic pollution is a global environmental problem that contributes to climate change and poses a risk to society, the economy and population health. Despite the potential of a circular economy to curb this crisis, gaps in financing and action remain.
According to The Circulate Initiative’s newly launched Plastics Circularity Investment Tracker, approximately US$850 million was invested annually in plastics circularity solutions across emerging economies, significantly lower than the estimated US$27.5 billion a year needed to fund basic waste management infrastructure in these markets. The total investments made between 2018 and 2022 was estimated at US$4.1 billion.
Leveraging deal-level information on private investments across emerging markets, the Investment Tracker is a world-first tool providing unique insights on the scale of investments into plastics circularity as well as the types of solutions and regions receiving funding.
The Circulate Initiative’s Research Director, Umesh Madhavan, says, “Global attention towards the plastic waste crisis, corporate commitments and growing consumer demand for sustainable products are creating a unique moment in time for investment into circular solutions. Investors can help to pave the way for a circular economy, but to date they have lacked the tools and data to assess where capital is needed most.”
By bridging existing data gaps and improving the transparency around the financing of plastics circularity solutions, Madhavan adds that the Investment Tracker will enable investors to better identify opportunities offering the potential to unlock financial returns as well as positive environment and social impact.
The accompanying insights report “The Plastics Circularity Investment Tracker: Monitoring Capital Flows to Tackle the Ocean Plastic Pollution Challenge” also exposed the disproportionate distribution of capital across the plastics value chain, with 88% of investments allocated to downstream solutions such as recycling and recovery. While continued investment in plastic waste management is necessary to prevent further leakage, the findings highlight the need for more equitable distribution of funding to the reduction and avoidance of plastics to achieve system change.
Additional findings include:
- The top 10 deals in plastics circularity involved waste management or recycling companies, indicating that investors tend to be risk averse when evaluating circular solutions and prefer established and tested practices and business models.
- Asia is leading the way in plastics circularity financing, receiving 87% or US$3.5 billion of cumulative investments since 2018.
- Majority of deals involved firms that were in early stages of development, however, they only added up to US$256 million or 5.1% of cumulative investment value. Continued support through patient capital is needed to help these startups develop their technologies and capabilities and reach maturity.