3 min read
For many of us, 2020 was a year postponed as the global focus shifted to the essential task of combating the COVID-19 pandemic. But other urgent global issues didn’t take a break, and we lost ground on tackling crucial problems, like plastic pollution and climate change.
During this time, the waste management and recycling value chain in South and Southeast Asia ground to a halt, while the use of single-use and virgin plastics soared. Research shows that at the height of the pandemic, 80% of the recycling value chain was offline in Vietnam, India and the Philippines, while demand for recycled plastics dropped by 50%.
The situation is untenable for the long run and the environmental impact is sobering.
Opportunities in times of crisis
The plastic pollution issue has the potential to be an engine for economic recovery and growth. It can be addressed simultaneously by shifting away from short-termism, to a focus on future-proofing. This means aligning approaches for plastic waste management and economic growth. The circular economy can play an important role in boosting global competitiveness and fostering sustainable economic growth by generating new jobs in the new normal.
To do this, we need to invest more into local systems: local resilience, local economies and local supply chains.
Investing to scale impact
To address plastic pollution, investments in climate-resilient infrastructure are integral. They not only accelerate the development of sustainable infrastructure and drive significant job creation, but also increase economic and environmental resiliency. The recycling industry is at the heart of the circular economy and the next frontier for infrastructure investors looking for resilient opportunities.
As investors providing catalytic capital to support private enterprises, we seek to create material improvements to the waste management industry across the region by addressing systemic gaps and pain points. These include fragmentation, lack of waste source traceability, and pervasive downcycling rather than upcycling.
We believe there are three key innovation strategies that can propel the positive impact of the industry in South and Southeast Asia.
Firstly, collaborations with local cities are important to scale the collection and sorting of the material required to drive the circular economy.
Secondly, to derive more value from plastic waste, we need to scale the upcycling of materials by developing higher value applications, such as food-grade applications. This will close the loop on plastic usage.
Finally, leveraging digital technologies that promote efficiency, transparency and traceability will connect all players of the value chain, including informal sector workers who collect 59% of the plastic recycled globally.
The opportunity for investment
To date we have invested in seven companies across the waste management and recycling value chain in India and Indonesia that address these areas. Our aim is to demonstrate the investment marketplace and pave the way for the billions of dollars of institutional investment capital that are needed to create a lasting solution to the ocean plastic crisis.
The waste management and recycling industry may not sound like the most exciting investment target but this territory is not a frontier economy where investors are required to take on outsized risks. To recognise the potential, we can look at other leaders in the space, with companies like Veolia making €10bn of revenue from waste management in 2019 alone.
Investing in this industry will not only address the ocean plastic problem, but it will also generate positive socio-economic outcomes such as jobs, women empowerment and improved sanitation while capturing the economic value of plastic waste.
With near-zero interest rates presenting a favorable investing environment for the foreseeable future, it is now time to invest in South and Southeast Asia’s recycling and circular economy industries. The increase in plastic waste must be more effectively managed to build resilient supply chains and divert plastic waste from the environment. This kind of win-win scenario is worth the attention and prioritisation from governments and investors across the region.
 Breaking the Plastic Wave, PEW Charitable Trusts and SYSTEMIQ, 2020