Finance & Investment

Report:
Investors Must Shift Priorities to Effectively Tackle Plastic Pollution

The Circulate Initiative’s latest Plastics Circularity Investment Tracker reveals investment amounts not only fall short of financing needs across the plastic lifecycle, too many are focused on reactive — vs proactive — solutions.

Published 4 months ago | About a 4 minute read

Image: Dylann Hendricks

The Circulate Initiative — a non-profit organization dedicated to solving the ocean plastic pollution challenge in emerging markets — is calling for greater investment into tackling plastic pollution.

New data, from the third edition of the Circulate Initiative’s Plastics Circularity Investment Tracker, reveal an average of US$32 billion a year of private investment went to plastics circularity solutions between 2018 and 2023 — far below the US$1 trillion needed.

According to the OECD, 22 million tonnes of plastic waste leaked into the environment in 2019 — a number that is projected to double by 2060. With total investments into plastics circularity since 2018 at only US$190 billion, the current investment trajectory is too slow to meet proposed targets to reduce plastic leakage into the environment by 90 percent by 2040.

Supported by the International Finance Corporation (IFC), the latest Plastics Circularity Investment Tracker analyzed more than 5,500 transactions across 3,000 companies in 100 countries over the six-year period.

Additional key findings include:

Emerging markets received only 6 percent of investments, despite the greater impact of plastic pollution in these economies.
Not only do investment amounts fall short of financing needs across the plastic lifecycle, too many are focused on reactive — vs proactive — solutions: 82 percent of investments are channeled to downstream solutions such as recovery and recycling, while solutions such as redesign and refill and reuse — which are designed to reduce plastics consumption — each only received around US$8 billion (4 percent).
Banks and corporate investment were the top two sources of funding — contributing to 37 percent and 31 percent of deal value, respectively, over the period.
While early-stage investment is needed to foster innovation and new business models, only 2 percent of investments went to firms in this space in their early stages of development.

"The Circulate Initiative is thrilled to launch the third edition of the Plastics Circularity Investment Tracker, in cooperation with IFC,” said Circulate Initiative Executive Director Michael Sadowski. “While the investment gap to tackle plastic pollution is significant, in showcasing examples of successful, innovative investment models, we hope to inspire more financial decision-makers to see the opportunity to join the global fight against plastic pollution."

The new report was released ahead of the final round of negotiations for an international, legally binding treaty to end plastic pollution — set to take place in November and December 2024 — in what will be a critical opportunity to set the course for the long-term future of investing in plastics circularity.

Jamie Fergusson, Global Director of Climate Business at IFC, said: "As we build on the momentum of the negotiations for a global plastics treaty, it is imperative that the public and private sector work together to translate the potential commitments from this treaty into tangible actions. IFC is ready to support companies investing in emerging markets, which currently only receive six percent of investments, to foster a circular economy that benefits all."

In releasing the data, The Circulate Initiative emphasized the importance of the global plastics treaty to not only mobilize additional capital, but to redirect it to regions where it is most needed. The report revealed that Asia and Africa received 10 percent and 0.2 percent of total investments, respectively, over the six year period — even though the two continents account for 90 percent of marine plastic waste.

Showcasing a series of successful investments, the report also demonstrates a growing acceptance of innovative investment approaches — such as thematic loans and bonds, blended finance and outcomes-based financing — which will be critical to the mobilization of private capital for tackling plastics pollution.

“I am hopeful that negotiators will agree to a strong treaty in November, which includes provision for significant financial resources,” Sadowski added. “I look forward to policy elements that will spur private investment, such as extended producer responsibility (EPR) and recycled-content requirements at local and national government levels. We will refresh the Investment Tracker on an annual basis to keep track of our progress in closing the financing gap and stemming the tide of plastic waste.”