The business world is at an inflection point. Sustainability — once siloed to
the corporate shadows as a “nice-to-have” — is now widely understood as a profit
driver and business opportunity.
Yet, capturing growth and new market share, in step with sustainability, is
dependent on transforming business models with unexpected players — including
peer competitors.
Industry leaders are forming new, pre-competitive pacts and deals to build the
foundation for ecosystems that support a circular economy or a net-zero
roadmap.
Here are three areas where pre-competitive partnerships can deliver material
impact.
Financing for circularity
Environmental sustainability is a complex, global challenge; but the materials
ecosystem necessary to address all of the challenges within it are built on the
local level, necessitating unique solutions. For example, collecting plastic for
recycling is not an issue in India — but processing capacity is. In
Indonesia, on the other hand, underdeveloped waste-management infrastructure
makes collection difficult.
Pre-competitive partnerships can play an important role in filling these gaps.
Back in 2018, a group of companies — including Dow —
partnered to create an over $100 million investment
fund
overseen by impact investor Circulate
Capital.
The goal of the collaboration is to finance projects that close gaps across
unique ecosystems around the world, creating a global circular marketplace for
used plastics.
More specifically, Circulate Capital’s supply chain strategy is working to solve
challenges in the recycling sector — focused on developing ecosystems by closing
gaps in local value chains in high-growth markets. In India, for example,
Circulate has invested in companies across upcycling and digitization of the
value chain.
One recent and ongoing project that the fund oversees is a partnership between
Dow and India-based recycler
Lucro,
which converts hard-to-recycle flexible plastics and films into post-consumer
materials. The results are encouraging, as capacity has increased more than
tenfold — making Lucro the largest supplier of PCR flexible plastic products to
the fast-moving consumer goods, food and beverage, retail, fashion, automotive
and electronics industries in India. Looking ahead, these investments are
enabling small and medium-sized businesses to meet global procurement standards
faster and more efficiently — in step with multinational companies that serve to
deliver economic growth around the globe.
Building up recycling infrastructure
Currently, 40 million US households need more equitable access to recycling
infrastructure at the collection phase. The Recycling Partnership — a
nonprofit that works with businesses and local governments to provide hands-on
recycling training and educational resources — has identified the dollar amount
that could address this problem: $17 billion. According to a
report, this investment
would make recycling as accessible as garbage collection; double the packaging
recycling rate; and deliver a return of $30.8 billion over 10 years in wages,
landfill savings and the value created by recycled materials.
A price tag of this magnitude, however, requires support at all levels of
government and across the private sector — not to mention the monumental task of
operationalizing it. Again, pre-competitive partnerships are offering a tangible
solution.
This month, The Recycling Partnership announced the kick-off of a
public-private
enterprise bringing
together the City of Kansas City, MO as well as national and local
stakeholders including Dow, the American Beverage Association and the
Missouri Beverage Association. By combining resources and expertise, the
$1.5 million initiative is transitioning the city to cart-based collection,
providing increased capacity for more recyclable materials, rolling carts for
easy maneuvering and a streamlined collections process.
The city’s previous opt-in recycling system required residents to purchase or
use their own 32-gallon recycling bins; the new program uses 65-gallon rolling
carts, which are made from 1.2 million pounds of plastic donated by Dow. Every
household with curbside solid waste service will receive one of the 162,000
carts by August.
The work in Kansas City is not an anomaly. In
Baltimore, a similar
public-private
partnership
has resulted in the distribution of 200,000 plastic-resin recycling carts, which
will collect an estimated 20,000 tons of additional recycled materials per year,
or 200 pounds per household.
Public policy for the win
Whether it’s leveraging financing to support the materials ecosystem or
delivering greater community resources, pre-competitive partnerships are proving
a circular economy to be viable and valuable. As barriers to circularity
continue to be dismantled at local, regional and global levels, it is integral
that public policy supports the transition to circularity to scale its benefits.
More specifically, extended producer
responsibility
(EPR) policies, which are being implemented around the world, provide a huge
opportunity to further unlock the economic and environmental benefits of
recycling. At the regional level, EPR policies can provide the certainty that
attracts more financiers to grow the projects we need for system transformation.
We know that when industries are not involved in government regulations, they
are less likely to be effective. In contrast, when governments act in concert
with the entire value chain — from civil society to financiers — committing to
the same exponential goals, we decrease risks while developing coalitions of
like-minded partners that are more capable of success.
While EPR in the US is a relatively new phenomenon, similar legislation in the
UK and Europe has supported an increase in recycling rates to upwards of
80 percent in some cases. As a result of collaboration, EPR strategies not only
incentivize creation and use of recyclable content — they also increase
recycling rates and access, and recapture lost economic value in materials
sitting in landfills.
Toward circularity
As we press forward toward a circular future, we must leverage various tools to
help us get ahead. Pre-competitive partnerships are one such tool. These
private-sector unions can help finance the development of recycling ecosystems,
build recycling infrastructure and advance effective public policy. And when we
set this foundation, brands can have a stable, sustainable market in which to
compete and thrive in a circular economy.
Director, Global Sustainability & End Use Marketing
Dow
Published Jun 1, 2023 8am EDT / 5am PDT / 1pm BST / 2pm CEST