Industry leaders are forming pre-competitive pacts and deals to build ecosystems that support a circular economy or a net-zero roadmap. Here are three areas where pre-competitive partnerships can deliver material impact.
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.
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.