Report: Investors Must Shift Priorities to Effectively Tackle Plastic Pollution

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.”