Plastic wrap: private markets, public policy for circularity

In the latest issue of our bimonthly review of the science, policy and deal flow driving a circular plastics value chain, we confirm two exciting recent investments for our strategy and report on robust corporate activity. We also put the spotlight on policy bans and roadmaps against ‘forever chemicals’, highlight a shipping giant’s investment in green-plastic manufacturing and announce our participation in a key event in the sustainable finance calendar.

Team activity

New investments

In recent months, our Plastic Circularity strategy invested in two companies, Watttron and Calyxia².

• Calyxia. This French startup has developed an innovative biodegradable alternative to the plastic microcapsules used in consumer products and industrial applications such as cosmetics, laundry detergents and agricultural fertilisers. Its highly scalable and customisable solution offers better performance and value than incumbent products, while Europe’s ban on intentionally added microplastics provides a policy tailwind 

Read also: Private equity: investing in a sustainable alternative to microplastics

• Watttron. German firm Watttron developed ‘digital heating’ technology to precisely control thermoforming and sealing processes in manufacturing. Its ‘pixellated heating solutions’ can be retrofitted to the existing machine park and help reduce the quantity of materials used by around 30% and allow producers to shift to recyclable monomaterials. The Plastic Circularity team invested alongside Circular Innovation fund and the European Circular Bioeconomy fund.

Events

Following our participation in an online Building Bridges event recently, the team will take part in the foundation’s live conference in December.

Impact webinar. In October, Guillaume Chapuis, Senior Investment Manager for the strategy, took part in a webinar, ‘Impact Lens Investing: Grabbing the Investor’s Attention?’, organised by the Building Bridges Foundation on 10 October. The discussion centred on various approaches to impact investing and the spectrum of strategies being applied by investment houses

• Building Bridges. We’re looking forward to the fifth annual Building Bridges conference, which will take place in Geneva (and online) from 9-12 December. The conference combines a summit, action days and the biennial United Nations Environment Programme Finance Initiative Global Roundtable. The team will be at the event, presenting the Plastic Circularity strategy and leading workshops around circularity. Please reach out to your Lombard Odier Investment Managers contact if you plan to attend.

Science and reports

A new global plastic-waste inventory that tracks hotspots in almost 51,000 municipalities, and a roadmap for ridding ‘forever chemicals’ from food-delivery packaging, were key research highlights in recent months.

PFAS roadmap

As regulation tightens, a new study by Systemiq demonstrates that per- and polyfluoroalkyl substances (PFAS), more commonly known as ‘forever chemicals’, can be phased out from food-delivery packaging. The research also creates a roadmap for how businesses and policymakers can manage the transition safely and sustainably. PFAS are recognised as harmful both to the natural environment and to human health. Yet in a booming global food-delivery industry, PFAS are still widely used in takeaway packaging thanks to their resistance to both water and grease.

Macroplastic pollution inventory

Recent research published by Nature aims to take an inventory of global plastic pollution. It estimates total global plastic waste emissions at 52.1 million metric tonnes per year, of which approximately 57% by weight is open burned while 43% is unburned debris. The study identified plastic-waste emissions hotspots across a total of 50,702 municipalities around the world, employing machine learning and probabilistic material flow to generate data on five types of land-based sources for emissions. While littering was the major culprit in the Global North, in the Global South, uncollected waste was the biggest issue.

Policy, regulation and disclosure

Key recent developments include: businesses and NGOs pressuring policymakers to commit to sustainable polymer production at INC-5, Minnesota moving to ban PFAS and a sustainable food-packaging product gaining US regulatory clearance.

Declaration on primary plastic polymers

A group of more than 250 businesses, financial institutions and NGOs signed the “Bridge to Busan” declaration, for the final session of the United Nation Environment Programme’s, INC-5 meeting, which recently concluded in Busan this month. The Business Coalition for a Global Plastics Treaty’s aim is to put pressure on governments to commit to sustainable levels of production of primary plastic polymers, setting a global objective and ensuring transparency. The summit failed in its key goal of securing a global, legally binding treaty to combat plastic pollution on lands and in oceans. But a large group of highly committed countries continue to seek an agreement and another meeting is expected in 2025. UNEP set up the INC (Intergovernmental Negotiating Committee on Plastic Pollution) to develop an international legally binding instrument on plastic pollution, including in the marine environment, in 2022.

UK local authorities call for a zero-waste economy

SUEZ Recycling and Recovery UK² has published an open letter on behalf of its 50 local authority partners calling for the urgent creation of a zero-waste economy. The letter calls for clearer and simpler policies, a definite timeline, effective funding and support, and government action to drive behaviour change. It cites the example of the Extended Producer Responsibility (EPR) implementation plan, which SUEZ states, “requires urgent clarification”.

Read also: Plastic wrap: polymer-munching microbes, AI-enhanced sorting

Minnesota moves to ban PFAS

In the US, the Minnesota Pollution Control Agency (MPCA) has announced that it will start to prohibit a range of products containing intentionally added PFAS from 1 January 2025. The state’s 2025 PFAS prohibitions will ban the ‘forever chemicals’ in 11 categories of products, including furniture, carpets, cleaning products, cookware and cosmetics. According to the MPCA, the prohibition may be extended to further products in the future. Minnesota joins other US states including Maine, California, New York, Vermont, Massachusetts and Connecticut that have banned or restricted the use of PFAS. Illinois, New Hampshire, Tennessee and Wisconsin have also proposed bans.

California sues Exxon² over plastic waste

The State of California has sued Exxon, accusing the petrochemicals giant of conducting a long-term campaign to deliberately mislead the public regarding the limitations of recycling. A coalition of environmental groups including the Sierra Club has also filed a related lawsuit in California. The move follows an in-depth investigation by the state’s Attorney General, who said Exxon’s negligence had been a key factor in fuelling global plastics pollution. The Minderoo Foundation’s Plastic Wastemakers Index placed Exxon as the world’s largest producer of resins for single-use plastics in 2023.

FDA approves Avantium² PEF for food packaging

Pioneering Dutch sustainable materials company Avantium has gained approval from the US Food and Drug Administration for the use of its polyethylene furanoate (PEF) material in food packaging. The approval allows the use of Avantium’s food contact grade PEF for use at room temperature and for chilled and frozen storage. Use for high-alcohol foods, infant formula or human milk is excluded.

Corporate activity

Investment and collaboration for a circular value chain continues, with a shipping giant planning a green plastics factory and food, chemicals and packaging firms working together to create sustainable packaging from used cooking oil.

SABIC, Lamb Weston and OPACKGROUP² serve up packaging made from cooking oil

US food company Lamb Weston collaborates with chemicals producer Saudi Basic Industries Corporation (SABIC) and Dutch packaging firm OPACKGROUIP to create sustainable packaging made from used cooking oil (UCO). The UCO is collected from Lamb Weston and used by SABIC as bio-feedstock to create polyethylene, which is then converted into packaging for Lamb Weston’s frozen potato products by OPACKGROUP. According to SABIC, the process reduces the packaging’s carbon footprint by 30%.

Packaging firm Berry Global² introduces healthier pill bottles

Fortune 500 firm Berry Global, a plastic packaging manufacturer, has launched a new range of fully recyclable clarified polypropylene bottles specifically aimed at the pharma sector. As well as being more sustainable and less polluting than traditional coloured PET bottles, the firm claims its ClariPPil bottles offer enhanced product protection alongside functionality and aesthetics.

Read also: Plastic circularity: why LOIM private equity

Maersk family develops plans for green plastics factory

AP Møller Holding², the Maersk family’s investment group, is developing plans for a EUR 1.5 billion 'green' plastics factory in Antwerp to pioneer fossil-fuel-free plastics production at scale. The plant will use methanol made from low-carbon hydrogen or biomaterial as feedstock for fossil-free polypropylene and polyethylene, and run on renewable energy. The group has set up a new company, Vioneo, to pursue the venture.

Viridor² plastic recycling plant closes less than three years after opening

While Viridor has consistently invested in its mechanical recycling capabilities, recycling rates remain below projections for 2020. The company attributes significant delays to implementing the policies outlined in its 2018 Resources and Waste Strategy as part of the reason for the closure of its mechanical polymers recycling plant in Avonmouth, UK. These delays, combined with reduced demand for recyclates from the consumer sector, have had a material impact on the financial viability of Viridor’s recycling operations. A separate review of its facility at Rochester is currently underway.

Deals and investments

Private-markets investors continue to back innovators in this space. Solutions attracting capital recently include a seaweed-based alternatives to single-use plastics and an online platform enabling companies to efficiently manage packaging across markets.  

2022 Earthshot prize winner Notpla² raises GBP 20 million

Sustainable packaging innovator Notpla has secured an unprecedented GBP 20 million in Series A+ funding. Notpla makes biodegradable, seaweed-based packaging solutions designed as direct replacements for traditional single-use plastic products. The firm says the money will be used to fuel its expansion into North American markets and drive further innovation. The raise was led by United Bankers Group² and supported by a diverse group of existing and new investors.

Shinkong² invests USD 10 million in Ambercycle’s circular polyester project

Taiwanese firm Shinkong Synthetic Fibers Corporation has strengthened its partnership with Ambercycle² by investing USD 10 million in the materials science company’s first commercial facility. The agreement builds on three years of collaboration between Shinkong, a global leader in polyester production, and Ambercycle, a pioneer in circular materials for the fashion industry. Ambercycle’s molecular regeneration technology will be used at the factory to manufacture its cycora® material for apparel production.

Recyda² secures EUR 6.3 million to expand into international markets

Freiburg-based climate-tech startup Recyda has secured EUR 6.3 million in Series A funding. It plans to use the money to expand into international markets, acquire new customers and accelerate product development. Recyda’s Software as a Service (SaaS) platform helps packaging manufacturers, brand owners and retailers manage packaging data effectively and adhere to varied international sustainability requirements. The firm is working with FMCG brands including Beiersdorf, Kao, and Trolli².

LyondellBasell² to acquire APK AG

Multinational chemical company LyondellBasell has entered into an agreement to acquire full ownership of APK AG², a German firm specialising in solvent-based recycling. APK AG’s technology enables the recycling of the low-density polyethylene that makes up most mixed plastic waste, improving recycling rates. It separates out the various polymers in hard-to-recycle flexible plastic waste, creating high purity materials that LyondellBasell can use in its Circular and Low Carbon Solutions business.

TOMRA² takes 80% stake in c-trace

Norwegian multinational TOMRA has acquired an 80% stake in c-trace GmbH², a German provider of digital waste-management solutions. The company offers advanced solutions that combine software and hardware to improve waste-management operations and is a leader in its domestic market. The deal enables TOMRA, which has various divisions focused on enabling the circular economy through automated collection and sorting systems, to boost its digital waste management capabilities.

Indonesia gains USD 21.5 million to help fund waste management

The Asian Infrastructure Investment Bank has provided USD 21.5 million in funding for a co-financing initiative with non-profit Alliance to End Plastic Waste³ and the government of Indonesia. The project aims to improve solid waste management and recycling in more than 10 cities and districts in the country, accelerating the shift towards a more circular economy.