Investment Opportunities in Transforming Asia’s Waste Management and Recycling Industry
Investment Opportunities in Transforming Asia’s Waste Management and Recycling Industry
In 2020, the global focus shifted towards combating the COVID-19 pandemic, causing other critical global issues such as plastic pollution and climate change to be sidelined. During this time, the waste management and recycling value chain in South and Southeast Asia ground to a halt, while the use of single-use and virgin plastics soared. The situation is not sustainable, and research shows that at the height of the pandemic, 80% of the recycling value chain was offline in Vietnam, India, and the Philippines. The demand for recycled plastics also dropped by 50%.
To address plastic pollution, we need to shift from short-termism to future-proofing, aligning approaches for plastic waste management and economic growth. The circular economy can play a crucial role in boosting global competitiveness and fostering sustainable economic growth by generating new jobs. We need to invest more in local systems such as local resilience, local economies, and local supply chains to make this happen.
Investments in climate-resilient infrastructure are integral to address plastic pollution. They accelerate the development of sustainable infrastructure and drive significant job creation, increasing economic and environmental resilience. The recycling industry is at the heart of the circular economy and the next frontier for infrastructure investors looking for resilient opportunities.
As investors providing catalytic capital to support private enterprises, we aim to create significant improvements to the waste management industry across the region by addressing systemic gaps and pain points. These include fragmentation, lack of waste source traceability, and pervasive downcycling rather than upcycling.
We believe there are three key innovation strategies that can propel the positive impact of the industry in South and Southeast Asia. Firstly, collaborations with local cities are essential to scale the collection and sorting of the material required to drive the circular economy. Secondly, to derive more value from plastic waste, we need to scale the upcycling of materials by developing higher value applications, such as food-grade applications. Finally, leveraging digital technologies that promote efficiency, transparency, and traceability will connect all players of the value chain, including informal sector workers who collect 59% of the plastic recycled globally.
To date, we have invested in seven companies across the waste management and recycling value chain in India and Indonesia that address these areas. Our aim is to demonstrate the investment marketplace and pave the way for the billions of dollars of institutional investment capital that are needed to create a lasting solution to the ocean plastic crisis.
Investing in the waste management and recycling industry may not seem like the most exciting investment target, but it is not a frontier economy where investors are required to take on outsized risks. Companies like Veolia are leaders in the space, making €10bn of revenue from waste management in 2019 alone.
Investing in this industry will not only address the ocean plastic problem, but it will also generate positive socio-economic outcomes such as jobs, women empowerment, and improved sanitation while capturing the economic value of plastic waste.
With near-zero interest rates presenting a favorable investing environment for the foreseeable future, it is time to invest in South and Southeast Asia’s recycling and circular economy industries. We need to manage the increase in plastic waste more effectively to build resilient supply chains and divert plastic waste from the environment. Governments and investors across the region need to prioritize this kind of win-win scenario.