New findings reveal critical gap in private capital directed towards tackling plastic pollution in emerging economies

November 9, 2023

Ahead of upcoming negotiations on the global plastics treaty, new insights reveal that almost 90% of private investments into plastic circularity since 2018 were made in North America and Europe.

 

 The Circulate Initiative has launched a new global edition of the Plastics Circularity Investment Tracker, the world’s first tool to track the scale of private investments into the plastics circular economy. The findings reveal that nearly 90% of all investment since 2018 went to North America and Europe, developed economies that offer a stable investment and supportive policy environment, despite the top 20 countries for ocean plastic leakage being emerging economies.

 

Assessing over 3,700 deals occurring in 91 countries between 2018 and the first six months of 2023, over US$160 billion in private capital has been directed to the plastics circular economy, which equates to approximately US$29 billion annually. While encouraging, it is significantly below the US$60 billion of annual investment needed under the systems change scenario which reduces plastic leakage to the ocean by around 80% by 2040.

 

“Addressing the scale of the plastic waste crisis will require concerted and collaborative action from stakeholders and investors. Global data from the Plastics Circularity Investment Tracker demonstrates the crucial need to drive more capital to emerging markets, where plastic pollution is at its most severe.” said Umesh Madhavan, Research Director, The Circulate Initiative. “This month, global leaders will meet at the third session of the Intergovernmental Negotiating Committee meeting to discuss the legally binding instrument on plastic pollution. We hope that these insights will be a timely call to action to address the urgent need to scale capital flow towards plastic circularity solutions, particularly in those markets most impacted by plastic pollution.”

 

The second edition of the Plastics Circularity Investment Tracker expands the coverage of the tool beyond emerging markets to provide global data, including a new feature for comparing investments across countries, across the value chain, and investment categories.

 

Additional key findings reveal the following:

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  • Although emerging markets in Asia and other regions such as Africa and Latin America are regarded as hotspots for plastic pollution, they received very little investment. Asia accounted for 8% (US$12 billion) of plastics circularity investments, and Latin America and the Caribbean followed, recording less than US$2 billion investment over the period. Private investments into plastics circularity in Africa were staggeringly low at only about US$150 million or 0.09% of total deal value over the review period.

  • Approximately 85% of investment went to recovery and recycling. In comparison, investments in reuse and refill were less than 5% of the total.

  • Financing by banks and corporate investments were the top two sources of private capital, each contributing about 35% of total investments, followed by private equity with 25%.

  • The top ten deals, each over US$2 billion, collectively accounted for 30% of the total deal value, indicating investor confidence to inject significant capital in this space.

Michael Sadowski, Executive Director, The Circulate Initiative, said, “By identifying the solutions and regions receiving funding, as well as insights into investor and transaction landscapes, our goal is to enable decision-makers to better identify opportunities to scale solutions to unlock the full potential of a circular economy. Not only is there a gap in funding for emerging markets, we also need more capital to be directed towards innovative solutions designed to replace fossil-fuel based plastics.”