Over the the past 6 years while diving into the climate change literature, picking up my Masters in Sustainability from ASU, and working with Carie Davis (an ex-Coca-Cola industrial designer and corporate innovation leader), I’ve come to understand both the urgency of the plastics crisis and the opportunity it holds.
Here are 7 reasons why investing to address the plastic crisis will generate both outsized impact and outsized returns.
Greenhouse gas (GHG) emissions from plastics will reach 15% of the global carbon budget by 2050. Plastics is a must-solve climate change issue, not just a littering problem. It’s part of "The Final 25%" that must be addressed in order to hit climate goals.
Plastic production is growing exponentially. Over the past four decades, global plastics production has quadrupled. It’s on track to quadruple again by 2050:
And the problem could be even bigger: not included in that 15% projection is the impact plastic is having on our oceans’ ability to sequester roughly 25% of human-emitted carbon.
Most investors don’t see the opportunity in plastics (yet).
I reached out to a top-tier VC with a $1B climate fund. His response:
I realize plastics are a problem, but I am entirely focused on climate.
While plastic’s carbon footprint is rocketing, the investment world is mostly focused on headline-grabbing categories like renewable energy, EVs, and alternative proteins. To be sure, billionaires are already being minted in these categories. After all, climate is the next frontier for venture capital (compounding at 5x annually).
VC’s spend too much time looking at the same startups which leads to an insular world of investing and inflated valuations. Plastics is the biggest missed opportunity I see within climate. It’s a large, growing problem that the majority is ignoring.
There’s a gap in the funding pipeline. Large upstream funds exist like Closed Loop Partners and Circulate Capital. More have launched recently to invest in plastics at earlier and earlier stages, including our friends at Regeneration, and several ocean and water-focused funds seem to understand that plastic must be a core part of their theses. But given the explosion in startup activity in this space, there is a growing gap at the pre-seed/seed stage.
Legislation is forcing corporate action. Industry insiders seem to agree that EPR legislation is finally coming to the US, which will make companies responsible for the waste they produce. Indeed, it’s already being passed in states across the US.
People are demanding (and paying) for sustainable packaging. The plastic problem has entered the collective consciousness. Single-use plastics and packaging waste is a leading trigger of eco-anxiety. Guilt around plastic packaging affects 87% of Americans. People are crying out for better options. Some retailers and CPG’s are implementing thoughtful solutions, some are greenwashing (and getting sued).
Recycling is failing us. Marketing campaigns convinced us that recycling was the answer, but less than 10% of plastic is recycled. New, investable models are emerging, forging a new path to a more circular economy.
The demand for plastic and plastic alternatives is closely tied to the explosion in e-commerce, which is growing by double digits annually - not including the additional 30% growth during the COVD-19 pandemic.
To take advantage of this opportunity, Carie and I have launched the first syndicate on AngelList focused on the plastic crisis. Join us!
Hey Shane! Looking to connect! dn@lassoloop.com is my email. We're changing recycling for good at Lassoloop.com and we'd love to speak with you.
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