The Alliance to End Plastic Waste and Lombard Odier Investment Managers (LOIM) have announced their intention to launch a new circular plastic fund.
The fund will aim to raise US$500 million from institutional and other accredited investors for scalable solutions to remove plastic waste from the environment, increase recycling, and drive the global transition towards a circular economy for the plastic value chain. The Alliance will serve as a cornerstone investor in the fund.
The Alliance has mandated LOIM to build and manage the fund with the objective of generating “positive environmental, social, and economic impact together with attractive financial returns”.
It says there is “tremendous opportunity” for turning plastic waste into a resource, as well as driving economies of scale and economic returns.
According to industry estimates, the transition to a circular value chain for plastic packaging represents a potential US$1 trillion global economic opportunity by 2030.
This strategy presents a meaningful opportunity to put the plastic waste management ecosystem firmly on the agendas of institutional investors
The fund will aim to target key themes which can directly contribute to a circular economy for plastic and accelerate opportunities in overall waste management (both upstream and downstream) —including collection and sorting infrastructure, technology-enabled recycling infrastructure, design solutions for improved plastic durability, reuse and recyclability.
It will also aim to drive innovation in plastic chemistry and production which can simplify or make end of life treatment easier or more effective.
The Alliance will act as technical adviser to the fund via a team of experienced professionals who will provide industry-led expert advice on the technical feasibility, commercial viability and scalability of plastic circularity solutions, as well as waste management technology and infrastructure.
Jim Fitterling, Chairman and CEO of Dow and Alliance Chair, commented: “The systemic transformation needed to enable a plastic circular economy requires societal, infrastructure and technology innovations.
“This strategy presents a meaningful opportunity to put the plastic waste management ecosystem firmly on the agendas of institutional investors to accelerate the transition to a global plastic circular economy.”
Investible opportunities
Just 9% of the world’s plastic is recycled, according to the Alliance. It says most ends up recovered for energy, in open dump sites, landfill or enters the environment as plastic waste.
While solutions to countering these issues exist—ranging from infrastructure and collection systems and scaling innovative technologies, to systemically addressing market inefficiencies and turning linear supply chains into a closed loop—there is vastly more to do to end plastic waste, it says.
“All these solutions require significant capital investment”.
Jacob Duer, President and CEO of the Alliance said: “Our goal in partnering with Lombard Odier in relation to a circular plastic strategy is to grow investments in solutions that can help end plastic waste and contribute to a circular economy.
The strategy harnesses the collective intelligence of the plastic value chain and connects it with capital, bringing much needed solutions to scale
“The strategy harnesses the collective intelligence of the plastic value chain and connects it with capital, bringing much needed solutions to scale. I am confident this will help focus financial market attention on the investment opportunity that plastic circularity represents, and help to catalyze multiple sources of financing for investments in circular solutions for plastic waste.”
Jean-Pascal Porcherot, Co-Head of LOIM and Managing Partner of Lombard Odier Group said: “LOIM is proud to be partnering with the Alliance to build and manage a ground-breaking fund that addresses the plastic circularity issue with true solutions. This important mandate reflects the shared values between the Alliance and LOIM, and recognises our deep expertise and highest credentials in sustainable investing.
“This strategy presents a compelling investment opportunity. It will target opportunities across all segments of the private equity spectrum – including direct and co-investments investments – with the objective to reduce plastic waste issues worldwide and deliver attractive financial returns and sustainability outcomes.”