Reducing plastic waste by digitizing the recycler supply chain
In 2020, it was reported that the U.S. plastics industry was responsible for an estimated 232 million tons of GHGs per year. Equal to the emissions output from 116 average-sized coal-fired power plants, plastic's carbon footprint of 3.8% of global GHGs — nearly double of the aviation sector — has led the ubiquitous material to be dubbed “the new coal.” As we’ve previously shared, plastic presents both direct and embedded emissions, respectively stemming from the energy used to produce it and its contribution to the waste that ends up in landfill. Plastics are a product of the petrochemical sector and have been dubbed “the plan B for the fossil fuel industry” due to their widespread and enduring use by a breadth of industries. A cheap, durable, and malleable material, it has become one of the leading forms of waste. Because “virgin” plastic (i.e. plastic that does not originate from recycled sources) is an inexpensive option, companies have depended on it for manufacturing and packaging their products, resulting in less than 10 percent of plastic being recycled. To combat this, the European Union (E.U.) recently declared a ban on types of single-use plastics, like cutlery and straws, as well as enacted a plastic tax in January on each ton of non-recycled plastics generated by member states. Greater regulatory action to curb plastic waste is part of a broader trend of “extended producer responsibility” (EPR) legislation that has been passed throughout the E.U. and, recently, in the American state of Maine, setting precedent in the U.S.
Apart from governments, some companies have signaled an understanding for the need to curb the plastic waste that results from their products. Pepsi has publicly committed to reduce its use of virgin plastic by 50% by 2030. This push is driven not only by increasing regulatory pressure, but also by growing consumer consciousness about the problem of plastic waste.
A major impediment to companies and brands using more recycled plastics stems from the challenges associated with sourcing from recyclers. The fragmented market of recycled plastic suppliers represents a classic set of challenges and inefficiencies: dubious quality due to lack of transparency of the seller and limited selection that leads to suboptimal dealings between buyers and suppliers. Ultimately, the net result of these inefficiencies keeps recycled plastics as the expensive option and perpetuates brands’ addiction to virgin plastic.
Addressing the underlying barriers that hinder greater recycled plastic adoption, cirplus, based in Hamburg, Germany, is working to scale brands’ use of recycled plastics by digitizing the process through which they source the material from global suppliers. It does this by creating an online marketplace in which companies and plastic recyclers can transact in a way that offers greater visibility into the quality of recycled plastics and the opportunity to compete on price. We’re happy to announce our investment in cirplus, founded by CEO Christian Schiller and CTO Volkan Bilici. The company envisions building the world’s leading digital marketplace for recycled plastics and massively reducing the planet’s demand for new plastic production.
What is cirplus?
cirplus enables brands to procure recycled plastics for their products faster, more cost-effectively, and with greater visibility into quality. Its digital marketplace streamlines what was largely a manual and complex process across numerous suppliers. Focusing on the sourcing of polyethylene, which is the most widely used plastic today found in packaging (e.g. bags, containers, bottles, etc.), cirplus manages the end-to-end procurement process. This includes identifying a supplier that meets quality standards and eventually supporting sampling and testing of material, supplier verification, logistics and more.
In partnership with the German Institute for Standardization, cirplus established DIN SPEC 91446, an industry standard meant to assure brands of the quality of the recycled plastics they buy.
The first-ever industrial standard for high-quality recycling helps build trust between brands and suppliers and advances the goal of commoditizing recyclable plastics into a widely traded material.
The company envisions multiple paths for revenue and profitability, including volume-based commissions on each transaction occurring on its platform. For high-volume suppliers, cirplus will consider offering tiered subscriptions that provide the former savings and generate recurring revenue. Similar to what is found in other online marketplaces, cirplus sees an opportunity in monetizing other aspects of the transaction between buyer and seller that adds value to both parties.
Why Did We Invest?
Compelling Founder-Market Fit
When we first met Christian, we were touched by how he arrived at the problem space of reducing plastic waste. Having sailed between Colombia and Panama several years ago, he recounted seeing a thick “carpet of trash,” much of it consisting of plastic refuse, around his boat for as far as the eye could see. This gut-wrenching sight was the profound moment in which he decided he needed to take action. With a background in technology startups — including as the first employee in Germany and later the Head of Business Development at BlaBlaCar, a major carpooling service in Europe — Christian is now putting his operating experience toward climate. Along with his infectious passion for the problem, we believe his depth of experience getting new markets off the ground will serve him well as he expands the landscape of brands and suppliers on the cirplus platform.
Commercial & Regulatory Tailwinds
Through its ERP legislation, the E.U. has demonstrated the most leadership around addressing the externality of waste produced by brands. For this reason, we believe the E.U. market is particularly ripe for the rollout of technology that will help companies become compliant. While other countries, not least the U.S., still have ground to make in order to be on par with respect to regulatory mandates, we expect in time more countries will follow the E.U.'s example.
Power of the Marketplace
From eBay to AirBnB, online marketplaces have been a disruptive means of driving efficiencies and scale in incumbent sectors accustomed to opaque ways of transacting business. As we’ve seen in other areas of climate tech, we view it as a tried and true opportunity, provided it's executed well, to scale the volume of an existing market.
The problem of plastics is something readily felt by nearly everyone, regardless of where in the world one lives. With the issue eliciting growing attention from both governments and brands, we’re optimistic that cirplus can add unique value in creating an efficient and scalable marketplace that makes a dent in the consumption of single-use plastics.
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