Closed Loop Fund Reveals First Recycling Investments, But Will There Be Impact?

The Closed Loop Fund launched last year and has added a bevy of marquee companies as partners, including Unilever, P&G, Walmart, Coca-Cola and PepsiCo. Described by its backers as a “social impact fund” that will invest at least $100 million in municipal recycling projects, Closed Loop Fund touts several ambitious goals for the upcoming decade: the elimination of 50 million tons of greenhouse gasses, the diversion of 20 million tons of garbage from landfills and the creation of 20,000 jobs across the United States.

To that end, in a press release widely disseminated to news sites and blogs, the Fund announced the first three investments that it claims will increase recycling rates and reduce the annual $5 billion that cash-strapped cities and counties currently spend on trash collection and landfills.

One project in Baltimore, according to Closed Loop Fund, will offer a “game-changing” system for plastic recycling by ramping up the collection of those pesky #3 and #7 plastics that most municipalities are not able to gather and recycle. Funded by Company QRS and Canuna-Hershman, the new facility could process up to 4,500 tons of these plastics monthly. As far as scalability goes, the Baltimore recycling plant certainly sounds impressive, as it will recycle plastic waste from an area stretching from Maine down to South Carolina.

The two additional projects are in the Midwest. Projects in Quad Cities, Iowa, and Portage County, Ohio, will allow both municipalities to change their recycling collection systems from dual stream to a more seamless single stream (or in industry speak, “co-mingling”) process.

“This new idea could change recycling forever,” says Fortune, which was enthusiastic over both the aforementioned plants’ recycling capabilities and the methods by which these facilities are financed. After all, recycling is akin to a hamster running in a wheel: retailers and consumer packaged goods manufacturers want more recycled material to boost their sustainability credentials while reducing the cost of procuring virgin raw materials, but many municipalities do not have the funding or infrastructure to increase their recycling rates. As a result, despite a generation of increasing consumer awareness, recycling overall moves in the same direction as that hamster: no where.

So the fact that these huge consumer goods companies--along with the world’s largest retailer that is also the biggest seller of their products--are willing to fund such projects reveals a bright future for recycling and waste reduction, right?

Not so fast, say several organizations skeptical of Closed Loop Fund’s intentions.

“The Closed Loop Fund continues the cynical tradition founded by the major soft drink companies that gave seed money to the Ontario Blue Box curbside recycling program in the 1980s: pay a few million dollars here and there to keep local governments distracted from the fact that they’re saving industry billions in waste recycling and disposal costs” - Guy Crittenden in Solid Waste Magazine

Written a year ago, Crittenden’s sentiment is shared by several environmental groups, such as UPSTREAM, an NGO that advocates for less plastic pollution, in addition to improved product design incorporating more sustainable and reused materials. The real solution, say these groups, is to expand extended producer responsibility (EPR) in the United States. EPR would put the onus of paying for recycling on manufacturers and retailers—but such an approach, commonplace in Europe, is a non-starter for these companies.

That $100 million also pales in comparison to what New York City alone annually spends on the collection on processing of packaging waste, which analysts say runs approximately $600 million annually. And before you add Walmart’s $485 billion in annual sales for FY2014, the combined revenues of Colgate-Palmolive, P&G, Unilever, PepsiCo, Coca-Cola (Company and Enterprises) tally at about $273 billion annually. That nine figures, while at first glance appear to be a hefty number, pales when one considers the size of these companies and the impact they have on waste streams nationwide. So while these manufacturers and Walmart are making a move considered unthinkable only a few years ago, many argue that more can be done. And considering the state of landfills in the U.S. overall, critics of the Closed Loop Fund and its backers have a point.

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