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Amazon will invest $10 million in Closed Loop Partners, a $100 million fund focusing specifically on municipal recycling programs and technologies aimed at eliminating packaging waste.
“Amazon’s sheer size, reach, and growth projections represent a big statement about the future of how things will be manufactured, and really the future of the circular economy,” said Ron Gonen, CEO of Closed Loop Partners.
Amazon joins other large retail and consumer goods investors including 3M, Coca Cola Co., Procter & Gamble Co., and Unilever.
The move comes amid a prolonged price slump for recycled materials, prompted by China’s import ban of 24 types of waste and stricter 0.5 percent contamination standard for mixed paper—both of which went into effect earlier this year.
Still, Gonen told Bloomberg Environment that he’s bullish on the future of the recycling sector.
“Companies that have invested in new sorting equipment to reduce contamination are doing well,” he said.
“I think the reckoning we’re seeing now has actually been a healthy thing for the industry because it highlights who the high-quality operators are.”
According to an Oct. 16 company statement, the investment aims to divert 1 million tons of recyclable material from landfills and open up curbside recycling programs for some 3 million U.S. households by 2028.
“This investment will help build the local capabilities needed to make it easier for our customers and their communities to recycle and to increase the amount of material recycled across the country,” said Dave Clark, Amazon’s senior vice president of worldwide operations. “We are investing in Closed Loop Fund’s work because we think everyone should have access to easy, convenient curbside recycling.”
Still, Amazon’s investment also comes at a time when many cities and communities are reevaluating the benefit of curbside services, in the face of soaring costs for collection and sorting.
“There are some things that industry and government have done to suggest that recycling is free,” said Pete Keller, vice president of recycling and sustainability at Phoenix-based Republic Services, the second-largest waste-collection company in the U.S.
Keller told Bloomberg Environment the company will be renegotiating many of its 680 municipal recycling contracts over the coming months, with costs likely to increase.
“Obviously you can’t have environmental sustainability without economic viability. If these programs continue to operate in the red, they can’t be sustainable,”
Not all of Closed Loop’s recycling investments have been a success. Last year, a joint-venture plastics recovery facility in Dundalk, Md., closed, citing challenges in the post-consumer plastics industry, despite a $2 million loan from Closed Loop. However, the Fund was repaid for the loan principal, plus interest.
Gonen says that talk from waste management companies, which also run landfills, may need to be taken with a grain of salt.
“The alternative to recycling is paying a landfill operator to take your material,” he said. “So, they have a financial incentive to try to convince people that recycling doesn’t work.”
Gonen said the relationships with Amazon and other consumer product companies give the Fund major advantages, including insider insights about the future of supply chain management, as well as a large group of potential buyers for recycled material.
“The folks that makes our boxes, definitely, this could contribute to more materials being available to them,” said Kara Hurst, director of sustainability at Amazon.
Hurst said the investment is about more than cardboard boxes. She points to the company’s new e-commerce packaging requirements designed to reduce waste and cut costs.
“I think it’s similar to what’s going on with energy—where we need to look at multiple solutions across multiple sectors.”
“We need to invest in curbside recycling, and also keep thinking about what’s next,” she added.
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