How are we financing the reuse revolution?

Reuse and recycling are often put in the same boat. However these types of waste management solutions are really very different. While recycling is well understood and applied, the same is not true for reuse. As a consequence, it’s much more difficult to channel investment to reuse solutions. How can we make this better?

During our webinar celebrating 3 years of Zero Waste Living Lab, we took the opportunity to touch on financing the reuse revolution with insights from ADB’s circular economy specialist Marianne Bigum and impact investor Thierry Sanders. Here are our insights on the financing roles of institutions, entrepreneurs and investors.

Governments: awareness creation and institutional funding

Governments are investing a lot in waste management systems, from incineration to recycling. However, very little institutional funding goes to waste prevention solutions such as reuse and refill solutions. Marianne explained to us how this happened and what’s needed to rectify this.

In contrast to reuse, the recycling sector is mature and the potential of recycling is well understood. Moreover, recycling businesses involve only a small group of stakeholders such as waste suppliers, recyclers and buyers. The same cannot be said of the reuse and refill sector. Indeed, waste reuse and refill models are per definition not waste-related. Reuse and refill models require the involvement of new stakeholders: packaging and product manufacturers, retailers, logistical service providers and even customers, to name but a few. As such, these systems require the attention of a broader set of governmental agencies than just ministries in charge of waste management; it would, for example, also require the involvement of ministries for business and trade. This makes it difficult for governments to grasp the best way to support waste prevention.

According to Marianne : “We, in the waste family, have for many years been discussing this, but I think we’ve neglected to include and build capacity with the commercial sector and the relevant governmental agencies.”

It’s important entrepreneurs learn from this and take a system change approach to waste prevention, building awareness and capacity across a broad group of stakeholders. Governments and municipalities are willing and ambitious. Involving them will enable them to provide the right incentives and create business opportunities and green jobs.

Entrepreneurs: what should they focus on?

When it comes to reuse entrepreneurs themselves, Thierry pointed out that there are many ideas but poor execution. We discussed what entrepreneurs should consider closely when starting a reuse and refill solution.

  • Firstly, to be successful, entrepreneurs should be prepared before launching their reuse solution. There is a lot to take into account, from customer behavioral change to super efficient logistics. They should be ambitious and ready for continuous optimization.
  • Then, they should go beyond free trials to create a customer base, a revenue base and a perfectly designed product.
  • Prepare to cross the chasm: scaling from niche customers to low-and-middle-class consumers. Most reuse and refill solutions often focus solely on eco-consumers, which is a small market base. Entrepreneurs should engage with eco-consumers and middle-income consumers. Our venture Qyos did just this, installing their refill stations where the customers are!
  • Realize that customers have either time or money but rarely both. Entrepreneurs must design their solution with this in mind.
  • Last but not least, focus on intellectual property. Indeed, there are many advantages to IP: having a competitive advantage, enhancing the company’s value, obtaining financial funding more easily, and an absence of associated fees.

Investors: time to dive into the reuse revolution

As mentioned before, given the correct understanding, governments are ready to take action and create an enabling ecosystem for ventures to tackle plastic pollution. Thierry underlined the fact that the number of reuse and refill start-ups is slowly but steadily growing, and many of those are becoming mature. These two factors, taken together, show that now is the time for investors to ride the wave and step in.

As governments take action through regulations and public statements, investor interest in reuse solutions grows in parallel. Indeed, Marianne claims that the “key opportunity currently is that there is a sincere and ambitious request from governments in South-East Asia to solve the plastic pollution at source, and to use strong policies and financial instruments to do so. This is because plastic pollution is a real and noticeable problem directly affecting the country’s people and their livelihoods.” There is an understanding of the need for collaborations across sectors, with the involvement of civil society organizations in developing solutions.

Each party has a role to play in the reuse revolution

Investors, governments and entrepreneurs all have responsibilities in making the reuse movement integrated and mature. Governments are in charge of giving exposure to the movement and facilitating the adoption of reuse via regulation. Entrepreneurs are in charge of designing the perfect reuse solution that will first attract green consumers and then a wider audience. Lastly, investors are in charge of funding promising reuse and refill offers to help them become scalable. Together these three parties can build a reuse revolution into our society.

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