ESG Spotlight: How to Recycle Plastic While Tackling Poverty

Published  6 MIN READ

Plastic Bank is an international social enterprise organisation founded and based in Canada. It builds recycling ecosystems in underdeveloped communities, as a way of reducing plastic pollution and tackling high poverty levels. TMI talks to David Katz, Founder and CEO, Plastic Bank, about how it achieves its twin goals, and how corporates can get involved.

The problem of waste plastic is that it will quite literally never go away. Plastic does not decompose. All the plastic that has ever been produced that has ended up in the environment will remain there in one form or another forever. Waste plastic often finds its way into rivers, seas and oceans, breaking down into smaller particles and damaging or even destroying the delicate ecosystem, from surface waters to the deepest trenches. At least eight million tons of plastic end up in our oceans every year, according to International Union for Conservation of Nature estimates. Unless action is taken, much of it will remain there, with dire consequences.

Recovery and recycling programmes are numerous around the world and these efforts must be applauded. But in developing countries, where there are few recycling plants, let alone active waste management systems, the problem is growing year on year.

To one extent or another, lack of money is the issue. So how can waste plastic become part of a system that not only removes it from the environment and re-uses it but is also somehow financially sustainable? The answer is what Canada-based Plastic Bank is aiming to deliver.

Collect and earn

Operating in low-income countries, the Plastic Bank system is a relatively simple means of removing discarded plastic, explains Katz. The waste is picked up by individuals, wherever they may find it, and taken to specialist collection centres. “Collectors receive a premium for the materials they collect, which helps them provide basic family necessities.”

The collected plastic is weighed and sorted before being transferred to local processing facilities. It is reborn as Social Plastic®. As a raw commodity, this is purchased as bales, flakes or pellets by manufacturers from a wide range of sectors, and reintegrated into their products and packaging.

Simple it may be, but the collectors earn an improved wage, says Katz, and the end-users reduce their need for new plastic production while earning the right to use the Social Plastic branding. Of course, in all this, the environment is cleared of thousands of kilos of plastic waste.

Currently Plastic Bank has 499 collection sites across Haiti, Brazil, Indonesia, Egypt, and the Philippines. Plans for expansion will see it establish collections facilities in Cameroon, Vietnam, Thailand, Nigeria, Kenya and Tanzania by 2022.

Corporate role

“Plastic Bank builds ethical recycling ecosystems in coastal communities and reprocesses the materials for reintroduction into the global supply chain,” explains Katz. With around 200 major global corporates and smaller entities onboard, he already sees Plastic Bank having a positive effect in the commercial space. Household names such as Henkel and SC Johnson are users of Social Plastic in their production facilities, for example.     

Manufacturers are now being joined by an expanding roster of non-manufacturing firms, such as Swiss financier Lombard Odier, as more businesses are seeking to make a positive difference. Indeed, Lombard Odier’s Blue Note structured investment programme is contributing to the extraction of around 790,000kg of waste plastic from the environment, with collections underway in Haiti and Egypt. Katz says other firms are similarly linking the collection of plastic to specific business activities.

Modern alchemy

At this point it is worth noting that Plastic Bank is not a bank in the traditional sense of the word. However, through its actions, it is creating ‘currency’. If value is attributed to plastic products, and that value represents a significant portion of income, the chances of it being thrown away will be dramatically reduced, notes Katz. By reversing the notion that plastic waste is worthless, Plastic Bank is attempting to transform it into a functioning form of payment.

In practice, accumulated plastic is redeemed by its collectors for digital tokens. These are storable in each collector’s Plastic Bank e-wallet. In this state, tokens can be exchanged for hard currency, or be used to purchase a wide range of subsidised goods and services sold through each collection centre shop. Offerings range from essential food, fuel and clean water to health and education services.

Plastic Bank has a not-so-secret weapon in that all of its plastic recovery processes are controlled through a blockchain-based application, which it has named Alchemy™. In the same way that SWIFT gpi tracks and traces a payment, Alchemy™ tracks plastic waste, from collection to re-use.

The data generated by the system can offer commercial partners an ‘impact dashboard’, explains Katz. Using real-time monitoring, it graphically illustrates the social impact of that support through the quantity and source of collected plastic.

German hair care firm Wella uses Alchemy™ data to support its marketing campaign for its vegan, 100% recyclable consumer brand weDo. Having undertaken an impact study of product packaging, the firm has calculated that one bottle of shampoo bought equals eight bottles removed from the ocean. Alchemy™ data is therefore offering corporate sponsors immutable evidence of their sustainable activities. But the effect of involvement goes further, notes Katz.

Social and corporate impact

The impact on the 25,000-plus collectors, without whom none of this would be possible, is impressive. In a recent meeting led by the team from Haiti, it was reported that the UN has recently upgraded the country from a position of ‘extreme poverty’ to one of ‘poverty’. This is marked by an upward shift from an average daily wage of $1 per day, to $2 per day. Plastic Bank is playing a role in this progress with some collectors managing to earn $7 per day, with collectors’ personal revenues improving by an average of 40%.

With a number of local projects also being managed by Plastic Bank, the social effects go further still. With the support of sponsors, it has some 105 schools programmes underway, and health insurance and services are also now being provided to collectors.

The positive effect Plastic Bank’s work has on corporate partners is also broadening, notes Katz. An external study carried out on its behalf last year looked at media coverage generated by corporate involvement. It showed that it added around $180m of earned media since its inception in 2013. When Procter & Gamble partnered with Plastic Bank on the launch its new shaving brand Planet Kind in the US, a single month of partnership generated $1m of earned media coverage.

Get involved

While the difference between the numbers experienced at the opposite ends of the partnership spectrum will never add up for some, each stakeholder is necessary to make this work. For the corporate, involvement clearly generates positive media. But the increasingly essential nature of proven sustainability, with investor relations (IR) reports now demanding detailed explanations of activities, the work of Plastic Bank should prove an interesting proposition.

Accusations of ‘greenwashing’ still abound in this space. What is being demanded now is proof, especially by activist investors who can and will challenge boards. Plastic Bank’s activities are real and can be seen to be so. It has collected 29 million kilos of plastic since it launched, this is equivalent to 1.4 billion bottles. Every kilo is verified by blockchain.

From a treasury perspective, providers of sustainable finance instruments (such as linked loans) can use this information to verify corporate compliance with green key performance indicators (KPIs). Of course, the fact that a real difference is being made on two levels may be enough in itself.