Closing the plastics loop in India

Since 2016, Rahul Nainani and Gurashish Singh Sahni have overseen the growth of an ethical, organized and more traceable supply chain for plastic scrap in India through their Mumbai-based company, ReCircle. 

The company, which has an imprint across India through a vast network of informal material collectors, processors, waste management companies and even some large brands, has identified a gap in its recycling infrastructure. 

According to Nainani, who began researching the sector in 2015 along with Sahni, they discovered India was importing high volumes of scrap such as plastics, paper, glass and metals from the U.S., Europe and Middle East, in particular, to help feed the country’s recycling industry, despite the fact it was already one of the largest scrap generators in the world.  

RELATED: ReCircle closes preseries A funding round, aims to expand recycling efforts

“[The importing] felt odd, because there’s already so much waste that we’re generating,” Nainani says. “We’re the fifth-largest plastic waste generator and will soon become the third-largest plastic waste generator in the world. We’re already the third-largest waste generator in the world.” 

The company co-founders also noticed India has a large “informal waste economy” that helps manage most of the country’s plastic scrap. Nainani estimates that 70 percent to 80 percent of plastic collection happens with the help of this informal economy, which includes citizens, aggregators and scrap dealers, and describes the practice as something of a “shadow supply chain.” 

“There’s absolutely no recognition for the work that they do,” he says. “There are issues in terms of working conditions, child labor and the entire system is not an ideal situation. But they’re doing a great job on the back end [in terms of plastic collection] without any formal support or organization.” 

What ReCircle aims to do is build a traceable reverse supply chain for all types of plastic with a business model designed to work in partnership with the informal collection economy rather than displace it. The informal collectors are onboarded only after ReCircle performs its due diligence to make sure those collectors are not using child labor and that they are collecting the right quantity and quality of material. They collect, sort and preprocess recovered material, which then is sent to authorized recyclers. 

ReCircle also partners with waste management companies to gather plastic and has developed its own technology platform, ClimaOne, to track the material collected by its more than 400 partners across the country and ensure it reaches the proper destination for recycling. More than 250 partner locations across the country accept the collected material. 

While it primarily works with other businesses, ReCircle also helps raise recycling awareness at a grassroots level, hosting collection drives, workshops where scrap is converted to art and zero-waste programs at large events such as music festivals or cricket matches, for example. 

As of March 2023, ReCircle had recovered more than 1 million metric tons of plastic that otherwise could have reached bodies of water or landfill, and is working to track recycled plastic back into the supply chain of brands it works with, such as Mondelez International and Hindustan Unilever, to allow those companies to incorporate more traceable and ethically-sourced content into their products while also helping them meet India’s national extended producer responsibility (EPR) requirements. “Our goal is to increase capacities and volumes for circularity in the plastic space, and looking at other parts of the supply chain and figuring out ways to incentivize them to recover other waste streams as we grow,” Nainani says. 

Collection to credits 

Nainani says 90 percent to 95 percent of the material ReCircle partners collect is plastic, and it uses ClimaOne, a mobile app, to track it from the point of collection to its processing destination. 

Every time a collector brings in a full truckload of material to a collection site, ReCircle gets traceability data through the app via the truck’s geolocation, invoices for the material and other documents, for example. “We can identify what was collected, who collected it, what the quantity of material is and what its quality is,” Nainani says. “This is then channeled to the closest plastic waste processor located nearest to the collector.” 

ReCircle works with two different types of scrap processors: recyclers, who work with high-value material such as rigid containers and bottles, and waste-to-energy or cement plants, which accept low-value plastic such as nonrecyclable snack packets that have been converted to alternative fuel. While the company collects all grades of plastic, its highest volume of material is polyethylene terephthalate (PET) bottles. 

Along with ClimaOne, ReCircle has developed a digital dashboard that allows the company to validate that the same material sent by a collector has reached a recycler. The material flowing through this supply chain is then converted into plastic credits and sold to brands such as Hindustan Unilever, Hindustan Coca-Cola Beverages and Mondelez to aid in their sustainability practices. 

Nainani says there are two reasons brands are buying these plastic credits.  

“One is that these brands have committed to sustainable development goals where they’ve said they want to use recycled plastic as part of their supply chain,” he says. “So, there’s global goals they need to meet. Second is that India has a very active extended producer responsibility policy, and as part of the EPR policy the brands have the mandatory requirement to offset their plastic footprint.” 

Photo courtesy of ReCircle

He notes that, typically, a brand will consult with ReCircle and provide the company with its plastic footprint both by type and by state, then ReCircle’s collection network will gather that material on the brand’s behalf, ensure it is recycled, then convert it into plastic credit tokens that are sold to the brands to use for their local EPR compliance and sustainability goals. 

Nainani adds that ReCircle is not a marketplace connecting buyers and sellers, rather, a data and supply chain company. “We incentivize our recyclers and collectors for giving us the data points as they become a formal part of the supply chain, and we can do this from the revenue we generate from these credits that we give to the brand owners,” he says. “We pass on the income as an additional income for the recycler and the collector for giving us these data sets.” 

Nainani says India’s EPR program, which was passed in 2016, has acted as a catalyst in the recycling sector. While the initial policy was aimed at producers offsetting their plastic footprint, starting this year, producers are required to use recycled granules in their supply chains. “It’s a very progressive and forward-looking policy in that sense,” he adds. Nainani says none of the brands ReCircle currently works with had a sustainability plan focused on plastic scrap prior to EPR’s passage, and interest in such planning received little interest. “And now we’re seeing there are massive teams built within these organizations that are focused specifically on plastic waste generation and a circular economy for plastics, and that’s how we’ve seen the industry grow as we’ve been in this space,” he says. 

Within the recycling sector, ReCircle’s goal has been to formalize collection and processing and “make sure it was happening in the right way,” while also concentrating on low-value flexible plastics that are hard to recover. 

“The gap we recognize is there needs to be additional sources of funding that are provided to the informal supply chain to get them formalized and increase recovery rates within the country,” Nainani says. 

Shows of support 

ReCircle’s mission has been met with confidence from investors. 

In October 2023, the company closed its preseries A fundraise, which was led by Flipkart Ventures, 3i Partners, Acumen Fund Inc. and a pool of HNI investors. At the same time, the company announced it had experienced a sizable leap in recovery rates, claiming a 290 percent increase in 2022-23 compared with the previous fiscal year. 

At the time, the company said the funds would allow it to enhance its service offerings for brands and expand its partner network, as well as enable it to scale its existing scrap supply chain, digitize it even further and propel it toward venturing into new material streams such as paper, textiles and glass. 

RELATED: ReCircle receives Ocean Bound Plastic certification

In a news release, Paraag Sabhlok, associate director of New York-based Acumen’s India portfolio, said, “Acumen is excited to join ReCircle as an investor to support the company’s vision of transforming waste into a valuable resource and bringing dignity to the work of people working in the waste management value chain who are often overlooked. This investment supports Acumen India’s initiative on pioneering green jobs.” 

In April of this year, ReCircle was among five Indian “Businesses for Impact,” or BFIs, recognized by the Singapore-based DBS Foundation for grant funding. Overall, 24 businesses were awarded funds from a record 2,000-plus grant applications received across DBS’ core markets. 

ReCircle says the final grantees were evaluated based on stringent criteria, including their ability to create social and environmental impact, innovation and the overall sustainability and scalability of their organizations. The five Indian BFIs were among 24 finalists for the DBS grant from across Asia. Winning BFIs received funding totaling 3.7 million Singapore dollars ($2.7 million), along with additional support such as customized banking services and capacity-building, along with access to business prospects. 

The company says the grant will be used to enhance its “ethical and inclusive circular economy mission,” and will be used to upgrade ClimaOne while improving the lives and livelihoods of scrap pickers.  

Photo courtesy of ReCircle

In a news release announcing the award, Nainani says, “The DBS Foundation grant award is not just a recognition for ReCircle, but a beacon of belief in our mission to tread lighter on the planet and uplift those who help us achieve this goal. The grant from the DBS Foundation will enhance our ClimaOne platform, further our waste diversion efforts and, most importantly, improve the lives and livelihoods of our Safai Saathis [informal waste workers].  

“We are committed to drive meaningful change across the waste value chain, and we thank the DBS Foundation for believing in our sustainable and profitable track record over the years, as well as our vision to drive environmental and social impact.” 

ReCircle also counts organizations such as the Alliance to End Plastic Waste, The Incubation Network, the Ellen MacArthur Foundation and the Plastic Credit Exchange among its supporters. 

Widening its reach 

As 2024 continues, ReCircle is trying to close the loop on plastics and expand its reach. 

One instance of a closed-loop system is a pilot the company has engaged in with a leading coffee brand in India where it collected bottles from a participating store and sent them for recycling. The bottles were converted into fiber and then made into T-shirts which are now being used as uniforms for store staff. 

“While that’s not bottle-to-bottle circularity, the idea is that we’re able to build these case studies to actually make sure that we can showcase this can happen,” Nainani says. “One is PET bottles to fiber, and bottle-to-bottle is what we’re leaning towards. 

“We’re looking at instead of plastic being downcycled, how can it be recycled into the same product itself. We’re working with existing plants to set up a supply chain and recycling technologies for the same. India is a very sensitive ecosystem, but there is interest we see coming in from Europe, the U.S. and the Middle East for recycled granules.” 

He says the company is looking at international expansion, where it works with larger brands on a local level and provides them with a traceable supply chain of responsibly sourced granules. Additionally, the company will look at ways to capitalize on its technology as well as using its existing network to wade into other material streams such paper, textiles and glass. 

Currently, Nainani says the company has an increased interest in textiles and has run a pilot with an Indian shoe company. Through the program, ReCircle recovered about 100 tons of material for the shoe brand last year and has recovered about 1,000 tons this year. Nainani says the plan is to reach 2,000 tons next year.  

ReCircle also is embarking on a pilot for all consumer textile scrap it collects to be recovered in collaboration with the Circular Apparel Innovation Factory, an alliance of textile companies that are investing in recycling the material. 

“Our goal is to increase capacities and volumes for circularity in the plastic space, and looking at other parts of the supply chain and figuring out ways to incentivize them to recover other waste streams as we grow,” Nainani says.