In the recycling world, the economics of trash are often mischaracterized. The most significant value to local governments is not in the value of the commodities, it is the savings and related value of diverting commodities from landfills.
That reverse-style of thinking has been a hallmark of the work I’ve done as an entrepreneur and government official, and led me to co-found the Closed Loop Fund.
The Closed Loop Fund – a consortium of corporate partners convened by Walmart – will invest $100 million over the next five years to support development of new infrastructure and recycling services through low-interest loans. Overall, the estimated impact of the project will include 27,000 incremental jobs, 78 metric tons of GHG reduction, $2B in avoided landfill tipping fees, not to mention the revenue generated from selling the diverted commodities themselves.
How did I go from an entrepreneur focused on building a recycling company to a member of the Bloomberg Administration to managing a social impact fund that incudes many of the worlds largest consumer goods companies as LP’s? I have four instances of “serendipity” to thank.
The first instance occurred when I was just a kid. I grew up with a single mom in a lower middle class section of Philadelphia. Money was tight and I got my first job at the age of 12. However, I was fortunate to have the opportunity to attend Germantown Academy, a local private school, on a financial aid package and eventually met people who would be instrumental in my journey.
The most important of these were Paul and Linda Macht. Paul was one of the first “green” architects way back in the late 1980’s. I started working for them babysitting their young kids and then doing all kinds of house and yard work. Paul and I would sit and talk for hours and our conservations sparked my awareness of our environment and my passion for having a positive impact. Years later when people ask how I’ve come up with my ventures in the sustainability space, I respond that I’ve been thinking about solutions since Paul and I first began talking.
The second occurrence was as a senior at Germantown Academy where I served as President of the student government. A teacher, Mr. Handy, came up to me in the cafeteria and softly suggested that I lead a campaign to transition the cafeteria away from using plastic utensils to using real silverware that would be washed each evening. “It would save a lot of plastic waste,” he urged. I pursued this campaign, and although there was opposition from the cafeteria manager and some others at the school, we were successful. That experience helped me realize that with perseverance, I could translate my passion and interests into tangible results.
The third occurrence was when I had the opportunity to become the co-founder and CEO for six years at RecycleBank. From an idea hatched at business school, the company developed a technology and business model that recorded the amount of material a household recycles and rewarded them with points to use in shopping or at local restaurants. Using RFID chips in recycling carts, GPS technology, and proprietary software to largely automate the process, the average household can earn up to $400 annually depending recycling volume. We created a real-time financial reward for people who wanted to take positive environmental action. I was CEO there during my late 20’s and early 30’s and it was a roller coaster of a ride. We grew quickly and I had to learn and apply lessons on the go about fundraising, HR, integrity and loyalty. We did a lot of good in a lot of communities — and in turn, I learned a lot of good and hard lessons.
My fourth occurrence of serendipity came while I was working in Michael Bloomberg’s administration as the Deputy Commissioner for Sanitation, Recycling and Sustainability in New York City. Towards the end of the term, I received a call from Rob Kaplan at Walmart. He had a series of questions about how to fix the chronically low recycling rate in the United States. Enter the “reverse-style of thinking” on how to unburden cities from the problem of waste and better realize the opportunities instead. Those questions turned into a number of conversations about “systemic solutions” that sparked the development of the Closed Loop Fund.
The Closed Loop Fund is comprised of some of the world’s largest consumer goods companies and retailers who recognize the significant economic value generated by increasing recycling rates. In addition to Walmart, the founding members include The Coca-Cola Co., Colgate-Palmolive, Johnson & Johnson, Keurig Green Mountain, Inc., PepsiCo, Procter & Gamble, Unilever as well as Goldman Sachs.
The Fund is further evidence that systemic solutions often require cross industry collaboration – even among rivals – to drive action. Stakeholders across all these companies and industries can benefit from high recycling rates. But working independently to fund initiatives had not proven successful because the total amount of capital required is greater than their individual investment capabilities or network. The Closed Loop Fund has created a financial vehicle for investment by these and other companies that have a clear interest in seeing recycling rates increase, with the expectation that it will have the scale and expertise to build the infrastructure required to realize real change.
The Fund accomplishes this goal by providing 0% interest loans to municipalities and below-market interest loans to private companies to develop local and recycling infrastructure, with grants expected to get underway in 2015. The result: A greater source of recycled materials going back to the very manufacturers who need them most.
It’s been a long way since my grade school cafeteria experience of changing everyday habits to save on plastic waste. But we have come closer to the goal of ensuring that more consumer products and packaging is recycled and returned for use in manufacturing new goods – and that food waste is used for beneficial purposes, such as donation to food banks or converted to compost or clean energy from anaerobic digestion. We are motivated by sharing ideas and sharing benefits – all in the name of more sustainable living.