Garbage has become such a crisis that companies that don’t invest in long-term ways to reduce waste won’t survive, warns the founder and CEO of the recycling company TerraCycle.

“I believe that it won’t be industries or sectors that pivot versus die, but individual companies,” Tom Szaky told the Harvard Business Review in an interview. Companies like Nestlé S.A., Unilever and Procter & Gamble Co., who are working with TerraCycle, are making the tough choices that have costs in the short term but lay the foundation for their survival, he said. But many large U.S. food companies “are blind to what’s coming and will likely be overtaken by startups that are building their business models around the new reality that is emerging.”

Investors understand that new ways of dealing with waste are needed and have poured more than $850 million into 20 startups in the sustainable packages and materials sector. With 18 billion pounds of plastic waste flowing into the oceans every year, the startups should find no shortage of customers.  

TerraCycle, a private company that focuses on hard-to-recycle items, saw its revenue grow 30% in 2019 from a year earlier and expects similar growth this year. The Trenton, N.J. company’s Loop initiative, formed in mid-2019, works with brands to provide reusable packaging for common consumer items. Loop Global and TerraCycle U.S. each raised about $20 million last year from investors, he said.

“This is driven primarily by everything moving faster and companies wanting to go deeper versus big new surprises or new industries that have been asleep now waking up,” he said. Meanwhile, “investors are looking much more for authentic impact investments. This is entirely correlated to garbage becoming a crisis.”

Sustainability investing has become a requirement for business longevity, a switch in perspective from about 15 years ago when investors saw it as more of a charitable contribution, he said. And many companies think they have to get ahead of sustainability issues or face legislative measures.

Szaky said he expects about 90% of the 400 companies that have made the Ellen McArthur Foundation pledge — to make their products compostable, recyclable and reusable and eliminate their use of new plastic by 2025 — will fail. That’s because they’ll produce packaging that will be technically recyclable but the recycling systems won’t be able to process it, he said.

“That’s going to create a big reckoning that will piss off consumers even more, backfiring on brands,” he said.

  • Nestlé said earlier this month that it would invest up to $2.05 billion to shift from virgin plastics to food-grade recycled plastics and accelerate the development of sustainable plastic products.
  • Unilever plans to halve the environmental footprint from the manufacture and use of its products by 2030.