“The key thesis statement is we can’t just recycle our way out of the garbage crisis.” Tom Szaky, TerraCycle’s CEO and co-founder, has a radical view of the circular economy: “We need foundational changes. Our version of this foundational change is: how do we solve the problem of disposability, while matching the benefits?” Renewable Matter met with the circular economy guru, and one of the most inspiring businessman around, in a nice coffeehouse-meets-coworking in Manhattan, New York. Tom has recently launched Loop, a global circular shopping platform, in what is a breathtakingly ambitious attempt to fight waste by transforming the products and packaging of everyday items from single-use to durable, multi-use, feature-packed designs. A challenge that he takes incredibly seriously: “In the end we will measure our success in what percentage oaf the world has moved from disposables to durables.”
How would you define TerraCyle?
“TerraCycle is a mission-driven business. Our mission is how do we eliminate the idea of waste: not how do we manage it, but how do we eliminate it. I have a big problem with companies calling themselves waste-management companies: they need the idea of garbage. But this idea shouldn’t exist. So our first division, which we’ve been running in 21 countries for over 16 years, is all about how to make things that are not being recycled today, recyclable and valuable. Only certain waste streams can make money on material, like aluminium or clear PET. So we focus on the non-recyclables and get funding from brands, retailers, cities and so on to make what couldn’t be recycled, recyclable.
Our second TerraCycle division is all about integrating waste back into consumer products (half B2B, half B2C), where we make, for example, Unilever packaging out of all sorts of ocean plastic. We bring recycled materials back to production. These two divisions make linear disposable systems more circular.
Loop is our third division; its goal is shrinking the loop. If you buy a cup of coffee in this store you buy the coffee and the cup, but you don’t really want to own that cup. If you drink here at this café they give you a ceramic cup which is much more expensive to make, but it becomes an asset for the store.
Let’s say a little paper cup takes five cents to make and a blue cup takes a dollar, but it can be used a hundred times so it’s five times cheaper. The only extra cost is washing it. Loop is about owning cups and making this ownership hyper-convenient. You could leave this coffee house with a nice cup. Use it. Then drop it off at a bin in a retail store.”
Sounds like an evolution in packaging. Who is interested in Loop?
“Unilever, P&G, Colgate, Clorox, and many more. Greenpeace put out a list of the top ten polluters in the world. Nine of them are Loop partners. Also retailers like Tesco, in London, or Carrefour, in France have partnered with Loop. We will make announcements soon for Japan, Germany, Canada and hopefully more. We are currently in talks with one of the biggest restaurant chains in the world, as it wants to embed the Loop concept into their food packaging. So, you can buy hamburgers and fries from their restaurants, and instead of ugly disposable packaging you will receive beautiful durable containers. And then you can drop them off at the restaurant or you can drop them off at any other drop point that will be created. Instead of going to waste it goes to reuse.
Loop is about shifting ownership. Moving from disposable to durable. However, note that durable is not just about reuse. We create packaging with elevated design and multiple functions.”
Multiple functions such as?
“A year into loop we realised customers have a relationship with the used product. So we created our fourth division. This is our diagnostic division, a small team of six people who are mostly data scientists as we realised that certain waste streams carry diagnosable samples with them.
For example, when your car’s oil is exhausted you change it. We are collaborating with large oil companies to create an option whereby you get an extra ten dollars every time you send back your used oil. We then take a sample of the used oil and send it to their laboratory where it is analysed: because what’s in used oil is the engine scrapings. This is big data applied to circular packaging.
Another example: we’re working with a large pet food company that produces cat litter. The urine in cat litter can reveal urinary tract infections. Therefore, based on the reading of your litter, which was returned using Loop packaging, you can get customised cat food containing treatment for the infection. Potentially we can also perform diagnoses with products for human use. In fact, we are working with one of the biggest diaper companies in the world. Your child’s poop holds a huge amount of information. It can help customise what type of baby food he/she needs, and at the same time you can recycle diapers. We can do the same with blood on a tampon or the saliva of a toothbrush or the hair of a razor blade. It’s like 23-And-Me [a popular DNA tester] meets waste, where the waste is the carrier of samples.”
You said working on packaging design is key.
“For Haagen-Dazs we created a double wall stainless steel container. Not only is it beautiful but it also stops you from freezing your hands when you handle their ice-cream. It also melts from the top down. Normal ice cream melts from the outside which is really bad melting behaviour because you have hard ice cream swimming in a pool of melt. This is an example of smart design. Just like the Cascade dish soap container. Data shows that people like to display it, while your soap pods stay wet for longer.”
How is this new packaging impacting companies?
“Everything is the same. They use the packaging as normal and the same retailers sell the same products. That whole aspect is normalised.”
How about reverse logistics?
“If you bought a Loop container in the store you would get a reusable garbage bag with a QR code and you’d throw all your loop items in there, mixed. No cleaning. We call it fierce convenience. Use the app, scan a QR code (so we know which package is in there) throw in the bag and, when you are shopping again, return it to the store to receive a payback. The store credits your account a day or two later with whatever was inside. Then we do the checking, sort all the packages, store them until each one has a critical quantity and then off. And that’s it. The same with e-commerce. With a new delivery you return your old packaging to the shipping fleet, like Carrefour or Tesco do.”
What bottlenecks are you encountering?
“Geographical density is very important. Right now we’re picking the big population centres as we are still unsure how to proceed in rural areas. Also, companies need to invest in new packaging and supply chains. Those are the opening investments. The main reason we’ve been successful and companies are signing up is the need for innovation in packaging.”
In order to really scale-up Loop has to become the standard.
“As a consumer you don’t want multiple loops. Forget me because my answer as CEO of Loop is obvious. It is the individual that will want one standard system. This is why we’re opening around the world so quickly and why for us it was important to partner with every major manufacturer.
70% of the world’s biggest manufacturers are already involved. That already creates a standard. We have eight major retailers: that starts to create a standard. And people prefer to plug into the standard. Sort of how Facebook is the standard for social media.
There is a chain of restaurants where 80% of their clients eat outside the restaurant premises. To recycle they would need collection points everywhere. So they need a system and they can’t do that on their own. One of the biggest benefits we bring is that you could buy your fast food with Loop packaging and then leave it in a Tesco.”
We clearly see massive marketing opportunities here.
“Totally! We will push customers to return. But this also has important safety implications. Consider the scale. Take for example a small start-up company that sells salads using vending machines. When you return the dish you get 2USD back. But how do they clean the dish? In washing machines. We have cleaning processes with super-strict controls. We have made multi-million dollar investments on these procedures, with multiple locations.”
The war on plastic around the world is on your side and will bring traditional packaging to its knees.
“Yes, the timing is perfect. People know there is a garbage crisis. This makes the average person upset. Corporations want to get ahead of the law and act before states can regulate them. And we have the right solution.”
What are the areas of relevance?
“Right now fast moving consumer goods (FMCG). We need to focus on what consumers really want to own in the end. Let’s set a relevance scale. A wedding ring, a photo, something sentimental has a high relevance. Your glasses have a medium relevance; a coffee cup, low relevance, you don’t necessarily want to own it. If you mix it with designer improvement opportunities and impact of waste in a Venn diagram you get what we need to focus on. So we will be experimenting on take away food and baby products.”
Europe is ahead in the Circular Economy Race. Can the US catch up?
“For the US it is a big opportunity. And it’s coming. The problem is politics. The government is anti-environment right now. But people who vote Democrats are very focused. My goal for Loop is: I don’t care about established environmentalists, I want to involve the average Trump voter. If I get them, it’s done. And I can win them over with price, convenience and design. Loop does that.”