In the last months of 2023, 30 landfills caught fire in Indonesia, highlighting a dangerous health risk and a symptom of the country’s failing waste management system. Most of these landfills are overflowing open dump sites. Moreover, not all waste ends up here, as large amounts — particularly low-value plastics like sachets and pouches — are never collected. Indonesia ranks among the top 10 global plastic polluters. The country generates 7.8 million tons of plastic waste annually, 63% of which is mismanaged. Most of these mismanaged plastics are thrown into rivers, dump sites or burnt by individuals, releasing toxic substances into the air. 

Many countries in the Global South similarly struggle to manage the tsunami of hard-to-collect and recycle plastic waste. Even drastic increases in waste management investments is unlikely to solve the issue. That’s why solutions that tackle plastics usage at its source are needed. Our organization, Enviu, an international venture-building studio, created the Zero Waste Living Lab (ZWLL) to incubate early-stage business models for zero-waste solutions in Indonesia. With ZWLL’s reuse venture building program, we aim to provide viable alternatives to single-use plastics (SUP). These upstream solutions are emerging all over the Global South and can be instrumental in solving the plastic waste crisis. 

Downstream Plastic Crisis Needs Upstream Solution 

The Global South is overflowing with a variety of SUPs that were not designed to be reused, recycled, or managed. Most prominent are sachets and pouches for fast-moving consumer goods (FMCG) like sauces, laundry soaps, shampoo and other hygiene products that are sold to low-income families in corner stores in Indonesia and across Southeast Asia. Their small-size and multilayered design makes this packaging difficult to collect and recycle. 

The exponential rise in single-use plastic consumption is outpacing the development of waste management systems. This is especially true in low- and middle-income countries that lack the infrastructure and capacity to manage the existing cascade of plastic waste. 

WWF estimated the true lifecycle costs of plastics for these countries are 8 times higher than for high income countries. Besides waste management, this calculation importantly includes costs of increased flooding caused by plastics clogging drains or decreased income for fisheries and the tourism sector due to plastic pollution. It does not however account for the less-researched health effects of plastic pollution. As waste management systems in the Global South cannot tackle the mounting plastic waste, investing in upstream solutions is key. 

Upstream Investment Gaps in the Global South

Global private investments directed toward plastic circularity are around $29 billion per year . This number is nowhere near the $60 billion required to reduce 80% of the ocean plastic leakage by 2040. There is also a significant geographical disparity, with 89% of the investments flowing to the Global North and only 11% to the Global South where the plastic pollution crisis is more urgent.

On top of that, investments are unevenly distributed along the plastics value chain. Most investments go into downstream waste management and recycling while only 5% into upstream plastics circularity solutions. These combined imbalances hinder effective development where solutions are most urgently needed. 

To address these challenges, several innovative upstream initiatives have emerged in the Global South. One notable example from Enviu’s Zero Waste Living Lab is Alner. Alner provides FMCG products in returnable containers, targeting local communities and small local stores, with the main goal of reducing sachet consumption. Other Indonesian pilots include the return packaging service for reusable food containers from Allas and an Internet of things-based refill stations for daily products created by the startup QYOS.

To prevent using single-use plastic for food and beverages, Allas provides returnable food and beverage containers. This model works well in places where returnables stay on site like restaurants, cafes, food courts and office buildings.

These initiatives hold immense potential to mitigate plastic pollution. They also provide economic benefits to consumers by lowering the costs of products and creating a whole new business ecosystem of community-based resellers who sell and collect the reusable packaging. To be effective, pilots need to scale and reach a wider consumer base which requires investments. As reuse markets grow in low- and middle-income markets and single-use plastic regulations strengthen, major plastic packaging producers will come under pressure to adapt and support the reuse revolution.

Solving the Chicken and Egg Problem

The current reuse solutions in the Global South face challenges in scaling due to lack of investors who view the reuse systems as too risky because: 

• Fossil fuel subsidies fueling virgin plastics for SUPs make it challenging for reuse systems to compete;
• The lack of standards for reuse businesses; and, 
• Financial investments for reuse/refill businesses are lower than recycling or waste management. However, extensive operational costs (collecting, sanitizing, refilling, and reselling) lead to relatively more complex administrative expenditure for investors.

Nevertheless, new national policies and the emergence of a global plastic treaty are beginning to change markets in ways that could help buoy reuse systems around the world. The assumption that SUPs would continue to be cheap may be proven wrong, because plastic taxes and enhanced producer responsibility (EPR) schemes are making companies accountable for their plastic packaging from cradle to grave. Nonprofit and commercial pilots of reuse systems – from university cafeterias and zoos to coffee shops and food delivery systems – are proving the concept and lowering the costs of these circular business models. Reuse systems are projected to reach 15-20% return on investment to system operators, and would become cheaper for users, making it profitable for both sides. 

PR3, a Global Alliance to Advance Reuse, has developed standards for the whole lifecycle of reusable products – from the containers and distribution to collection and sanitation. Clear standards will help companies better value the investment in such business models. 

Packaging reuse systems need to attract more investment to scale up, yet investment is lacking to expand these upstream solutions in the Global South. Well-enforced local laws and international standards on packaging EPR and SUP bans could create the foundation needed for prospective investors to overcome this chicken-and-egg problem in Global South countries. Better governance of SUPs will simultaneously help scale up and attract investments in upstream industries, setting the stage for a sustainable and profitable future.