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Zero Waste Recycling: Why We Invested

by Melody Smith about a month ago in investing

The global waste generation is expected to rise 70% by 2050

The global waste generation is expected to rise 70% by 2050 . This is faster than any other pollutant. UN Sustainable Development Goal 12 seeks to significantly reduce waste generation through recycling, reuse, and reduction. According to the International Solid Waste Association, 15% of global GHG emissions could be cut if all waste management measures are taken into account. Companies like Samsung and Apple have been setting lofty waste reduction and landfill diversion goals in response to their corporate sustainability plans. It is important to encourage the circular economy through reusing and recycling as many material and waste as possible. However, it can be complicated for companies to implement a comprehensive strategy due to waste being tied to almost every aspect of their operations.

Solution

Zero Waste Recycling ("ZWR") provides outsourced waste stream management services for manufacturing operations in the Southeastern U.S. ZWR offers a complete-service, one-stop provider that helps manufacturers recycle or divert as much as 100% of their operational waste. Their corporate clients can avail a range of environmental services, including onsite waste collection, sorting, 24-hour waste transportation and hauling, as well as recycling ferrous and nonferrous metals, paper, cardboard, and plastic. While 75% is recyclable, companies need to manage solid waste that is not recyclable. ZWR provides their clients with the opportunity to turn this waste into energy. This is a renewable source. ZWR also has its own solidification pits. This allows them to take non-hazardous liquid waste from clients and combine it with water and a binding agents to create hardened solid blocks. They can be shipped off-site to energy-to-waste facilities once they have solidified.

Why We Invested

ZWR's leadership team is made up industry veterans who have built and successfully sold two recycling businesses. Their multi-year contracts with blue-chip corporations have shown their customer satisfaction and competitive differentiation. We are excited about the many dimensions of impact this investment will have. The company has a clear mission and focus on environmental sustainability. It is also riding strong industry tailwinds due to the rise in zero waste corporate sustainability goals. ZWR's employees also have a strong social impact. Our investment supports an employee ownership transaction through an Employee Stock Ownership Program ("ESOP")). All employees at ZWR will benefit from the transaction, which effectively transfers ownership. ESOP companies offer wealth generation opportunities that are often unattainable for many employees. ESOP companies also have demonstrated greater job stability and worker efficiency. You can read the article by Priya Parrish about Closing the Wealth Gap with Alternative Ownership Structures if you are interested in learning more about employee owner as an emerging impact thesis.

Impact

ZWR assists manufacturing companies in achieving their landfill diversion goals. Nearly all ZWR clients have committed to sustainability and waste diversion. ZWR's nested worker approach, in which ZWR employees are embedded daily at the client's facilities, has a substantial impact on their ability achieve these outcomes faster and more effectively. ZWR has helped a manufacturing client recycle more than 500 tons of waste and conserve over 350,000 kWh. They also diverted over 2,000 cubic yards from landfill. They can support more ambitious sustainability goals by supporting long-term partnerships with their full-service capabilities and enabling them to work closely with clients. They reduce the amount of waste going into landfills and help clients to save money on waste disposal. This offsets the extra expense of sending non-recyclable material to be recycled as energy, which is the next preferred solution in the EPA's waste hierarchy.

Economic Opportunity: The US continues to see an increase in wealth inequality as the capital holders enjoy greater economic benefits than labor providers. There has been renewed focus nationally on wages to address income inequality, however that does not address the "Wealth Gap" - 69% of Americans save less than $1,000. Participating in an ESOP has been proven to result in 92% greater median household net worth and 2.5x higher retirement accounts than those who are not employees. More than 90% of ZWR employees are from low-to moderate income (LMI), underrepresented groups. ZWR employees will have an average ESOP balance greater than 3x their annual salaries. This is a clear indicator that the ESOP structure can allow employees to accumulate significant wealth and share in the company's value.

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Melody Smith

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Melody Smith
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