Sustainable sourcing platform Circular.co is growing. Live since June 2022, the platform secured $10.5 million in March of this year to expand its trading activities and database of post-consumer recycled (PCR) materials: more confirmation that the initiative is one the market has confidence in. The funding will make it possible to expand the team, add companies and suppliers, and further enhance the scale and functionality of the platform, said Circular’s founder, Ian Arthurs. It includes a new $5.3M round, backed by Maniv, Oxygea, and Eclipse, which followed a $5.2M seed round previously led by Eclipse.
“We're showing some good progress, but we've got a long way to go to really scale,” said Arthurs. He is confident that it will happen, however. The past year has seen impressive strides being made mainly as a result of the development and introduction of a new tool called Explore - the first self-serve tool to see what PCR materials are available at specific specifications and prices anywhere in the world.
The idea for the Explore tool arose from new insights into what the market needed, but it was only able to become reality because of the advances in AI technology of the past 12 months.
The team at Circular became aware of the potentiality for such a tool after doing some initial pilot work with various large manufacturing companies in the consumer-packaged goods (CPG) sector, among which Danone, as well as with at least two in the automotive industry and several in the durable goods space.
“We found that some of the sustainability teams tasked with hitting the PCR goals were seeing the increase in EPR legislation in Europe and in the US, and were now using that to get inside support in their companies to get more resources - which is a good thing,” said Arthurs. “But what they were coming to realise was that they hadn’t any idea of how to start.”
As a sourcing tool, the Circular platform could help these companies obtain the product they sought, but what Arthurs discovered was that ‘there was a gap in the strategy part’: a lack of understanding of the market.
“These sourcing and sustainability teams needed to assess the market in order to understand what their options are. They needed to plan for pricing, plan for availabilities, and plan for KPIs so that their design teams could start to redesign the products using PCR, and they didn't know how to get the data to help with those decisions. It turned out our sourcing tool had all that data in the background. So, last year, we added the Explore tool to our product offering. It allows users to explore the market and look across a database of 10,000 suppliers and all of their technical data and figure out what to do before acting,” he explained.
”Before, the product we created was almost too far downstream. What we’ve done is to back up a bit to offer companies a tool that helps with strategy and provides the data they need. Once they’ve gained insight into the market, based on the data generated by the tool, we’re convinced that sourcing will follow.
Standards
One of the obstacles preventing companies from informed decisions about using PCR resins is the lack of reliable standards. There are currently a number of basic standards, put in place by the Association of Plastic Recyclers. Circular.co is presently in the process of working with the US Plastics Pact and association members to try and create standards for particular applications for PCR resin.
“We are looking at norms across large datasets and applications. What does the data set look like for particular PCR applications, and what are the norms to set standards beside each KPI or spec? Basically, most companies are looking for information about what’s available, is there a reliable supply, what’s the quality, what’s the cost – these are the things they want to know before committing to changing their entire product and company around,” explained Arthurs.
“In the Explore tool, users enter information about what they are looking for – quantity, grade, region, specs. And this can be refined in multiple ways, for example, by filtering on specific density, or melt flow ranges. There are actually 167 KPIs or specs associated with PCR that we know of and have data on. The pricing data is there, too. We can show pricing history by index, but also from our own transactions to the system in the past. So, what we do is effectively project some level of confidence. We're opening up data on strategy, allowing responsible producers like Danone or
AI makes it possible
Right now, the platform still relies on some level of human intervention to facilitate the interaction between suppliers and buyers, and has set up internal teams for this purpose. However, in the future, Arthurs said he expected it to evolve into a full-fledged self-service product; a transition he likened to what has already happened in, for example,
Next to the human beings, Circular.co also uses AI in the background to
How does the platform make use of AI?
“There are over 50,000 technical data sheets in our database, all in PDFs and they all look different. The
In other words, while the world adjusts to the new technology, Circular uses AI in the background to do the actual work, after which a human intervenes and interprets the data for the buyer and the supplier.
There is no way in the world to organise a database like this without AI, Arthurs stressed, adding that it was something that had only become possible in the last 12 months.
“It's what happens downstream from that. It's the tooling, or even before that, the product design - making a product that is reliably is going to hit all of the requirements, from the consumers perspective and the legal perspective.”
First, however, Circular will have to create significant proven value to demonstrate this is the right way forward. It is the journey the company is currently on and that will take at least another five years – ‘hopefully helped forward by the developments around EPR’, said Arthurs.
The new end-of-life vehicle regulation in Europe, published in July 2023, will also help, as it includes provisions stating that 6 years after the adoption of the legislation (around 2030 thus), plastics in new type-approved vehicles must include 25% recycled content, as a percentage of the total weight of plastics in the vehicle. OEMs can choose which parts and plastic types they focus on to achieve the target. 25% of this recycled content will come from the automotive supply chain.
“Given the seven-to-10-year development cycle in the automotive industry, when you've got a 2030 deadline, and you're not already figuring out PCR, you are late. This is adding a level of urgency in the background that I think we've been missing.”
There is a future for recycling
Despite the negative publicity about recycling, including its so-called failure to solve the plastic waste crisis, the practical reality is that plastics recycling is an essential part of the future of the industry.
“Right now, market conditions are somber: the prices of virgin materials are too low, there is an oversupply, and buyers are not committing to recycled resins. This promised land of PCR being the thing that helps move manufacturers in a sustainable way isn't moving at the pace that everyone thought it should. Yet as legislation kicks in and customers continue to demand more sustainable products, this will have to change,” Arthurs noted.
He is betting on the fact that until now, the data needed to make large-scale materials decisions has been lacking.
“It’s the missing piece, that and pricing. Traditional index data is not always something that can be relied on everywhere in the same way, plus there is often a time lag. So, we're now working with our network of suppliers on transactional index pricing – using real transactional prices – by asking suppliers what they specific material with what KPIs they sold for how much, and then what they would sell it for now. This is another path we're starting to open up. Customers get the KPIs and a prediction of pricing, which long term contracts are a feasible reality, with buyers becoming more comfortable with big contracts. It becomes a dependable investable,” he clarified. “So, this is the strategy we are pursuing, essentially making that happen in the fastest, most confidence inspiring way. Suppliers may still be feeling negativity in the market right now, but at Circular.co, we are helping; we are choosing to find ways to improve, to create positive economic opportunities for buyers and sellers - because we need to. What’s the other choice?”