An innovative plastic waste reduction-linked bond announced recently by the World Bank, Citibank and Plastic Collective (external) will leverage Waste Collection Credits and Waste Recycling Credits (collectively “Plastic Credits”) to provide returns to its investors. These Plastic Credits are expected to be generated by two projects seeking registration in Verra’s Plastic Waste Reduction Program (Plastic Program). The use of Plastic Credits in this outcome bond demonstrates a novel pathway for financial instruments to support the scaling up of plastic waste reduction activities.
As the World Bank shared, “investors are providing approximately $14 million in up-front financing required by the projects to increase capacity at existing facilities, expand to new collection and recycling sites, and install food-grade recycling equipment.” In exchange, the investors will receive coupon payments linked to the sale of Plastic Credits the projects hope to generate on top of a fixed amount.
Registration with Verra’s Plastic Program enables a project to demonstrate its compliance with Verra’s robust set of program requirements, certify its impacts, and issue Plastic Credits. To issue Plastic Credits with Verra’s Plastic Program, projects must complete a rigorous audit by an independent third party and undergo review by Verra. This process ensures that the resulting Plastic Credits represent real and verified contributions to plastic waste collection and recycling. It also ensures that the Verra-certified projects have carried out the associated activities in line with key program requirements, such as those for stakeholder engagement, social and environmental safeguards, and additionality.
The two projects that will receive financing from the bond are in the process of registering with Verra’s Plastic Program. The projects are as follows:
- ASASE Foundation Community-based Collection and Recycling Project (Verra Project 3964). This project, developed by the ASASE Foundation (external) and located in Ghana, establishes small recycling plants as social enterprises in communities where plastic pollution is most severe, and empowers women entrepreneurs to build their own plastic waste collection businesses as a sustainable source of income and employment.
- SEArcular Indonesia Collection and Recycling Project (Verra Project 4805). This project, developed by Greencore (external) and located in Indonesia, empowers coastal communities by providing training and employment and offers price premiums for the ocean-bound plastic they collect. SEArcular focuses on managing difficult-to-recycle plastic types.
Verra is a nonprofit that operates leading standards programs in the environmental and social markets. Verra’s Plastic Program helps mobilize finance for plastic waste collection and/or recycling activities and plastic waste management infrastructure anywhere in the world.