Trend analysis: Recycling systems & material recovery — where the value pools are (and who captures them)

Only 9% of the 400+ million tonnes of plastic produced globally each year is actually recycled into new materials, while municipal solid waste collection rates in emerging markets average just 39%, leaving 1.6 billion people without regular waste services (UNEP, 2024; World Bank, 2024). This staggering gap between recycling aspirations and operational reality represents both a profound environmental crisis and a significant investment opportunity. With Extended Producer Responsibility (EPR) schemes expanding to 170+ countries and global investment in recycling infrastructure exceeding $25 billion in 2024, understanding where value actually accrues—and who is positioned to capture it—has become essential for stakeholders navigating the circular economy transition.

Why It Matters

The recycling and material recovery sector sits at the nexus of regulatory pressure, consumer expectations, and resource economics. Brands face mounting scrutiny over end-of-life product management, with greenwashing accusations creating real reputational and legal risks. Meanwhile, virgin material prices remain volatile—the recycled aluminum premium inverted in 2024, making recycled content cheaper than primary aluminum for the first time in a decade—creating new economic incentives for circularity.

The EU's Packaging and Packaging Waste Regulation (PPWR), finalized in 2024, mandates that all packaging be recyclable by 2030 and sets binding recycled content targets (30% for plastic bottles by 2030, 65% for all plastic packaging by 2040). Similar legislation is advancing in the UK, California, and Canada, while EPR frameworks in Brazil, India, and Indonesia are reshaping waste economics in major emerging markets.

For investors, the sector offers a rare combination of defensive characteristics (regulation-driven demand) and growth potential (infrastructure build-out in underserved markets). However, distinguishing between genuine value creation and "measurement theater"—where recycling claims outpace actual material recovery—requires rigorous due diligence frameworks.

Key Concepts

Value Chain Mapping

The recycling and material recovery value chain comprises interconnected segments with distinct economics and competitive dynamics:

Collection & Aggregation: Often the rate-limiting step for recycling rates. Value accrues to operators with density advantages, digital routing optimization, and formalized relationships with waste generators.
Sorting & Processing: Increasingly technology-intensive, with AI-powered optical sorting, robotics, and advanced sensor systems differentiating leading operators. Material purity at this stage determines downstream value capture.
Reprocessing & Upgrading: Converting sorted materials into recycled commodities or feedstock for chemical recycling. Scale economics are paramount, with minimum efficient scale typically requiring 50,000+ tonnes annual throughput for plastics.
Secondary Material Markets: Trading and price discovery for recycled commodities. Transparency and liquidity vary dramatically by material type, with established markets for metals and paper but fragmented, opaque pricing for many plastics.

Critical KPIs and Benchmark Ranges

KPI	Description	Leading	Average	Lagging
Collection Rate	% of target materials captured from waste stream	>85%	50-85%	<50%
Sorting Accuracy	Correct material identification rate	>98%	90-98%	<90%
Contamination Rate	% of collected material unsuitable for recycling	<5%	5-15%	>15%
Material Yield	% of input converted to marketable output	>90%	75-90%	<75%
Cost per Tonne	Operating cost including labor, energy, logistics	<$150	$150-300	>$300
Carbon Intensity	kg CO2e per tonne of material processed	<0.15	0.15-0.5	>0.5

Digital Product Passports and Traceability

The EU's Digital Product Passport (DPP) regulation, requiring comprehensive product lifecycle data by 2027 for batteries and progressively expanding to textiles and packaging, is reshaping recycling economics. Products with embedded material composition data enable more efficient sorting and higher-value recovery. First movers in DPP infrastructure—both technology providers and recyclers investing in compatible systems—are positioning for significant competitive advantage.

Traceability also addresses "measurement theater" concerns. Blockchain-based chain-of-custody systems from companies like Circularise and IOTA are enabling verification that recycled content claims reflect actual material flows rather than mass balance accounting that may mask continued virgin material use.

What's Working and What Isn't

What's Working

EPR-Driven Infrastructure Investment in Emerging Markets: Extended Producer Responsibility schemes are transforming waste management economics in emerging markets by shifting costs from municipalities to producers. In Indonesia, the EPR regulation implemented in 2023 has channeled $180 million into collection and processing infrastructure, increasing plastic recycling rates from 8% to 14% in covered districts within 18 months. Brazil's Reverse Logistics Law has catalyzed investment in packaging recycling, with formal collection rates in São Paulo increasing 40% since program expansion in 2024.

AI-Powered Sorting at Scale: Advanced sorting technologies are achieving commercial viability. Tomra's AUTOSORT systems, deployed at 12,000+ facilities globally, achieve 95%+ purity rates for PET and HDPE plastics. AMP Robotics' AI-guided robotic sorting arms, now installed at 175+ facilities, reduce labor costs by 70% while improving sorting accuracy by 15-20% versus manual operations. These technologies are particularly impactful for mixed plastics and multi-material packaging previously considered unrecyclable.

Closed-Loop Corporate Systems: Companies establishing captive collection and recycling systems for their own products are achieving both environmental outcomes and cost savings. Nespresso's capsule recycling program now recovers 35% of capsules sold globally, with the aluminum recycled into new capsules at 30% lower cost than virgin aluminum. HP's Planet Partners program has processed over 1.5 billion cartridges since inception, creating a stable supply of recycled plastics for new products while generating €200 million in annual material value.

What Isn't Working

Municipal Single-Stream Recycling Without Adequate Sorting: Single-stream recycling systems that combine all recyclables in one bin have increased collection convenience but often resulted in unacceptably high contamination rates. In the U.S., contamination rates in single-stream programs average 25%, compared to 5-8% in source-separated systems. This contamination reduces material value and has contributed to the 2018-2024 recycling crisis following China's National Sword policy restricting contaminated material imports.

Wishcycling and Overpromising: Consumer confusion about what is actually recyclable, combined with brand claims that outpace infrastructure reality, has created a credibility gap. A 2024 Greenpeace audit found that only 5 of 375 types of U.S. plastic packaging are truly recyclable at scale. The resulting disillusionment threatens public participation in recycling programs and invites regulatory backlash against misleading claims.

Chemical Recycling Scale-Up Delays: Despite $4+ billion in announced investments, commercial-scale chemical recycling (pyrolysis and depolymerization) has struggled to achieve projected economics. Several high-profile projects have faced delays or cancellations, including facilities from Plastic Energy and PureCycle Technologies. Mass balance accounting controversies—where chemical recyclers claim recycled content credit exceeding verifiable material recovery—have drawn regulatory scrutiny in the EU.

Key Players

Established Leaders

Veolia Environment: Following the 2022 Suez acquisition, Veolia operates the world's largest materials recovery network with 2,400+ recycling and recovery facilities across 48 countries. 2024 revenue of €45.3 billion with a strategic focus on high-value plastics and critical materials recovery.
Tomra Systems: Norwegian technology leader in sensor-based sorting and reverse vending machines. 90,000+ reverse vending machines installed globally, processing 45 billion beverage containers annually. AI-powered AUTOSORT systems deployed at 12,000+ recycling facilities.
Republic Services: Second-largest U.S. waste management company with 91 recycling centers and $14.9 billion in 2024 revenue. Polymer Center joint venture with Blue Polymers demonstrates commitment to closed-loop plastic recycling.
Biffa: Leading UK materials recovery operator with 12 recycling facilities and strong position in commercial waste services. Strategic investments in plastics recycling capacity targeting PPWR compliance requirements.

Emerging Startups

AMP Robotics (USA): AI-powered robotic sorting systems installed at 175+ facilities globally. 2024 Series D raised $99 million at a $600 million valuation. Technology applicable to both materials recovery facilities and deposit return schemes.
Greyparrot (UK): Waste analytics platform using computer vision to monitor material flows and sorting performance. Raised $70 million with deployments at 100+ sites. Data insights support EPR reporting and operational optimization.
Mr. Green Africa (Kenya): Formalizing waste collection in East Africa through technology-enabled waste picker networks. Reached 3,000+ collection agents and 50,000+ households. Model for emerging market value chain formalization.
Circ (USA): Textile-to-textile recycling technology converting blended fabrics (polyester-cotton) to recycled fibers. 2024 Series C raised $50 million with Zara owner Inditex as strategic investor. Addresses fashion industry's post-consumer textile waste challenge.

Key Investors & Funders

Closed Loop Partners: Leading circular economy investment firm with $650+ million under management. Investments span collection technology (Rubicon), advanced recycling (PureCycle, Novoloop), and secondary materials markets.
European Investment Bank (EIB): Deployed €2.8 billion in circular economy loans and investments in 2024, with recycling infrastructure a primary focus. InvestEU Circular Economy Window provides additional guarantees.
Circulate Capital: Ocean-focused plastic waste investor with $250+ million deployed across South and Southeast Asia. Strategic approach combining investment with policy advocacy to build enabling infrastructure.
SYSTEMIQ/Catalyst Fund: Multi-stakeholder initiative backing recycling innovation in emerging markets. Portfolio companies include Recykal (India), Trashcon (India), and Rekosistem (Indonesia).

Examples

Deposit Return Scheme Implementation in Ireland (2024): Ireland launched its national Deposit Return Scheme (DRS) in February 2024, covering plastic bottles and aluminum cans with a €0.15-€0.25 deposit. Within the first year, collection rates for covered containers reached 78%—up from 30% pre-scheme—with contamination rates below 2%. Tomra supplied 3,800 reverse vending machines across retail locations, while Re-turn, the scheme administrator, processed 1.2 billion containers in the first 12 months. The scheme demonstrates how deposit incentives transform consumer behavior and create high-quality material streams suitable for closed-loop recycling. Ireland's experience is informing DRS design in Australia, Scotland, and several U.S. states (Department of Environment, Climate and Communications Ireland, 2025).
Plastic Credits for Informal Sector Integration in Indonesia (Plastic Bank/Prevented Ocean Plastic): In Bali and Java, Plastic Bank has established 450+ collection points that purchase plastic waste from informal collectors at premium prices, paying 25-30% above local market rates. The collected material is processed and sold with traceability certification, enabling global brands (including Henkel, SC Johnson, and Aldi) to claim verified plastic waste recovery in their supply chains. In 2024, the program recovered 28,000 tonnes of plastic that would otherwise have leaked to the ocean, while providing income to 45,000+ informal waste workers. The model demonstrates how price premiums for certified materials can formalize waste collection, improve livelihoods, and create verified environmental outcomes simultaneously (Plastic Bank Impact Report, 2024).
Veolia's Advanced Plastics Recycling Hub in Dagenham, UK: Veolia's £35 million advanced plastics recycling facility in East London, opened in 2024, processes 80,000 tonnes annually of flexible plastic packaging—a material stream previously considered unrecyclable in the UK. The facility uses near-infrared sorting technology to separate polyethylene film from polypropylene, achieving 95% material purity. The recycled pellets are sold back to packaging manufacturers at prices competitive with virgin polymer, demonstrating that advanced sorting technology can make previously problematic waste streams economically viable. The facility directly addresses PPWR recycled content requirements and serves as a template for similar investments across Europe (Veolia UK Investor Presentation, 2024).

Action Checklist

Map material flows through your value chain to identify where recyclability gaps exist and where high-value recovery opportunities are being missed
Evaluate EPR exposure across all markets of operation; engage proactively with Producer Responsibility Organizations (PROs) to ensure compliance costs are optimized
Implement Digital Product Passport infrastructure for product categories subject to EU DPP requirements (batteries by 2027, textiles by 2030, packaging by 2032)
Audit recycled content claims using verified chain-of-custody systems; avoid mass balance accounting approaches that may face future regulatory challenge
Establish relationships with advanced sorting technology providers (Tomra, AMP Robotics, Greyparrot) to future-proof material recovery capabilities
Consider emerging market infrastructure investments where EPR implementation is creating formalized waste management systems for the first time

FAQ

Q: How reliable are recycled content claims, and what verification standards exist? A: Recycled content claims vary significantly in reliability. Physical traceability (tracking actual material through processing) provides the highest assurance but is often impractical at scale. Chain-of-custody certification standards include ISCC PLUS (widely used for plastics), RecyClass (EU-focused), and SCS Recycled Content Certification (North America). Mass balance accounting, which allocates recycled content across products mathematically rather than physically, is accepted by some standards but faces increasing scrutiny—particularly for chemical recycling claims. The EU is developing stricter verification requirements as part of Green Claims Directive implementation. Investors should prioritize companies using third-party verified physical traceability where economically feasible.

Q: What is the economic case for recycling versus virgin material use? A: Economics vary dramatically by material type. Recycled aluminum trades at a consistent premium to primary aluminum (typically 5-15%) due to the 95% energy savings in reprocessing. Recycled steel and paper are similarly cost-competitive. Recycled plastics economics are more volatile: recycled PET (rPET) trades at €100-300/tonne premium to virgin PET when demand is strong but can reach parity or discount during demand weakness. Recycled HDPE and PP typically require policy support (mandates, taxes) to achieve cost parity. The economic case generally strengthens when carbon pricing is included, virgin material prices are high, and regulatory mandates create demand regardless of price. Companies should model recycled content economics under multiple scenarios rather than assuming current conditions persist.

Q: How should companies approach recycling in markets with limited infrastructure? A: Emerging markets require different approaches than developed markets with established recycling systems. Key strategies include: (1) Invest in formalization of informal waste collector networks, which handle 50-80% of material recovery in many developing countries; (2) Partner with specialized organizations (Plastic Bank, Closing the Loop, Circular Action) that provide verified collection and traceability; (3) Design for recyclability in the local context—what can actually be recycled in India differs from Europe; (4) Engage with EPR scheme design to ensure workable requirements; and (5) Consider direct investment in collection and processing infrastructure where markets warrant. Companies operating in 10+ countries should develop market-tiered approaches recognizing infrastructure differences.

Q: What is the role of chemical recycling in the future materials recovery landscape? A: Chemical recycling (pyrolysis, gasification, depolymerization) can theoretically process mixed and contaminated plastics that mechanical recycling cannot handle. However, commercial scale-up has proven challenging, with several high-profile projects delayed or cancelled. Current capacities are measured in tens of thousands of tonnes versus mechanical recycling's millions. Environmental assessment is contested—some lifecycle analyses show marginal or negative GHG benefits compared to virgin production. The EU is scrutinizing mass balance accounting practices. Chemical recycling likely has a role for specific waste streams (mixed flexible packaging, textile waste) but should not be positioned as a primary solution for plastic waste. Investors should apply rigorous due diligence to technology readiness levels and environmental claims.

Sources

United Nations Environment Programme. (2024). Global Waste Management Outlook 2024. Nairobi: UNEP Publications.
World Bank Group. (2024). What a Waste 3.0: A Global Snapshot of Solid Waste Management to 2050. Washington, DC.
European Commission. (2024). Packaging and Packaging Waste Regulation: Final Text and Implementation Guidance. Brussels: DG Environment.
Greenpeace USA. (2024). Circular Claims Fall Flat: Comprehensive Survey of U.S. Plastic Recyclability. Washington, DC.
Plastic Bank. (2024). Annual Impact Report 2024. Vancouver, Canada.
Department of Environment, Climate and Communications, Ireland. (2025). Deposit Return Scheme: First Year Performance Review. Dublin.
Closed Loop Partners. (2024). Circular Economy Investment Landscape Report. New York.