Climate Clock Podcast: How CEO of Recircle Rahul Nainani makes a living of waste management

In this edition of the Climate Clock Podcast, CNBC-TV18's Sonal Bhutra gets in conversation with Rahul Nainani, CEO and co-founder of ReCircle, to discussed how change can be made at the individual level to enhance waste management at home.

Sonal Bhutra: Hello, you are listening in to the climate clock podcast a show where we discuss everything related to climate change and sustainability. Well, in the last few episodes, we discussed how we can make change at an individual level waste management at homes is the way to go as well. So let's take that forward and discuss it in greater detail.

We have with us Rahul Nainani, who is the CEO and co-founder of ReCircle, which is the clean tech innovator as well thank you all for joining us on CNBC-TV18, and congratulations on the fund raise as well. ReCircle recently raised funds from 3i Partners, Flipkart Ventures and Acumen Fund as well. But before I talk to you more about what these funds will be used for, let's start with the basics.

Rahul Nainani: Thank you for having me on the show and helping us amplify the work that we do. So you are right. I mean, I think when I was growing up, there was never a thought that okay, I am going to make a living out of scavenge, of clearing waste from landfills, especially when I had my studies in finance. But I would say somehow happened to me. So back in 2015, my co-founder Gurashish Singh Sahni and I went for something called the Google Startup Weekend, which is essentially like a three day seminar where you come and pitch an idea. And, and I was still studying my CFA, my partner was working in the real estate sector previously and this opportunity came to us. So when we were researching on what we want to do, and this is one of the sector's was like figuring out what we can do with waste and what drove me to the sector is largely because when coming from the finance field, the numbers was, of course, something that did drive me in the sector.

During our preliminary research, we found out that India was actually importing trash from rest of the world. So we are actually importing tonnes and tonnes of garbage from US, Europe and Middle East, just to keep our recycling industries running. This number was not a small number, it was a billion dollar plus import bill that we were having for actually importing trash. And that felt odd, like, having been born and brought up in Mumbai I never thought that we have a shortage of trash as compared to everything that we have shortage of. But there's definitely no shortage of trash in our country. That basically was a one of the things that got me into the sector itself, that why are we importing trash, even though we have so much trash in our own country. And that being that the guiding path, but also after that, we went and went and visited the landfill. So I think 99% of the people and like me, I was as naive as everybody else, has never gone to a landfill site and nor do we even know where it exists.

In Mumbai, we have the largest dump site in Asia, which is the Deonar dumping ground and in early 2016, just when we were launching, there was this massive fire that happened at the dump site. And there was this iconic image that NASA took from space, where you could actually see that fire burning from space, it was that large, and it was burning for almost seven to eight days, nine days consecutively.

Post the fire douse out, we went to the area around the dump site worked with this NGO called Apnalaya to find out what actually happens over there. And there were a couple of things that we found out. The first being that these fires was not a one off situation. But it was an actual it happens almost on a every second or third day itself. Largely because of this of course methane gas that gets trapped in and which is where there is a fire, especially in the summertime. But this particular day there was the fire escalated and the wind was blowing towards South Bombay. So that's when the entire city woke up to realize that okay, there is a big issue coming up.

But the second and most astonishing fact that we found out was that the average life expectancy of people just living around the dump site these are not people that work in the dump site. These are just living on the periphery in the slum areas was 37 years of age and that was shocking for me. It is in the heart of Mumbai city if you see the Deonar dump site, and it's affecting the people living around it, how soon is it going to start affecting the rest of us?

Those two things got me into the space, of course, the numbers because I come from the financial background and then, of course, the reality check in life in terms of actually going and seeing what happens with your trash drove me in the sector. Now of course, we've been doing this for the last eight years. So there's a lot more that has happened in that eight year journey to be able to make sure that now we are in this space, and we are going to make sure make a large impact in the space itself.

A: So India is the third largest waste generator in the world, we are generating almost 62 million tonnes of waste. And the argument is simple in that sense that, we are the largest population. So we are also going to generate a large amount of waste. But that's not the problem. The problem lies that nearly 80 to 90% of this waste remains untreated, and it's getting dumped into landfills and oceans. And that's the bigger problem that is creating. If we are going to generate more and more waste, but we need to figure out how we are able to manage this.

To give you some perspective, because these numbers of 62 million tonnes is so large that you have no idea what it looks like. A city like Mumbai, or Delhi or Bangalore is generating about 8,000 to 9,000 tonnes of waste every single day, which is equivalent to the weight of almost 1500 full grown elephants. And that's happening every single day, we are generating that much waste in any big metro city that we are living in. And imagine that 80 or 90% of this remains fully untreated every single day and is just reaching landfills and oceans. So the problem is large. But the problem is not waste. It's a problem of disposal. It's a problem that we have to fix ourselves and we have to set up more infrastructure. So it's, we're only going to generate more and more waste and that's what the trends keep saying, with the development that's happening in our country. But we need to figure out how are we going to manage this?

A: So we like to look at the sector a bit differently. Firstly, we don't like calling ourselves as a waste management company, we are a resource recovery enterprise. So what is waste for everybody is actually a resource for us? And if you started relooking and rethinking the term that's when your mindset starts changing. Because if you look at waste then typically what means is waste is what you dumped out, throw it away. But when you think of it as a resource and you think of actually what can happen posts the collection of this material that gets discarded. So right now at ReCircle, we are recovering almost 10,000 kgs of waste every hour, every day from over 300 locations across India. And the only way that we can do this is because we built an inclusive business model where we actually partner with local scrap dealers and aggregators and waste management companies that help us collect this material as compared to looking at doing it all ourselves.

Because the problem is so large that we can't solve this alone. And there's already a large informal waste economy that actually not just makes a living, but is also doing the dirty work of cleaning up after us. So our model revolves around working with these collectors that help us collect this material, making sure that this material that gets collected is then channelised to the right processing facility. So on the other side, there's also a lot of informal recycling that ends up happening, but we make sure that it's going to a formalised recycler, so that recycling actually leads to good and not bad in that sense. So making sure it only goes to registered recyclers and the material that this flows through our supply chain is then sold as plastic credits to businesses to help them go plastic neutral.

So we are primarily a B2B, clean tech company while we do a lot of work on consumer awareness in terms of collection drives, in terms of workshops, in terms of ensuring that we are able to spread the message through our social media, through offline stuff as well but what we believe at ReCircle is that if you want large impact to happen, we need the big companies and the big guys to actually take action on this. And which is where what we do. So we largely work on formalising the supply chain, selling these plastic credits to brand owners. And with the money that we receive from these plastic holders, we actually incentivise our collector and recycler, to basically become more formalised as a part of our supply chain. So they have an additional income perspective where they actually make more money by working with us by doing exactly what they were doing, while making sure that we are able to provide them with health checkup camps, social security, because it's very, very informal, right in that sense.

So that's what we are largely doing and then of course, there are the smaller stuff in terms of capacity building for the informal workers, collection rights that we conduct for consumers in Mumbai. So making sure that whatever dry waste that you're discarding, we have almost a bi monthly drive where you can sign up and get all your dry waste collected or dry waste is recycled by us and then we bring it to a collection center sought, segregate into almost 40 different categories and then that's sent for proper processing or recycling post that

A: So it's a partner based approach. So we have 300 collectors in 300 locations in India, we have 45 processors which are plastic waste processors across the country itself. So, if the material gets collected from Mumbai, it goes to the closest recycler located next to Mumbai to basically optimise our operations as well. And similarly, if it gets collected from Guwahati in Assam, it gets goes to the closest processor next to go out in Assam.

A: There is a policy called extended producer responsibility or EPR. So EPR has made it mandatory for brands that produce plastic as packaging to recover as much plastic they put in the market. So in simplicity, let's take a beverage brand and if they're selling 10,000 bottles in the market, they need to collect sorts, aggregate and recycle these 10,000 bottles and showcase to the relevant government authority that they are going plastic neutral. Now, this is where we come into the picture and we enable these large FMCG companies to collect sorts aggregate recycle it and provide them end to end traceability of where the material got collected, how was it collected, who collected and how it was recycled and convert these into plastic credits. So easier way to understand is like how carbon credits work, we're basically digitising the plastic supply chain and basically converting those into plastic credits and selling these to these brand owners, which is on the brand side. Then on the consumer side, of course, we make sure that the waste gets collected from their houses and offices.

A: So of course, the pollution control board and the government has put out a lot of policies and EPR being one of them. It was a slow start, I would say 2016 when the policy came out, and it was supposed to be implemented from 2018 onwards. But in the initial 2018 to 2020, we didn't see too many brands actually take this up. But now we are seeing a lot of traction coming in that space. The government authorities have also got stricter, the businesses have also started realising that this is something as a part of their obligation to clear out. Plus, a lot of these larger businesses have also committed to their global sustainable goals. So as a part of that, also, they are basically recovering this material. So yes, while it was a slow start, but I think there's momentum that's picking up now and then there's a lot more that is expected to happen in the next few years as well.

A: There are a lot of stuff that comes to our collection centers. I think the last thing I remember there was a full packet of dentures that we got. We have got, lots of clothes, we have got lots of funny stuff, but if you have food container, which has basically got some food in it, and then you clean it up, you think there is some kind of wet residue in it so they think that is a wet waste and they don't give it to us in dry and vice versa, in that sense as well. We have got a very stuff that keeps coming in time to time.

A: So I personally think that plastics is actually one of the best inventions of mankind in the 21st century. And the reason I say this is that, leaving aside packaging, which of course we see as a problem, but without plastics, we wouldn't have had development. And let's say IT, automobiles, healthcare, plastics is entrenched in our lives, and it's part of every single sector and has helped us actually do better in most of this. It's a lighter, more durable, more versatile material. It's also cost effective in that sense. So we created plastics because it was a better alternative than anything else. So I don't think that banning is the right solution because I like to believe that plastics are here to stay and the question that we need to ask ourselves is that not how we can live without plastics, but how can we live with them? Because it's here to stay no matter what.

When I say this, it doesn't mean that please use more plastic that's not the message I want to push out, but reduce as much as you can, reuse as much as you can, eliminate as much as you can. But today there is no others large scale substitute that can immediately substitute all applications of plastic, if you ban it today. So while there is a large economic side to it, there's also a social side, which is like there, there are millions of people that actually make an income either from the waste picking, the waste management are the recycling industry that are right now already employed. There's a lot of capex has been employed in the recycling space as well, what about the people that have these jobs? So banning plastics is not the way forward, it's about figuring out alternatives, it's about reducing as much as you can, and, and then looking at where how we can manage this better.

A: The overall ecosystem in terms of climate tech or sustainability, if you look at it, so there has been traction over the last few years. But largely, if you see earlier, the buzzwords were EV and solar, that's majorly where the money was going into, into sexy businesses, if you'd like to call it. But more recently, over the last few, maybe a couple of quarters, or maybe a year or so we are seeing that there's a lot more traction coming into the other clean tech domains as well, not just waste, but even water, sanitation, and things like that. So there has been push in terms of VCs actually looking at this sector separately, as compared to just having it this as the last bucket in terms of where they were putting in their money.

And this has been pushed through the global actions that have been taking place. So there's a lot of tailwind in the sector, with the sustainable development goals with the local policy push that has come in, with a climate change conversation that is happening across the globe. So now we are seeing that it is and they have soon realised that climate change is real in that sense. So there's more traction coming in the space itself.

Our fund raise journey was fun, exciting, we are excited to you know, work with these renowned VC firms investors that we have on board. But our main efforts in terms of what we are going to be utilising this fund is for further growing our business. So largely looking at how we can digitise further. So building our tech platform to ensure that we are bringing in end to end traceability across the supply chain. We are looking at increasing capacities for our collection partners that actually work with us to formalise them. While plastics is the main focus for us but we are also exploring other waste supply chains that we can get into, so that we are able to even work large, open up our market even larger.

Then of course, try and reach out to more brands to make sure that we are able to increase our service offerings, go deeper in terms of that. We are working with, while right now our main focus is on the plastic credit, but we are now working towards how this recycled plastic now goes back into the supply chain of the brands that we work with, which is the which is the bigger problem. If there's no demand for recycled plastic, there's no recycling that is going to happen and we are going to go back to square zero. So that's one of the focus areas that we are working towards right now.

A: So recycling in India has been happening for almost two to three decades, so there is a market for recycling. However, the challenges are the recycling sector is also quite informal and at the same time, the granules that these guys are producing is being sold for inferior quality products. So if you collect a pet bottle is not going back to bottle to bottle, but it's going to an inferior which might be to buckets, pipes, go to local markets. So there wasn't a demand for recycled plastic earlier. But now as a part of the global commitments that these large MNCs have made also, the local EPR policy has now asked brands to start using recycled plastic as a part of their supply chain. So we are starting at 30% from next financial year onwards and then growing 10% year-on-year. So if they are producing 100 tonnes, you need to use at least 30% of recycled plastic in your supply chain. So there is a demand that's coming in.

Then we need to set strengthen our infrastructure for recycling so that we are able to create high grade recycled material which can go back into these supply chains of these brands. So in terms of what happens finally so there are multiple grades of plastics, and each of them have different applications. But largely if I have to put it, they would go into three main buckets. One is that they are converted into granules after they get recycled, which is raw material to make any new products out of it. The other is going into – so pet bottles also get converted into fiber. So it's going into the textile industry, where they are able to make garments out of this. It's polyester textile so basically your jerseys that you see a lot of these cricket teams, the Indian cricket team has a jersey which is made out of recycled plastic bottle we recently saw a Prime Minister Narendra Modi also got a gift, the blue one, which is made out of PET bottles again, as well. So it goes into the textile market as well.

The third being your alternative application, which is plastics to oil, plastics, to roads, plastic to briquettes, plastics as fuel in that sense. So these are the three main buckets, but it goes up to down, right now it's going bottom to up when I say that means maximum goes to alternative and your other packaging materials. But now, we need to make sure that this material actually goes from bottle to bottle and that's the main aim that we need to work with. And that's where the demand needs to start increasing from these brand owners that we're working with.

A: So ocean bound plastics is a certification issued by Zero Plastics Ocean. Basically this is an international body that has audited our supply chain and audited our work that we do to ensure of course, one is on the social side to make sure there's no child labour, there's proper working conditions, we are following all our policies. And the second is to certify that we are able to collect ocean bound plastics. So our collection center in Mumbai, essentially is located in Dahisar in Mumbai. And that's where we are able to ensure that whatever material that technically would go in the ocean, we are tapping before that and being able to collect so similar to how our plastic credits are getting sold to these EPR customers there's a market that's coming up for global customers that are basically looking at collection of ocean bound plastics. So the ocean bound plastics are certified to collect ocean bound plastic material in that sense.

A: First to identify what microplastics is basically, plastic degrades if you keep it in the open and it degrades into very, very small pieces, which you can't see with the naked eye and which leaks into the environment. So the challenge with microplastics is that we need to make sure that the material gets collected properly and gets recovered and not gets leaked into the ocean itself or into the landfills for that matter of fact. On the recycling front as well when material does go for recycling, if it is an authorised registered recycler, when I say that I mean they have all their clearances and their licenses in place, most likely they have control environment in which they will ensure that there is no residue or there is no leakage of either air, water or any of those substances that happened which leaks microplastics into the ocean.

But if it goes into unregistered hands or if it goes into our oceans, if it goes into our landfills, it tends to basically leak and leach out in a long term perspective. And this is something that you cannot collect back. So, what we need to work towards and because it cannot be collected, it cannot be recycled for that matter of fact. We need to figure out how we are able to make good quality products ensure that they stay in the resource supply chain and not reach the landfills and oceans so that there's enough recycling that happens with it. It is a problem and there is no perfect solution for sustainability, I would say and each of these products have their own challenges. But we need to make sure what is minimising our impact in terms of whatever we're going out and using.