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As discussed above, the recycling vertical is dynamic due to ongoing regulation, particularly around plastics. The recycling vertical is positioned to benefit from continued investment in curbside recycling programs/drop-off programs and public outreach to educate consumers on the value of recycling and the correct way to recycle goods. MRFs are expected to benefit from these tailwinds, as they will increase diversion and lessen the amount of unrecyclable waste that is placed in recycling bins by consumers. Ironwood has previously provided investments to support companies with MRF operations, including Boston Carting Services (Star Waste), a non-hazardous solid waste company servicing Greater Boston with a focus on commercial, residential, and roll-off collection, which operates an MRF located in North Andover, MA. Ironwood's investment was recently recapitalized in July 2022 (Ironwood still holds an interest).
This sub-vertical is expected to benefit from the move toward a circular economy and the increasing environmentally conscious population, which will drive waste management, climate, and other ESG-related goals in the future. The circular model is expected to drive the reduction of waste entering landfills and associated greenhouse gas emissions. Ironwood is focused on the circular economy through its recent investment in Mid-West Textile, a vertically integrated textile recycling operation that reduces post-consumer waste by efficiently collecting, sorting, and grading donated textiles that are then sold through Mid-West’s existing U.S. thrift retail network, domestic wholesale division, or to numerous international markets. The Company supports the circular economy by taking in clothing and miscellaneous goods that would have typically gone to landfills and repurposing them to be sold to consumers in multiple markets. Textile waste is a key area of focus for the Environmental Protection Agency (EPA), as 25 billion pounds of post-consumer textile waste is generated annually, of which only 15% is recycled. Another circular economy investment recently made by Ironwood is Verdi Commerce, an outsourced liquidation and inventory remarketing services company serving leading consumer electronics brands, supporting the reduction in electronics waste through the remarketing and re-usage of pre-owned and refurbished products by consumers. Electronic waste, commonly known as e-waste, has also become an issue for disposal sites, as only ~17% of $816 billion in retail and e-commerce merchandise returns were properly collected and recycled1.
Another critical focus within the circular economy is food waste generation and disposal. Food waste generation is a global issue, as one-third of food produced for human consumption is wasted annually and 97% of food waste currently ends up in landfills, creating the second largest human source of methane emissions. Progress has been made in the up-cycling / re-use of food waste (conversion into animal feed), as ~10% of surplus food in the U.S. is diverted to feed livestock and pets, but there remains an additional 14.7 million tons that could go toward this process2. The further development of other food waste recycling methods (e.g., anaerobic digestion, composting) will also help drive the reduction of food waste going to landfills.
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