Tom Szaky: ‘The best thing we need to focus on is how to purchase less’

In conversation with the founder and CEO of TerraCycle

Born in the early 80s in Budapest, Hungary, while the country was still behind the Iron Curtain, Tom Szaky was just 4 years-old at the time of the Chernobyl nuclear disaster. This event precipitated the uprooting of his family as political refugees to Canada. Tom later went on to study at Princeton and settled in the United States.

The transition journey from communism to capitalism has been a fillip to many an entrepreneur of East-European descent, but Tom had an epiphany moment during his first year at university.

‘We were taught that the reason for being of every enterprise is to maximize profit for the shareholders, the central tenet of capitalism. I decided to focus on creating a profitable business in the context of making the world – and society – better.’

TerraCycle was born 20 years ago, well before the concept of circular economy became mainstream, and now operates in 21 countries as the world’s most prominent reuse platform. Its mission? Changing the perception of, and eliminating the very idea of waste.

‘We recycle things no one else recycles, helping companies to make their products out of waste material, and advocating less consumption.’

Waste recycling is not on the top of any political agenda and, with a few exceptions, it is not directly profitable. ‘You can recycle most things but not locally because the high cost means lack of economic motivation. Conversely, aluminium cans collection is popular because the value of the material is greater than the cost of recycling.’

Rather ingenuously, TerraCycle’s founder has created a business model that is both scalable and good for the planet by partnering with major stakeholders: consumer brands, manufacturers, local businesses, municipalities and consumers who enable and fund the recycling of economically unprofitable waste through TerraCycle’s innovation program.

‘We always have to tease out the intangible benefits to encourage brands to participate in recycling programs.’

Today, TerraCycle counts 40,000 customers who value the opportunity to offer recycling solutions. I ask Tom to give me specific examples to illustrate the point.

One of his clients, the office supplies brand Staples operates a national pen recycling program. As the intrinsic value of the material is not enough to cover the costs of collecting and processing, Staples cover the collection and recycling costs. The company does this because it is good for the environment but also because it drives traffic through their stores.

Gillette and Venus fund a similar initiative, because the consumer often prefers a brand offering recycling solutions. Another example is the contact lenses manufacturer Bausch + Lomb, whose recycling program at retail optometrists strengthens the brand’s value. ‘We always have to tease out the intangible benefits to encourage brands to participate in recycling programs.’

A big elephant in the room of circularity is the electric car battery, whose elements are much more difficult to recover and recycle than most waste. ‘The best thing is to not own a car at all’, says Tom, even as he concedes this is too radical a solution, at least at the time of writing, especially for countries that don’t have a well-established public transport infrastructure.

‘If you compare the environmental impact of an electric vehicle v. a conventional, internal combustion one, the EV has greater impact until a certain amount of kilometres have been driven, at which point this impact decreases sharply. There are multi-billion-dollar investments dedicated to developing battery recycling solutions which will doubtless be available by the time batteries reach their end of life.’

The second-best solution is to buy used cars, says Tom; or, if you buy a new one, to tailor the purchase to your intended use. This brings us to TerraCycle’s other stated mission: advocating a break on ​overconsumption.

‘The environment has many complex issues: climate change, species extinction, garbage and pollution… The unifying element of every environmental issue that we face is that we vote for its existence through the act of purchasing.

‘The best thing we need to focus on is how to purchase less and if we are going to purchase, how to purchase used and durable items, or new and durable, long-lasting rather than disposable short-lasting ones. People need to re-evaluate priorities and stop thinking in terms of accumulating.’

The TerraCycle Foundation

TerraCycle operates its own non-profit foundation in Thailand and hopes to expand across South-East Asia, where pollution is a big problem and a common one in emerging markets.

In Thailand, the foundation uses river traps, built locally to its own design, to address the flooding of rubbish in the canals that the rain washes into the rivers. The capture system gets emptied daily, allowing fish to swim underneath. Four traps collect 1m pounds of waste per year before it gets into the ocean. ‘More funding would allow us to deploy in more regions.’

Trash collection is a pervasive issue, says Tom, and TerraCycle intervene from the most polluted locations around the world to the top of Mt. Everest. It is in the nature of trash that it is least prioritised in poor and wealthy countries alike. Even rich countries have landfills, which are not economic to mine.

‘So, we work with government entities to create recycling programs or create a “pay as you throw” shift in municipal policy (rather than “throw as much as we like for the same fee”). The big white elephant is funding to prioritise these issues.’

TerraCycle does not lobby governments but it does advise them. There are two types of action in terms of recycling waste: mandatory and voluntary. Mandatory regulation is good but in that it increases costs generally, it is politically difficult. The voluntary option is where businesses and organisations come in.

Loop economy

TerraCycle’s Loop Initiative, launched at the WEF, was built on the company’s existing relationship with blue chip corporate partners to bring the concept of re-usable containers into sharp focus.

Loop partners include Procter & Gamble, Nestlé, PepsiCo, Unilever, Mars, Clorox, Coca-Cola, Mondelēz, Danone, retailers Carrefour and Tesco have participated in the initiative.

‘Today, continues to grow globally – we are now at more than 200 brands, retailers and operational companies.’

  • Loop is scaling with Carrefour in France and Aeon in Japan – now at over 100 stores in Japan. We recently launched with Walmart and Giant Foods in the U.S.
  • In 2021, as a co-chair of the World Economic Forum’s Consumers Beyond Waste initiative, Loop and a multi-stakeholder coalition of brands, retailers, cities, NGOs developed community papers that provide guidance on Safety and Design of reuse systems, and also published a City Playbook on Reuse. 
  • Loop continues to partner with WEF to drive multi-stakeholder collaboration to implement reuse at scale, in context of growing legislative momentum for reuse and corporate action on reuse.

The challenge of implementing reuseables

‘Consumers are ready to adopt refillable options, but the true roadblock to scalability is that reuse is often not made a commercial priority. Through our learnings from launching and growing Loop, we’ve identified four aspects needed to scale a reuse program.’

1. Make it a commercial priority: To be successful, reuse has to be a priority across the entire corporate ecosystem, from commercial to supply chain to packaging suppliers to retailers.

2. Support it in market: It’s been shown that if a reusable version of a product is supported, it can outsell its disposable counterpart.

3. Create the right value equation: Approach reusable package design from a product innovation standpoint.

4. Pick scalable materials: We learned that stainless steel or aluminum, while durable materials, can be less scalable because they are more expensive than durable plastics and are not compatible with existing fill lines.

What’s in the future for TerraCycle – and the recycling industry at large?

‘Great strides are being made in packaging innovation to phase out undesirable materials and transition to curbside-acceptable materials or other alternatives. While this is progress, changing material type only solves one piece of the puzzle.

‘Practical recycling is still a challenge, given the insufficient collection and processing infrastructure. Additionally, many people don’t realize recycling is a for-profit business. Recyclers have no legal responsibility to recycle anything – they only accept materials they can profit from. These typically include items such as aluminum cans or #1 and #2 plastics. Almost everything can technically be recycled; it’s just not traditionally profitable to do so.

‘At TerraCycle, we continue to innovate, not only to find new solutions for complex waste, but to make it more convenient for people to recycle materials they currently aren’t able to recycle locally. In the United States, we have launched a service called TerraCycle Home and will be expanding that to other markets. Same with a service called SalonCycle that recycles materials from salons.

‘Additionally, we also look for new ways to think about waste. Our newest business unit is called TerraCycle Discovery where the used product becomes the specimen carrier. For example, your used toothbrush, conveniently captures a sample of your dried saliva and if analyzed this can provide invaluable health and wellness insights.’