Have you ever felt guilty about tossing your old Teva sandals, or Colgate toothbrush, or Etch A Sketch into the trash, where they will clog up a landfill for hundreds of years? I have good news for you. All of those items—and many more—are now recyclable thanks to TerraCycle, a company that can recycle just about anything, especially items that can’t be processed by municipal facilities.
When the company launched in 2001, eliminating waste wasn’t something the average consumer cared about, but two decades later, environmentalism has gone mainstream, and that’s been good for TerraCycle’s business. Over the past five years, TerraCycle has grown explosively thanks to partnerships with brands that pay the company to collect and recycle customers’ old products. Today, more than 500 brands have signed up, a tenfold increase from 2016. In 2020, TerraCycle generated upward of $50 million in revenue across 20 countries and grew its staff by 33% to 380 employees globally.
TerraCycle’s remarkable growth tells a larger story about the progress the world is making toward a circular economy–a more sustainable system in which companies stop extracting raw materials from the earth and instead recycle products that already exist. While brands and consumers are eager to keep things out of landfill, there are still big challenges ahead in the war on waste. Who should bear the cost of recycling? And what will it really take to recycle a complex object, like a shoe or an Etch a Sketch, back into its original form?
A World With No Waste
Tom Szaky launched TerraCycle as a 19-year-old Princeton student. The company began as a humble side hustle: transforming food waste into high-quality fertilizer with the help of worms. In college, he emptied his bank account to build a “worm poop conversion unit” and spent his free time shoveling decomposing food from Princeton’s cafeterias. Two years later, he dropped out to pursue the business full-time, selling the fertilizer he created to Home Depot and Walmart.
Spending every waking hour of his twenties thinking about waste helped Szaky grasp the full extent of the global problem—long before many Americans had woken up to the crisis. He realized that food is just the tip of the iceberg: The real—and trickier—issue is plastic, a cheap, versatile material that companies use in everything from food wrappers to furniture. Since plastic does not biodegrade, it ends up in landfills and oceans, where it breaks into tiny fragments and enters the food chain.
Curbside recycling programs launched in the 1970s, but they have always been limited in the plastic products they accept; most only collect simple objects made from a single form of plastic, like takeout containers. Everything else ends up in the landfill because it’s made from multiple materials that are complex and labor-intensive to separate. A high chair, for instance, uses metal bolts and screws to connect different plastic pieces together.
As Szaky looked into the problem, he discovered that it is technically possible to recycle any of these objects. The problem is that recycling infrastructure is not set up to tackle this. Cities pay waste management companies to pick up and recycle materials, which they then sell on the commodities market. If a product is too expensive to break down, recyclers won’t make a profit on it. “We perceive that recycling companies are out there recycling whatever they can recycle out of a moral obligation,” he says. “The reality is that recycling companies are for-profit enterprises and they are only going to process what they can recycle at a profit. If an object costs more to collect and recycle than the ensuing materials are worth, they won’t do it.”
So Szaky decided he needed to create a new business model for recycling. He would build the infrastructure to recycle all kinds of objects and ask companies making these products to bear the cost of recycling them. “We asked ourselves, ‘Is there a stakeholder, like a manufacturer or a retailer or a consumer or someone who is willing to cover what it really costs to collect it and process it?'” he says. “With this business philosophy, we can unlock the ability to recycle just about everything.”
Who Should Pay for Recycling?
The idea of asking companies or individuals to pay to recycle their own waste seemed crazy two decades ago. But Szaky has observed how people around the world have begun to realize that waste has real costs.
This awareness reached a tipping point in 2018, when a video of a turtle with a straw up its nose went viral, prompting consumers to call for cities to ban straws and other single-use plastics. The following year, National Geographic devoted an issue of the magazine to the problem of plastic waste which circulated widely; brands like Everlane and Adidas began swapping out new plastic for recycled plastic in their products; and new research emerged about how microscopic pieces of plastic end up in our food and water, damaging our bodies.
Szaky first asked brands to sponsor recycling efforts in 2007, when Honest Tea, Stonyfield Farm, and Clif Bar paid Terracycle to set up collection centers for consumers to drop off used food packaging from their brands, which it would recycle. It wasn’t until 2015 that big brands created ongoing programs, like Bausch + Lomb with contact lenses and Target with baby car seats. Some turned their recycling efforts into marketing: In 2017, Right Guard and L’Oreal launched playgrounds and gyms made from recycled products with great fanfare.
This paved the way for the current moment, when many brands feel pressure to take responsibility for some of their waste—or risk alienating consumers who are highly conscious about sustainability. This is why Teva, maker of iconic outdoor sandals, proactively reached out to Terracycle to collect used shoes and transform them into new products. “There is a cost for generating waste without regard for the environment,” says Anders Bergstrom, Teva’s global GM. “It’s a stiff financial penalty that is coming on the backs of young consumers who are seeking out sustainable brands. This is a new reality that I believe many enterprises are going to face in the future. ”
As of last week, customers can go to Teva’s website to download a free, prepaid shipping label to send their old sandals to TerraCycle. To keep the carbon footprint of this shipping low, TerraCycle uses a network of its own recycling center as well as third-party recycling plants, and sends products to the nearest facility. Bergstrom says that Teva will pay for the entire cost of shipping, sorting, and processing, but declined to say exactly how much it will come to, partly because it depends on how many customers send their shoes in. Financial documents reveal that the lion’s share of TerraCycle’s revenues come from these brand partnerships.
Szaky says that each new partnership involves developing new systems for collecting, cleaning, and separating products into their core components. Then, the materials go through the company’s existing machinery: Metals are melted, and plastics are shredded, melted, and extruded into pellets. TerraCycle then sells these recycled materials. The plastic from Teva sandals will be used to make playgrounds, athletic fields, and track ground cover.
In early April, a brand called Century became the first baby gear company to partner with TerraCycle to recycle car seats, strollers, high chairs, and play pens. Betsy Holman, manager at Newell Brands which owns Century, says the brand is specifically targeted at millennial and Gen Z parents, and initial focus groups with this demographic revealed the sustainability was a crucial factor in their buying decisions.
Holman’s team had to price the cost of recycling into the bottom line. Given how bulky and heavy the products are, paying to ship products to TerraCycle is expensive. “The cost of recycling is hitting us just like any other cost,” she says. “TerraCycle was definitely a hit to our profit and our margin is definitely not as attractive, but we felt that this was the right call for the brand. Our goal is to be the sustainable baby brand.”
The Dream of Circularity
TerraCycle is growing quickly thanks to new partnerships. Nordstrom announced that starting October 1, consumers can bring in any beauty product packaging into stores to be recycled. Startups—from sneaker brand Thousand Fell to reusable silicone baggie brand Stasher—invite customers to download prepaid labels to send in their old products. Heritage conglomerate, Spin Master, which makes Etch A Sketch, Rubik’s Cube, and Hatchimals just announced customers can send in any toys it manufactures.
While Szaky is thrilled that business is picking up, he believes there’s a lot of work to do. TerraCycle has still not created a fully circular system, in which a product can be infinitely recycled into that same product. For instance, Teva sandals can’t be turned back into sandals, which means the brand will continue to rely on new materials to make their products. “The most exciting thing we’re working on is how to get the material back to where it began,” Szaky says. “This is the highest and very best use of the materials.”
This is a complicated process, as Thousand Fell is discovering. Cofounder Stuart Ahlum worked closely with Szaky to design sneakers made from just a few materials that would be easy to recycle. Over the past year, the company has begun receiving used sneakers from customers, which TerraCycle processes. But to be fully circular, Thousand Fell must collect the recycled rubber and plastic, and send them to its various suppliers. “Like most brands, we have a global supply chain, which means we have to send these recycled materials around the world,” Ahlum says. “In some cases, we have to think about whether the emissions created from shipping outweigh the benefits of creating a fully circular system.”
At just shy of 40, Szaky has come a long way from shoveling Princeton cafeteria food into a worm poop conversion unit. He’s hopeful about what he has seen over the past two decades. When he started TerraCycle, few people understood his mission. Today, values have shifted and his business is booming. “We’re in the middle of a mass extinction and it’s entirely because we’re not paying the bill for the waste we’re creating,” he says. “We’re essentially using all of these resources on credit, expecting our children, animals, and the planet to pay for it in the future. But consumers are crying out for change, which is prompting lawmakers and companies to rethink the way we’re doing things. The future they want is circular, and they’re going to vote for it with what they buy.”