Innovative Business Models in Ocean-Bound Plastic Recycling

Problem definition : About 30 million tons of plastic waste reaches the oceans each year, mostly from low- and middle-income coastal countries. We study novel business models of firms aiming to reduce ocean plastic pollution with a triple-bottom-line (TBL) objective—a weighted sum of profit, environmental impact, and social impact. These firms sell (a) plastic offsets and (b) segregated plastic. Methodology/results : We develop and analyze models where a firm partners with a local plastic recycling supply chain to sell (a), (b), or both via collecting and recycling ocean-bound plastic. Considering additionality (i.e., that the firm can only sell plastic offsets based on recycled plastic that is additional to the plastic recycled without the firm’s presence), we solve the equilibrium outcomes by maximizing the firm’s TBL objective. For the special case of a for-profit firm, we show that additionality can decrease the firm’s social and environmental impacts when selling (a) only or when selling both (a) and (b). Additionality may also alter the effect of the local recycled plastic market (i.e., the number of collectors and the recycled plastic price) on the firm. We find similar insights under the TBL objective via a numerical study calibrated with real data. Managerial implications : When firms decide whether to integrate and promote additionality, they must be careful because it may not only reduce their profit but also, reduce their social and environmental impacts. Moreover, we find that selling both (a) and (b) can generate a much higher TBL objective value than selling either one alone. We also find that firms employing a TBL objective can generate much larger environmental and social impacts with a slight reduction in profits than profit-maximizing firms. Our model and results provide insights into new initiatives for tackling ocean plastic pollution. Funding: O. Baron and G. Romero are both supported by the Natural Science and Engineering Research Council of Canada. Z. Zhang is partially supported by the Fundamental Research Funds for the Central Universities of Xiamen University [Grant 20720241012]. S. X. Zhou is partially supported by the Hong Kong Research Grants Council General Research Fund [Grant CUHK-14500921], the National Natural Science Foundation of China [Grant 72394395], and the Asian Institute of Supply Chains and Logistics. Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2022.0643 .