September 7th, 2023 - Green chemistry is the process of changing the molecular chemistry of an end-product from synthetic, petrochemical molecule formulations to non-toxic, sustainably sourced and biodegradable natural feedstocks. In 2022, the global biomaterials market was valued at US $155 bn and is expected to increase to US $550 bn by 2030 at a CAGR of 17%. The industries where there is currently the largest application from green chemistry products is the personal care industry, which was valued at $51 bn in 2021 and projected to grow at a CAGR of 9.5% and is expected to reach US $130 bn by 2031.
 

Rising Consumer Demand for Bio-Based Ingredients

There are many different types of bio-based ingredients used in the cosmetics and personal care products industry, for example emollients, conditioning polymers, biosurfactants, emulsifiers, rheology modifiers, UV absorbers and hair fixative biopolymers. There is rising consumer demand for natural ingredients and additives in cosmetics because end-customers now have a sharper awareness about the harmful long-term effects of synthetic chemical-based products on their overall health. They are more likely to choose products that use sustainable sourcing, reduce waste, and have eco-friendly packaging.  

To build trust, companies need to provide clear and verifiable information about the sustainability practices and certifications associated with their products. In terms of changing demographics, younger consumers, particularly the millennials and Gen Z bracket, are driving the demand for sustainable products. These generations prioritize sustainability and are more likely to make purchase decisions based on environmental and social considerations. As they become a larger consumer segment, their preferences shape the market and influence companies to adopt sustainable practices.

International corporations are also responding to this shift and want to avoid being labelled as ‘greenwashers’. For example, the Personal Care Products Council (PCPC) is the leading US trade association representing 600 global cosmetics and personal care products companies, including Johnson & Johnson, Kimberley Clark, L’Oreal, Proctor & Gamble, RB and Estee Lauder. In a PCPC member company Sustainability Assessment Survey, conducted in February 2022, 72% of respondents said that climate change/action is the most important sustainability impact area to address in the next three to five years.

The Push for Greener Supply Chains

Moreover, the rising regulatory pressure on corporations to enter net zero carbon emission commitments by 2050, which is also one of the drivers behind the push for a greener supply chain (to lower Scope 3 emissions overall). In the US and UK, there are strong regulations to promote green practices and reduce the impact of carbon-intensive materials on the environment, such as:  

• Sustainable Materials Management (SMM): the US Environmental Protection Agency (EPA) promotes sustainable materials management, which focuses on using and reusing materials more productively over their entire life cycles. The approach includes using materials more efficiently, reducing toxic chemicals, and ensuring sufficient resources for present and future needs.  

• UK Sustainability Disclosure Requirements: These requirements include sustainable investment labels for investment products and consumer-facing product-level disclosures, summarizing the sustainability characteristics of products, particularly for retail investors (proposed by the UK’s Financial Conduct Authority – FCA) 

The Traditional Uses of Biomass into Biofuels

In countries such as India, biomass – which is one of the earliest renewable energy feedstocks – is widely used as a source of fuel to replace petrochemical alternatives for uses in industry in the form of bioethanol, cooking fuel and specialty chemicals.

In the case of India, one of the key focus areas of chemical laboratories such as Hindustan Petroleum Chemical Laboratory (HPCL) has been on developing bioethanol due to an industry mandate for oil production, rather than specialty chemicals for consumer industries, energy storage or other applications. Meanwhile, there is a large opportunity for agricultural waste residue to be utilized in India for biomaterials, given the annual volumes of approximately 350 million metric tons of agricultural waste generated in the country, which have the potential to generate more than 18,000 MW of power through electricity generation annually, in addition to green fertilizers for agricultural cultivation and yield enhancement. However, approximately 50% of this agricultural waste is still burned on wastelands in India, which leads to more than 140 metric tons of carbon emissions every year.

AltM’s goal is to first beat wood-based products at scale 

While traditionally, the bio-based alternatives supply chain has consisted primarily of wood (the main origin of cellulose), there is a growing trend for the extraction of cellulose, lignin, and hemicellulose as chemical components of plant fibre raw materials. Lignin is the second-most abundant polymer on earth (after cellulose), and interestingly, lignin does not stand for a single substance, but for a group of substances that have common properties in plants. It is also characterized as an element which has heterogenous molecular weights, different functional groups, and different proportions of structural units.

altM plans to displace wood on three parameters: i) lower cost of raw material; ii) lower carbon footprint through a lower energy-intensive process; and iii) performance. As the first go-to-market product, the company has narrowed down on a cellulose based rheology modifier, which originates from agricultural biomass-based lignocellulose. These formulations are extracted from rice paddy crop waste and utilized as advanced material replacement formulas in the following industries: FMCG, apparel, industrial chemicals, and packaging.

We chose altM Bio as our first bet in this space, as it has a clear potential to become a leader in the green chemistry space, with the plan to build a highly differentiated, full-stack platform with a multi-channel revenue strategy.  Furthermore, the company has significantly de-risked the major technical challenge of cost and scale, using an energy-efficient process technology to deconstruct and upgrade agricultural waste into specialty chemicals other bio-based substitutes such as wood. Finally, there is a strong cross-functional leadership team at the helm, with experience in industrial microbiology, manufacturing and product engineering.