The business world is starting to recognise that recovery and reuse of resources in efficient circular business models, as an alternative to the using-up of virgin resources, is a major opportunity.

Whether it is the flow of materials, component parts or entire products, circular principles allows us to make and do more with less, and offer the potential to reduce, or even reverse, the negative environmental impacts of our economic activity.  

I am privileged to have come across some great businesses that are bringing alive the central tenet of the circular economy, to ‘design out waste’. 

A life less throw-away

One of the best ways to reduce waste is to keep stuff for longer so that we throw away less. In the jargon, it is called ‘product life extension’.

Product durability is the focus of BuyMeOnce, the on-line retail business that champions ‘a life less throw-away’ by seeking out the most long-lasting products on the planet. As Tara Button, durability expert and Founder of BuyMeOnce, explains in her excellent book ‘A Life Less Throwaway, qualities we used to value – durability, longevity and repair-ability – have been elbowed out of our consumer minds by a big brand culture of planned obsolescence and corner cutting. Whether it is cut-price fashion or the latest must-have tech, the advertising machines have been feeding us the message that having new stuff is the way to health and happiness.

“Durability is the most overlooked solution to climate change,” says Tara, “A huge amount of focus has been on recycling, but most people have not stopped to make the connection that when people keep their products for longer, fewer new products need to be produced and therefore fewer resources and less energy needs to be consumed.”

Waste to product

When materials are left over, either as scrap from a production process, or because an item is broken or finished with, then those resources can be used in a ‘waste to product’ process.

Alusid and Smile Plastics both use this model to create high value products from waste streams. Alusid makes bathroom and kitchen tiles using post-industrial glass and discarded porcelain. Smile turns waste plastic into unique decorative panels for the interior design trade. These are businesses that understand the value in these underused waste streams. 

“Our mission is to change people’s perceptions around waste – to use art and technology to unlock the hidden potential in recycling and open their eyes to the unexpected beauty of scrap. In doing so, we hope to inspire more people about sustainability and recycling,”say Smile Plastics founders Adam Fairweather and Rosalie McMillan.

The materials they produce have inspired designers around the world. Their unique decorative panels feature in flagship commercial installations, including Selfridges, the Lyan Club (Hoxton) and The Welcome Trust, as well as private homes.

Similarly, Alusid’s high quality tiles and solid surfaces are nothing if not beautiful. Our strategy has always been that customers will not buy a product just because it is greener but because it is of premium quality as well as being sustainable,” says Dr Alasdair Bremner, co-Founder of Alusid.  

Ethical and valuable

Defra calculates that UK businesses could benefit by up to £23 billion per year through  improvements in the efficient use of resources (WRAP). While some may think that figure is optimistically high, I see signs of transformation popping up across supply chains in all sectors and proud to be involved with some of the most exciting innovators leading the way forward.

This blog is distilled from a longer version ‘Designing out waste, designing in value‘ written by me for the Green Angel Syndicate web site.

According to the Circularity Gap Report 2019 published at the World Economic Forum in Davos last week, only 9% of the materials we use globally is reused. That means more than 90% is wasted. How crazy is that?!

We are using up the world’s resources faster than ever. The global use of materials tripled from 26.7 billion tonnes in 1970 to 92.1 billion tonnes in 2017, and it is likely to double again by 2050 to 184 billion tonnes, says the report, quoting UN International Resource Panel data.

This matters because we are using up finite resources more quickly than they can be replaced and creating mountains of waste we don’t know what to do with. It also matters because materials extraction and processing is a major contributor to the global greenhouse gas emissions that are causing climate change.

Simply put, making goods from virgin resources creates more greenhouse gas emissions than using recycled materials. According to Circularity Gap, better use of material stocks already in circulation could offer a major contribution to mitigating climate change. This is a huge opportunity for business and policy makers.

If we are to limit the change in our global climate to 1.5°C as the 2015 Paris Agreement demands, then we need transformation, not just in energy and transportation as is the rightful focus now but also in the way we make and use stuff. We will need to transition to a circular economy based on the use and reuse of materials that are already in circulation. We need to replace the using-up of finite resources, traditionally associated with economic activity, with systems that are designed to recognise the value of ‘waste’ through efficient reuse, remanufacturing, recycling and recovery.

The planet is already 1% warmer than pre-industrial levels and rising. The IPCC tells us we need to reduce global emissions of COby 45% by 2030. While more than 90% of the goods and materials we make is lost beyond recovery, dispersed as emissions or unrecoverable waste, the opportunity represented by circular economy innovation is obvious and urgent.

 

References

Circularity Gap Report 2019 Circle Economy, January 2019 https://www.circularity-gap.world

Worldwide, waste generation is rising fast. We created 1.8bn tonnes of solid waste in 2013. By 2016 it was 2bn tonnes. There is an urgent need to decouple waste production from economic growth and rising living standards.

According to a report last week (The Economist 20 Sep 2018) politicians around the world are increasingly aware of the economic, ecological and human cost of waste and the missed opportunities it represents.

In the developing world this translates to a growing understanding that spending on efficient waste collection systems is a wise investment in public health and cheaper than dealing the consequent problems of large scale uncollected garbage. In the developed world it flags a need for much better support for recycling and resource efficiency.

Exporting the problem

The UK recycling rate for household rubbish is around 45%. About half this recycling is carried out in other countries. For example, the UK has shipped more than 2.7m tons of plastic waste to China since 2012, according to data from Greenpeace quoted in the Guardian recently (Nazia Parveen, The Guardian 23 Jul 2018).  

There are a number of good reasons this should change, not least because China banned the import of waste at the start of this year, making it harder for us to simply export the problem, and forcing us to re-evaluate.

We are not short of innovation in this sector. We have the ideas and the technology to make clothes from recycled plastic and packaging from mushrooms. We can recover precious metals from electronic waste and power vehicles with spent coffee grounds. We urgently need our policies and systems to catch up.

A huge opportunity

The head of a circular economy capital investment company told me recently that one of the biggest challenges facing start up businesses whose models are based on the use of recycled materials, is reliability of supply. This is a major market failure of our time and a huge opportunity.

I find it hard to understand why our economy should be skewed towards the widespread use of, for example, over-engineered single-use plastics which are known to create huge ecological problems with dire environmental and human consequences.

We need positive policies to encourage large-scale investment in recycling supported by efficient and consistent collection and sorting systems so that recycled materials always offer a competitive alternative to virgin stock, regardless of the uncertainty of commodity prices.

Policies such as extended producer responsibility are working well in the electronics sector, encouraging valuable material recovery. Why not broaden the system to other sectors? Use tax incentives to encourage use of second-hand materials by manufacturers? Harmonize recycling systems across the UK?

Promising a circular future

Perhaps China’s ban is exactly what we needed to kick-start a serious, joined-up approach to reducing unnecessary waste, reusing materials efficiently and recovering value through recycling.

In November Defra will publish a new 25-year strategy for the management of resources and waste that promises to embrace the principles of the circular economy. Lets hope it delivers on that promise, and starts to change the way we look at that valuable resource called waste.

Christina Figueres, ex-Executive Secretary of the UNFCCC delivered the keynote speech at the Ashden Awards last night. She described the cohort of winning entrepreneurs, chosen for their potential to help solve some of the world’s biggest problems, as ‘stubborn optimists’.

Ashden is a charitable trust with a mission to influence real-world change and help us move towards a world where everyone can live secure, healthy and fulfilling lives. They champion the businesses that are making those changes happen, through awards, support programmes and investment for scale-up. 

The awards ceremony is an optimistic and inspiring affair. In the face of the huge global problems that we face today, climate change, population growth, political uncertainty, it applauds the individuals who continue to come up with ideas and technologies that address directly the needs of the world they see around them. Ideas like Shuttl, which is reducing pollution and congestion in India’s biggest cities by providing safe and comfortable public transport for commuters, Lumos Global that offers affordable off-grid solar energy to homes and businesses in rural Nigeria and, in the UK, Upside Energy, which uses data to aggregate and manage flexible energy demand allowing more use of renewables by the grid. This then, is optimism: not to deny or ignore the difficulties we face but to take action to do something about it, and to keep on doing that, stubbornly if necessary, until things get better.

A couple of weeks ago, Chris Stark, recently appointed CEO of the UK Committee for Climate Change (CCC), addressed a small gathering of angel investors in London. He pointed out that since 1990, the UK has cut its greenhouse gas emissions by 43%, whilst at the same time growing its economy by around 70%. More reasons for optimism is would seem. 

Or is it? The problem is that we have done the ‘easy’ bit. The success to date has come mainly as result of the replacement of coal-fired power plants with renewables and gas. According to Chris, the most difficult challenges still lie ahead. We need big changes in transport, the built environment and in our individual behaviours if we are to meet the target to reduce green house gas emissions by 80% on 1990 figures by 2050.

Enter once more, those stubborn optimists, the entrepreneurs. The role of business in addressing the world’s most complex global challenges has never been more crucial. Ever since Stuart Hart’s seminal article in the Harvard Business Review in 1997 challenged the business world to see the pressing need for sustainability as a business opportunity for innovation and revenue growth (Hart, 1997), enlightened, inspiring business people have been doing just that.

Governments and their policies will not solve the problem of climate change on their own. It is up to all of us to use the tools, knowledge and resources available to us to act in the best way we can, including encouraging and supporting those purposeful optimistic entrepreneurs, by recognising their contribution, investing in their ideas and telling their stories, because the future, however uncertain it may be, belongs to the optimists.

Reference

HART, S. 1997. Beyond Greening: Strategies for a Sustainable World. Harvard Business Review.

Transition to a circular economy demands a systemic shift of mainstream production and consumption away from traditional, fundamentally wasteful processes to a new way of thinking. It is not a tinkering with the edges, a movement for do-gooders or an edgy branding exercise for the benefit of middle-class consumers. It is the most exciting business opportunity of our time.

The circular economy designs out the concept of waste. It is based on the concept of the flow of materials within the economy and the continued use and re-use of valuable technical resources, while natural systems are protected from contamination or over use. It is often described as being restorative and regenerative by design.

The circular economy is exciting because for the first time in our recent industrial history it breaks the link between the using-up of natural resources and prosperity. Scarcity of natural resources such as minerals, precious metals, oil and water need no longer limit our ability to meet people’s needs today, or those of our expanding populations in the future. That is why it represents such a massive opportunity for business.

The issues at stake are complex, global problems. We share one planet and live in a global economy where markets are governed by huge corporate entities with complex international supply chains. Transition to a circular economy will require political will, legislation and innovative disruption. Such is the inertia of the mainstream market that effort from all these parties is needed to tip the balance for the majority of large-scale businesses and their supply chains.

What is exciting to see is that innovative businesses based on the ideas of the circular economy are already springing up all over the world. Entrepreneurs are not waiting for the perfect policy landscape to emerge or for the big players to commit. They are taking the lead and doing what business does best; identifying opportunities and creating new ways to meet them. Seeing the market failures of traditional business models, far-sighted entrepreneurs are building profitable enterprises using leftover resources that may once have been called ‘waste’. They are managing resources super-efficiently with beautifully crafted modular design, modern re-manufacturing facilities and servitized offerings that give their customers exactly what they need, when they want it.

There will come a time when no one will talk about the Circular Economy anymore because it will just be the way we do things. The common sense of designing products, systems and material flows to operate effectively and harmoniously within planetary boundaries will be accepted as the norm. Innovative business is bringing that day closer and I for one am hugely exited to see it happening.

Every organisation understands the importance of a good reputation. Even though it isn’t something you can buy off the shelf or sell on when you decide you want a change, reputation is fundamental to operation and growth.

Reputation is what economists refer to as an intangible asset. Unlike machinery, offices, vehicles or stock, the assets of today’s most successful companies are increasingly made up of things we can’t see or touch. Things like knowledge, R&D, software, brand, design and reputation.

In the major developed economies of the world investment in intangible assets is now greater than investment in traditional tangible assets. This quiet revolution in the way business is being done has significant consequences for the future of our world, according to Jonathan Haskel and Stian Westlake In their new book Capitalism without Capital.

It is my observation that the PR and communications industry has a tendency to tie itself in knots when it comes to justifying spending on its services. In an effort to step up to the task of measuring ‘return on investment’, practitioners are busy ‘getting to grips with the numbers’, setting measureable objectives to support their creative campaigns and seeking out the data that will prove their worth at the client’s quarterly budget meeting.

Well that is all well and good for short term budget planning but I am wondering if, in the rush towards granularity and measurement, we are not missing opportunities to have a wider conversation about what investment in reputation really is and what it means for today’s organisations.

The term investment implies an anticipated future gain; a larger market share, the ability to command higher prices, increased customer loyalty or the securing of an important contract.

Therefore, a true investment in reputation is likely to be ambitious, designed to help achieve key organisational goals not just to maintain the status quo.

Like any investment in intangible assets it also carries a degree of risk. Outcomes are not certain and if the campaign flops, the organisation has no way of recovering the cost. Brands are constantly challenged by the fluid expectations of their stakeholders and must continue to protect and maintain the valuable asset that is their reputation.

So I think perhaps it is time for PR and communications to be a little a braver in its conversations and about budget and ROI and more open about the potential risk and reward we can create for clients. Let’s catch the wave created by this fundamental shift towards investment in the intangible by learning the language of economists and joining in the conversation at a higher level.

Instead of just focussing on data to show incremental improvement, I think the time is right to lift our eyes to the higher prize of a seat at the strategy table and really prove our worth as experts in the building and management of that most valuable of assets, reputation.

Reference

Jonathan Haskel and Stian Westlake 2018 Capitalism Without Capital Princeton University Press

The brightest and best of the next generation are challenging traditional corporates to live up to their values and demonstrate a positive contribution beyond the bottom line. Research by YouGov and GT Nexus reported recently in Enterprise Times tells us that CSR figures highly in the buying decisions of young people.

According to the report, millennials surveyed in the US, France, Germany and the UK all cited the treatment and payment of workers (25.1%) and the environmental credentials (20.8%) of a company as a reason to switch loyalty.

There is plenty of evidence too that this generation takes a strong interest in the values of the organizations they choose to work for. According to Dr Christian Busch of the LSE, millennials are rejecting the linear approach of their seniors who aspired to ‘do well, then ‘do good’ and instead seek meaningful jobs where they can achieve for themselves and give as much as they take throughout their careers**.

Brands and businesses that fail to grasp the strategic importance of taking proactive responsibility for all the social and environmental impacts of their activities risk loosing market share and missing out on talent.

CSR is not a sideshow, nice-to-have HR initiative or PR project. It is not about running a cake sale or a marathon in support of the CEO’s favourite charity (as worthy as those activities may be). CSR is about how your business is managed and the contribution it makes to society.

The people who work for you and buy from you are saying clearly that they want to have a positive impact on their own communities and our wider society. To be successful in this exciting new world, businesses need to put social responsibility at the heart of business strategy and communicate their values and purpose clearly.

They say money makes the world go round but I don’t think that is true. Money is the oil that facilitates transactions, not the fuel that drives the engine, nor the destination. No business can operate without the support of the people it needs to do its thing. People make the world go round, not money.

It feels to me like the traditional economic model ie paying-workers-to-make-stuff-creates-wealth-and-spending-power-for-those-workers-to-buy-other-stuff (aka ‘money makes the world go round’) is longer fit for purpose.

The economist and writer Kate Raworthcaptures the big picture well in her doughnut economics model. She points out that the traditional economic money-based model fails to account for the finite resources of the earth or the massive human resources involved in unpaid, sharing and collaborative work. She frames human activity within a social foundation that protects human rights for all and planetary environmental boundaries.

The trouble is that profit has been the one-dimensional language of business for so long that the money-money-money approach is deeply embedded into the business psyche and it is hard to let go. Meanwhile, the world is moving on and businesses are getting out of step with the people they serve. Customers, employees, suppliers, partners and neighbours increasingly expect more from the commercial organisations they buy from, work for, work with and live near.

As a result, cracks and gaps are showing up all over the place as businesses scrabble to cope with the fallout from their actions on emissions, workers’ rights, resources, supply chain management and tax. Reputations built on years of profitable trading are being eroded, or in some cases, crumbling away in a matter of weeks.

Businesses often struggle to articulate what it is they mean by sustainability.

In some cases, that is because they don’t really understand what they mean themselves. Good communication requires clarity of message.  You can’t tell a strong sustainability story unless you have a strong sustainability strategy.

That is why concepts like Net Positiveare so powerful. Net Positive is an initiative established in 2013 by Forum for the Future that gives organisations a clear set of principles for making a positive contribution to the world. It is a framework that a business – or indeed any entity – can use to plan its activities to make sure that it has a positive effect in its most important areas of influence.

One reason that some organisations have trouble with sustainability communications is that they are still thinking in terms of reducing harmful impacts; cutting carbon emissions, less waste, fewer food miles.  It doesn’t make for much of a story, because it isn’t one. While I wouldn’t want to knock any organisation’s genuine attempts to improve, the point is that incremental transition to make things ‘a little less bad’ is not enough. We need to turn the story around; to be able to talk about the positive effect that our activities have on the societies and environments in which we act.

When you know what it is that you are trying to do, it is much easier to communicate it to others. A Net Positive effect – now that really is something to shout about.