Why join the circular economy?

Businesses can play a key role in the transition from a linear economy to one where waste is designed out, and resources kept in use for as long as possible.

But why are some companies perhaps slow to embrace this? “The first barrier is that the circular economy is quite a complicated term,” says Géraldine Noé, head of environmental sustainability, Business in the Community NI. “Grasp the concept fully – and then see the potential in it for your business.” The key is to start simply. “We all recycle our waste at home and we understand that too much packaging is bad. But that’s often the extent of it. Educate yourself and your team and raise awareness.”

From there, go on to the practicalities. “Look at your supply chain,” Noé says. “What are the resources you use as an organisation? What are the raw materials you buy? If you’re in a service industry, what kind of food are you buying, where does it come from?” And after examining all your resources? “Look at the other end of the spectrum – what is your waste? What physical products do you throw away and what do you do with it?”

Current Pressures

At first sight, the coronavirus pandemic has weakened the move towards the circular economy. As Matt Appleby, director at Matt Appleby Consulting and former director, Business in the Community Cymru, points out, “more people [are] using single-use plastics for hygiene reasons and more car journeys are replacing public transport use”. He adds: “One of the biggest impacts is simply the amount of focus that it has taken – if businesses are fighting to survive, there’s little room for anything else. Add to that increased pressure on costs and cash, sometimes a reduction in staff numbers, a negative economic outlook and there’s not a lot of headspace.”

But Appleby is optimistic for one key reason. “Covid has prompted a global conversation about building back better and has given us pause to reflect on the type of society we want to return to,” he says. “And consumers are reconnecting with local businesses, showing a greater appreciation for nature and caring more about where they spend their money and the impact that it has.” All this, Appleby explains, “creates a platform of positive opportunities for businesses to embrace greater circularity”.

Increasing uptake

“There are opportunities to save – through more efficient processes, lower energy/resources costs and higher-value customer relationships,” says Appleby. “But savings may be longer term and require upfront investment. It can be a good idea to look across the potential savings and identify those that will give a quick return to help support the case for investment in longer-term solutions.”

Making the circular economy part of your DNA is also an opportunity to win business. Appleby adds: “Customers are increasingly looking to spend their money with companies offering sustainable, ethical and responsible products and services. Plus, staff and suppliers want to work with businesses they trust and who share their values.” This, in turn, enhances the brand.

Less waste, more innovation

The Ellen MacArthur Foundation was established to accelerate the transition to a circular economy. “Designing out waste allows companies to save money on input costs,” says Joe Murphy, network lead at the foundation. “For example, Winnow offers a service to professional kitchens that helps them save money on ingredients through smarter menu design.” This uses AI-powered software linked to a camera that identifies food waste thrown into a bin on scales – and also captures the volume and weight of the waste. “This data is then fed back to chefs who can optimise menu design, adds Murphy.

Another way to think about financial benefits, explains Murphy, is “by looking for ‘waste equals food’ opportunities, where existing waste streams from one process act as feedstock for another”. He adds that in these symbiotic relationships “raw material inputs often come at low cost, or no cost at all, because the cost of disposal is avoided”.

Tapping into the business ecosystem

“Leasing rather than selling means you do not need to pay for raw materials or components,” Murphy continues. “Instead, your costs shift to reverse logistics and processing repairs or remanufacture. On the revenue side, leasing and not selling allows you to generate multiple revenue streams from the same underlying product.”

There are opportunities to save. But savings may be longer term and require upfront investment. Look across the potential savings and identify those that will give a quick return to help support the case for investment in longer-term solutions

Matt Appleby
Director, Matt Appleby Consulting

Finally, Murphy advises food and drinks operators to “switch to biodegradable packaging for food products, to help increase the quality of food waste. This creates ecosystem value that incentivises the investment in food waste collection and ultimately leads to higher quality compost being returned to the soil.” This ecosystem value point is important when thinking about circular economy solutions and business models, says Murphy, adding: “Small changes can create value for other parts of the system which are often a couple of steps removed from an existing customer – and can help open up a whole new segment of customers.”

Leading the way

So who is blazing a trail for the circular economy around the UK? In Scotland, according to Murphy “the Circularity Capital portfolio is a specialist circular economy fund that’s based here and invests across Europe”. Meanwhile, Zero Waste Scotland is currently investing £18m in the Circular Economy Investment Fund, in the form of grants to SMEs. It focuses on energy, waste, food systems and heat, explores markets for new circular economy products, and supports the uptake of innovative technologies and services. Any Scottish SME or charity can apply.

In Northern Ireland, “Huhtamaki takes the trimmings from McDonald’s manufacturing processes and makes packaging for McDonald’s from it,” says Noé. “So, it’s a great example of a local SME creating a ‘closed loop’ resource recovery.” Additionally, adds Noé, Encirc“creates the world’s most sustainable glass bottles – recyclable, but energy-intensive when you melt it to produce something else”. And the result of using energy from burning ultra-low-carbon biofuels is “bottles with the lowest impact in the world”.

In Wales, “Bluestone National Park Resort is a really good example of the circular economy in action,” says Appleby, with a focus on biodiversity, renewable energy and waste management. “Riversimple (an eco-car manufacturer that leases rather than sells) has recently launched a Circular Economy Innovation Centre. And Dusty’s Pizzeria will be a case study for sustainable restaurant design at its forthcoming Warden’s House project.”

In England, Murphy says: “There are some great companies in the ReLondon portfolio.” These include Delphis eco-cleaning, Olio Exchange, which is an app connecting neighbours to share food and reduce waste, Bio-bean, which turns coffee grounds into biofuel, and Fruu, which makes cosmetics from fruit by-products. All of these businesses are generating consistent revenue from their circular economy models.

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