Closing the Loop: Risk or Reward?


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Closing the Loop: Risk or Reward?

  1. 1. Sponsored byClosing the loop: risk or reward?A White Paper highlighting the opportunities andchallenges of a circular economy
  2. 2. Contents1 Executive summary 04 3 The business perspective 13 3.1 caling the waste hierarchy: the drive for S greater resource efficiency 3.2 ontractual implications for the waste C supply chain2 Working towards circularity: 07 3.3 pportunity knocks: maximising the loop O the state of play 3.4 genda for change: the key influencers A 3.5 oes size matter? D 2.1 oing round in circles – the big disconnect G 2.2 he race for feedstock as the hierarchy T comes of age 2.3 he local authority gatekeepers T 4 The waste supply chain 18 2.4 ront-runner focus: rethink your business F proposition perspective 2.5 ho is influencing the circle of lifecycle W 4.1 he great reclaim game: will the waste T thinking? industry lose out? 2.6 he year ahead: immediate priorities for T 4.2 urvival strategies start to take flight S action 4.3 losed loop collaboration – a safe bet? C 4.4 ind the knowledge gaps M 4.5 lways be prepared: take action to future- A proof Sponsor viewpoint 23Sponsored by |2|
  3. 3. 1 Executive summary Set against a backdrop of global climate how attitudes towards waste and smarter In drawing on the key findings and change, carbon economics and resource resource management were impacting at analysing their implications, this White scarcity, the intrinsically valuable materials different points across the value chain. Paper sets out the evolutionary state and scrap carbon that have for so long of play within business and the waste been locked up in waste streams are now It questioned how attitudes to waste are management supply chain as these becoming highly sought after. But how are changing in both camps and what the likely circular dynamics take hold. organisations reacting to this challenge, implications of this will be, both now and given our current linear ‘take, make, in the future. The resulting White Paper The conclusions drawn are intended to waste’ system? As businesses begin to 35% of provides a narrative to help influence and act as an informative steer for decision- recognise the benefits of an emerging steer thinking in this area, particularly for makers, both within, and outside of, the circular economy and its ability to drive businesses the waste management industry, which waste industry, who are looking at how greater resource productivity, the benefits are actively appears to be in a transitional phase. best to navigate this rapidly changing are perhaps less tangible for the waste landscape and capitalise upon the new management industry. looking to We surveyed 435 companies in total – 361 opportunities it presents. shift their businesses and 74 WMCs – asking them However, as businesses look to reduce resource about the key issues: The premise of a circular economy is environmental impacts and boost the founded on not only extracting greater bottom line by moving waste up the management • ow attitudes among waste producers H value from waste materials, but on hierarchy, the waste supply chain is focus are changing feeding this value back into the industrial ideally placed to help them deliver on elsewhere, • ow fast closed-loop thinking is rising H cycle or in some cases, the biological their ambitions - providing it can react fast up the business agenda cycle. This strategic shift of resource use enough to align itself as a key enabler to seeking new • What strategies are being adopted, and which, according to our research 76% encourage this circularity. alliances by whom of businesses are now looking to align outside of • Whether closed-loop recovery themselves with, is certain to prove highly To examine these issues in more depth, is superseding traditional waste consequential for the waste supply chain and sister title Local Authority the waste management – a sector whose lifeblood is built on Waste Recycling (LAWR) magazine, with industry to • here competition for feedstock is fiercest W securing these materials. sponsor FCC Environment, carried out help them • he evolving nature of the business and T extensive market research among both waste supplier relationship For 54% of businesses, reclaiming waste producers (businesses) and waste deliver on • How best to leverage competitive these waste streams will fundamentally management companies (WMCs) to track this agenda advantage reshape their relationship with the waste Sponsored by |4|
  4. 4. The Resource Revolution This White Paper forms a key output of the Resource Revolution series - an extended campaign centred on the emerging circular economy - comprising rich content, insight, and networking chain – either through specifying There are major risks and rewards for key players in this space and, as thesignificant contractual changes with waste campaign gathers pace, together with sister title LAWR will be chartingmanagement providers or by streamlining these trends and highlighting the game-changers who are redefining the concept ofthe number of providers they deal with. waste and the way it is perceived.Not only this, but 35% of businesses areactively looking to shift their resource More information about the campaign and how it aims to facilitate thoughtmanagement focus elsewhere, seeking leadership can be found at www.resourcerevolution.netnew alliances outside of the waste industryto help them deliver on this agenda.As these trends take hold, wastemanagement companies need to bealert to the possibility that end-of-lifematerial streams could start side-steppingtraditional disposal and treatment routesthat have been their exclusive domain When itfor so long. More than three-quarters waste management companies don’t route forward in order to exploit theseof businesses are also focusing their comes to feel there is a need to adapt or reposition opportunities. Traditional waste collectionefforts on waste minimisation and as closing the their business model in any way to take and disposal arrangements – certainlythese prevention strategies bed down, loop, 72% of advantage of the changing dynamics in the municipal markets – are builtthis will further intensify issues around around waste flows. Consequently there on lengthy contracts with guaranteedfeedstock security. Already 31% of waste businesses is a real danger they might not be able to tonnages. This, together with the fact themanagement companies feel these issues are looking innovate quickly enough as the transition UK is still heavily reliant on landfill, mightare impacting on their operations, with to engage to a circular economy accelerates. be offering a false sense of security to18% voicing real concern. some providers, who feel they don’t need with waste Underpinning this inertia is both to change their service provision model forDespite this, there remains a high management uncertainty and complacency. The nature the foreseeable future.level of inertia within the waste supply providers to of waste is changing as thinking evolveschain to address these fears and react and waste is increasingly viewed as a However, this still leaves one-third ofaccordingly. For most, it is a case of help them resource. The industry is at a crossroads, waste management companies who are‘keep calm and carry on’. Two-thirds of deliver trying to determine and navigate the best already repositioning themselves as theSponsored by |5|
  5. 5. circular economy unfolds. These early biggest gains to be made is in high-valuemovers and adopters appear to be taking extraction of waste materials – an issuea more holistic approach – one based on widely recognised by both businesses andclient-centred consultancy services whichlook to address the wider sustainability their waste supply chains. ABOUT USissues around waste management. For 77% of waste management firms, is used by more than a million sustainability professionals every year to smarter extraction techniques – either in keep up-to-date with the news, informationUltimately, this could drive changes to the form of secondary materials or energy and analysis which directly addresses thecharging models for waste disposal as recovery – represent the biggest single issues affecting their companies. It is andemand grows for smarter value extraction business opportunity over the next five invaluable resource for an increasinglymethods to better prepare materials for years. influential audience of decision makersupcycling, reuse or remanufacture. across the spectrum of small, medium, large This highlights a strong need for technical and enterprise-sized companies in the UK.There are clear commercial gains for these innovation, which is also recognised as aearly movers. When it comes to closing commercial driver in itself by 54% of waste LAWR (Local Authority Waste Recycling) magazine is the UK’s leading monthlythe loop, 72% of businesses surveyed, management providers. Increasingly, the publication for the waste and resourcesaid they are looking to engage with waste waste industry is also recognising the need management industry. It is read by overmanagement providers to help them deliver to broaden its service offering – almost two- 6,500 waste and resource managementit. And the returns could be immediate, with thirds of waste management companies professionals across both the public and30% of businesses planning to maximise said they were diversifying in a bid to be private sectors, as well as by politicalresource use through the implementation more competitive. analysts, government and academia.of a closed loop process for their wastearisings over the next 12 months. Considering all of these factors, it is clear FCC Environment is one of the largest that the waste supply chain needs to recycling and waste management companies in the UK, employing over 2,400 staff acrossWhile this bodes well for the 61% of re-engineer itself to deliver better value, more than 200 facilities in England, Scotlandwaste management firms who can see not only by generating cleaner, more and Wales. It is part of a global group withcommercial benefits arising from the profitable outputs from its waste streams, a strong heritage in providing services foremerging closed loop economy, only 37% but by meeting client-led demand for communities and business. Its vision is toof them feel entering into such initiatives more resource-efficient recovery built be the environmental company of choice,will result in strong revenue generation over on lifecycle analysis and whole systems delivering change for a sustainable future.the next five years. Where most see the thinking.Sponsored by |6|
  6. 6. 2 Working towards circularity: the state of play A circular economy is one in which manufacturers $630bn (£416m) a year by tonnes. The report’s main thrust broadly resources are kept in use for as long as 2025, according to a recent report from the aligns itself with government policy both possible, by extracting the maximum value Ellen MacArthur Foundation [LINK-1]. In at UK and EU level, which is seeking to from them while in use, then recovering light of concerns from manufacturers and More than encourage greater efficiencies in this field and regenerating products and materials their supply chains about rising resource half of through the delivery of zero waste agendas at the end of each service life. As modern scarcity, this approach has been broadly and resource security action plans. day resource management starts to shift welcomed. businesses from a linear to circular economy, the stated However, the emergence of closed loop business opportunity this opens up is The same study calculates that adhering that taking models could present a threat to one immense. to circular economy principles could help particular sector – the waste management UK plc generate savings worth up to greater industry. As manufacturers, retailers Better design and more efficient use £700m annually, while also reducing yearly ownership of and brand leaders seek to take greater of materials could save European greenhouse gas emissions by 7.4 million ownership of their waste streams for their waste commercial gain, the waste industry streams will itself is being fundamentally reshaped result in as a result. The circular economy significant New alliances are now being forged In a circular economy, as opposed to a traditional linear economy, products are intended to be more sustainable, as their design is based around reusable parts, allowing for a contractual outside of traditional waste management simpler end-of-life recovery process. In a circular economy, there is no such thing as changes with markets, resulting in material flow waste – it is effectively designed out the system and becomes raw materials or energy for diversion – not only from landfill, but something else. their waste from the hands of waste management management providers themselves. This is starting to Designing for a circular economy is complex. To try and unravel this complexity, collaboration is needed across the entire value chain, from start-of-life to end-of-life. providers or raise questions around the future security and supply of feedstock levels for these This means that all of the stakeholders involved in the lifecycle of a particular product, streamlining providers. from product designers and material scientists right through to recycling operators and reprocessors, need to come together and work out the best solution. the number of providers 2.1 Going round in circles – the big disconnect they deal There are now clear signs that working with towards a circular economy is presenting Sponsored by |7|
  7. 7. itself as a strong business opportunity, In contrast, most WMCs seem woefully stream. A significant number (44%)but the waste management supply chain unprepared for such a scenario – believing confirmed they were taking measures tois in danger of being left out in the cold as that ‘business as usual’ is a viable option. recover energy from their waste streamsit struggles to understand and navigate Despite admitting significant concerns while just under a third (31%) were activelythese fast-changing resource flow around feedstock security, two-thirds exploring closed loop opportunities.dynamics. of WMCs surveyed (66%) did not feel they would need to adapt their business More than three-quarters of firms (77%)More than three-quarters of businesses models to position themselves at the also said they were focusing their efforts(76%) surveyed said they perceived forefront of the circular economy agenda. on waste minimisation and prevention,the emerging circular economy to be Consequently, there is a real danger they while more than half (59%) were lookingan important driver in becoming more might not be able to innovate quickly for greater reuse opportunities. Both ofresource-efficient – a trend which is enough if their sector should undergo these approaches will effectively takealready starting to reshape their a paradigm shift as it evolves into a materials out of the waste managementbusiness models. As they look to resource-led economy. supply chain. This strategic repositioning –extract greater value from their waste from a linear ‘take, make, waste’ economystreams and feed it back into their supply Almost a 2.2 The race for feedstock as the to a more sustainable circular one –chains, this is likely to have serious third of hierarchy comes of age is already registering serious concernsrepercussions for waste management Crucial to these transformational resource with almost half of the WMCs wecompanies (WMCs). WMCs flow dynamics is the feedstock itself, surveyed. surveyed which is becoming a sought-after asset –More than half of businesses (54%) confirmed both by businesses as they look to close As this race for feedstock intensifies,surveyed stated that taking greater the loop on their operations, and the WMCs will not only have to compete forownership of their waste streams will that issues waste management supply chain whose materials outside of the waste sector,result in significant contractual changes of feedstock livelihood is dependent upon it. but from within their own industry too.with their waste management providers security Almost a third of WMCs surveyed (31%)or streamlining the number of providers The vast majority of businesses surveyed confirmed that issues of feedstockthey deal with. Just over one-third (35%) are now (86%) are now looking to move their waste security are now impacting on theiralso felt that this transition would involve impacting management activities up the hierarchy business, while nearly a fifth (18%)entering into new alliances with key with more than half (52%) seeking to profit said it was of real concern. Feedstockstakeholders outside of the traditional on their from it as they start to view their waste competition from overseas markets, suchwaste sector. business arisings as a potential resource or revenue as the rising demand for refuse-derivedSponsored by |8|
  8. 8. fuel from Europe, was also considered of unlocking future feedstock supply as add value to their service offering andsignificant by more than a fifth of those landfill diversion strategies take hold. capitalise on the opportunities that a morewe surveyed. circular economy might present. It is not surprising that local authorities2.3 The local authority gatekeepers were cited by the vast majority of WMCs Nearly three-quarters of businesses weDespite these uncertainties, a significant as the most important stakeholder group surveyed (72%) are looking to engageamount of potentially valuable material to target or engage with as the circular with WMCs to help them deliver closedremains locked in landfill. National recycling economy agenda takes hold – especially loop solutions – this is a huge commercialrates across the UK hover on average as many of these municipal waste opportunity which should not bearound the 40% mark except in Wales collection and disposal services are overlooked.which is edging ahead slightly – outsourced to private waste contractors.last year it broke through the 50% barrier. However, only one-third of WMCsCalls are now intensifying among WMCs for In England, one recent development that surveyed are already reacting to this andmore government intervention to stimulate should sound alarm bells is that municipal believe their business model will need tomarkets and unlock feedstock availability. recycling rates appear to be flatlining, change as a result. For some, a stronger according to latest figures released by emphasis on more client-based strategicIntroducing measures such as landfill Defra [LINK-2], bucking the trend of thinking around wider sustainability issuesbans of certain materials including waste year-on-year percentage increases. This was considered necessary coupled withwood and food were considered by could be due to local authority service There a rethink of charging models for wasterespondents to be important levers in this provision cutbacks as economic pressures are huge disposal. Others saw benefit in the needrespect, coupled with better regulation and take hold, but may also indicate a lack of for more data intelligence to matchenforcement of existing policies. A more suitable treatment capacity on the ground. disconnects feedstock availability with treatmentprescriptive zero waste policy, especially in Unless this trend is reversed, tensions between infrastructure capacity.England, was also thought desirable. around feedstock availability will only start-of-life heighten going forward. This would appear to reflect growingCrucial to facilitating this strategic rethink (product client-based demand, particularly in theare the local authorities themselves who 2.4 Front-runner focus: rethink your designers) blue chip sector, for more consultancy-ledare mandated to oversee the collection, business proposition and end-of- services based around waste preventiontreatment and disposal of large tonnages of Set against this backdrop of rising that can be rolled out across the entiremunicipal waste. Consequently, they have a feedstock security concerns, WMCs life (WMCs) supply chain. Linked to this is a risingvaluable gate-keeping role to play in terms need to seriously consider how they can industries requirement for smarter value extractionSponsored by |9|
  9. 9. methods to better prepare materials for Who is influencing the circle?upcycling, reuse or remanufacture. Stakeholders, ranked by waste producers and WMCs, in terms of their importance to the circular economyInterestingly, more than three-quarter of Businesses Waste management companiesWMC respondents we surveyed (77%) –regardless of whether they were looking tochange their business model or not – saidthat extracting more value from wastepresented the single biggest commercialopportunity as the resource management 2.52 2.45agenda unfolds over the next five years. 2.67 2.80Despite this, there remains a high level 2.68 2.90of business inertia among most WMCsin reacting to these drivers. Some may 2.75 2.97be harbouring a reluctance to change 2.82 2.97while perception exists that they have asafe supply of materials to tap into for 3.04 2.45the foreseeable future. This is likely to be 3.15 3.41particularly true for those operating in the 3.23 3.28municipal waste market, where disposalcontracts can stretch for up to 30 years 3.52 3.35with guaranteed feedstock levels built intosuch arrangements. Key Reprocessors Waste contractors 2.5 Who is influencing the circle of Manufacturerslifecycle thinking? Product designersWaste contractors, reprocessors and Local authorities Government manufacturers are perceived by both Public sector bodies waste producers and WMCs to be the top Brand owners three stakeholder groups leading on the Retailers Sponsored by | 10 |
  10. 10. circular economy agenda according to our disconnects between start-of-life (productsurvey. designers) and end-of-life (WMCs) industries and a pressing need for moreThis is not surprising, given all three communication between the two ends ofare highly materials-focused in their the chain if a true circular economy is tooperations. A 2012 study from EEF, the be realised.manufacturer’s organisation, found that80% of its members thought raw materials Encouragingly, these issues are recognisedshortages now pose a risk to their and starting to be addressed with thebusiness [LINK-3]. advent of ‘teardown labs’ hosted by Why is behaviour changeAmong businesses, product designers organisations such as the Ellen MacArthur Foundation [LINK-4] and the RSA Great so important?were also ranked higher than average Recovery Project [LINK-5]. A true circular economy cannot be realised unless therein terms of influence and leadership, is sustainable consumption. This is one of the biggestsuggesting a growing awareness of These labs aim to forge strategic alliances challenges as it requires the engagement of not just business and government, but consumers too.the importance of lifecycle analysis as between key stakeholder groups tobusinesses begin to think more holistically examine the challenges of product Organisations must explore ways they can leverageabout how materials and energy flow disassembly in a practical way and their potential to deepen customer loyalty by involvingthrough the industrial system. encourage more lifecycle thinking across them in closing sustainability loops through reusing the value chain. The Technology Strategy and repurposing. They must also encourage their ownThat said, only a fifth of companies are Board [LINK-6] is also offering funds employees to replicate green actions carried out in theactively seeking to engage with product for research and pilot projects aimed at home, such as switching off lights and recycling, in thedesigners to influence thinking in this recovering problematic materials. work environment.field, indicating a strong collaborative Larger corporations, such as brand leaders, need to finddisconnect. Looking ahead, demand for facilitation creative ways to highlight consumers as part of the roles to enable more collaborative solution and identify how best to reframe ownershipMeanwhile WMCs perceive product thinking is likely to grow. WRAP (Waste around a new, sharing economy. This will also requiredesigners as showing the lowest levels of Resources Action Programme) will alternative business models built around service, leasing,leadership in the circular economy agenda. play a central role here, particularly hire and refurb options. by enabling big business to becomeThis would suggest that there are huge more resource-efficient through theSponsored by | 11 |
  11. 11. development of alternative models that movers. Over the next 12 months, almost stakeholders outside of the traditionalcentre on waste prevention and high value a third of businesses we surveyed (30%) waste industry. Manufacturers, forrecovery. The Circular Economy Taskforce stated they were planning to maximise instance, see partnering with other[LINK-7], launched last year, has also resource use through the implementation manufacturers as key to closing the loopbrought together leading businesses to of a closed loop process for their waste due to the interconnectivity of supplyunderstand how circular models can be arisings. Significantly, a quarter of these chains, while a significant number publicdeveloped in a way that keeps companies companies are actively looking to engage sector organisations and consultanciesprofitable. On a more global level, the with interested parties to realise these are seeking closer ties with governmentEllen MacArthur Foundation has set up ambitions. This pull towards more bodies.the Circular Economy 100, a consortium external collaboration appears to beof 100 businesses, to help accelerate the most prevalent in the manufacturing and It is imperative that WMCs react to thesetransition to a circular economy over the construction industries and the public emerging trends by taking a panoramicnext three years. sector, across all company sizes – view of resource management and start from large corporations to SMEs and to add value, perhaps through tailored2.6 The year ahead: immediate priorities micro-organisations. service models or service diversification.for action Waste management audits and contractsAs the business case builds for moving While most of these companies see the must take account of minimisation andtowards a circular economy, there are value in entering into strategic alliances prevention strategies with in-builtclearly strong commercial opportunities with WMCs, a sizeable number are flexibility to address the possibility ofalready out there for early adopters and also looking to join forces with other changing waste flow compositions.Who are businesses looking to engage with to close the loop? Waste Manufacturers Local authorities Government Reprocessors Energy Public sector Retailers Product Brand ownerscontractors 57% 44% 43% 39% providers bodies 35% designers 19% 72% 36% 36% 22%Sponsored by | 12 |
  12. 12. 3 The business perspective waste streams while almost one-third 3.1 Scaling the waste hierarchy: the (31%) are actively exploring closed loop drive for greater resource efficiency opportunities. Perhaps unsurprisingly, According to our survey, 86% of given rising concerns around raw material businesses are looking to become more security, manufacturers expressed resource-efficient and move their waste significantly more interest in closed loop management activities up the hierarchy. initiatives than retailers. More than half (52%) are seeking to profit from this strategy as they start to view HOw businesses Recovering both materials and energy their waste arisings as a potential resource are moving waste up the from waste was viewed as offering the or revenue stream. most profit potential by slightly less than hierarchy half of companies surveyed (49%), while Increasing recycling rates is considered more than a third (39%) thought secondary the easiest and fastest way to achieve 82% Increasing recycling rates materials offered better value compared better resource efficiency, with the with renewable energy (12%). majority of businesses (82%) focusing their efforts on it, followed by better 77% Better waste prevention In terms of material stream value, on waste minimisation and prevention average metals (aluminium/steel) and (77%). In terms of a sector split, appetite paper and card rated highest among for improving recycling levels and minimisation strategies is highest among 59% A greater focus on reuse respondents, followed by plastics (PET and HDPE), food waste, WEEE/precious retailers, manufacturers and public sector metals, and lastly glass, which was organisations. 51% Zero waste to landfill targets perceived as having the lowest value. Reuse is also rising up the agenda – more There was, however, a sector split at the than half of companies (59%) are looking top of the table, as recovery of metals for greater reuse opportunities – while half 44% Energy recovery was thought to offer most value by (51%) have set themselves zero-waste-to- manufacturers, construction firms, public landfill targets. sector bodies and those working in power 31% Closed loop initiatives and utilities, while paper and card were A significant number (44%) are also taking singled out as being of most value by the measures to recover energy from their retail sector. Sponsored by | 13 |
  13. 13. The zero waste agenda Zero waste means going further than maximising recycling levels to prevent waste going to landfill. It 3.2 Contractual implications for the encourages thinking around better minimisation strategies to effectively ‘design out waste’ in the industrial system. waste supply chain Significantly, more than half of businesses In the UK, the waste debate has traditionally revolved around meeting EU landfill targets and packaging (54%) stated that taking greater ownership regulations. However there is a growing realisation that more legislative drivers are needed to target waste of their waste streams will result in prevention and, as such, England, Scotland, Wales and Northern Ireland have embarked on the first step towards comprehensive contractual changes with this by setting out their respective visions of zero waste society. their waste management providers or streamlining the number of providers they Scotland’s vision is considered the most ambitious and prescriptive. The Scottish Government’s Zero Waste Plan deal with. includes landfill bans for specific waste streams, separate collections for food waste, restrictions on energy- from-waste feedstock and measures to cut the carbon impact of waste. Under the plan, businesses are targeted to reach 75% recycling levels by 2025, with just 5% of waste being sent to landfill. More than one-third (35%) also felt that this transition would involve entering Wales has taken a long-term view with regard to waste. Its Towards Zero Waste plan sets out a framework for into new alliances with key stakeholders improving resource efficiency stretching up to 2050. Measures include waste prevention, separate collection outside of the traditional waste sector. of food waste and kerbside sorting for dry recyclables. It also sets out a 70% recycling rate for commercial and industrial waste by 2025, with an interim goal of 67% by 2020. The Welsh Assembly is also drawing up sector As the majority of businesses (76%) plans covering markets such as municipal, wholesale and retail waste, and construction and demolition waste. perceive the circular economy to be an important resource-efficiency driver, this England, by contrast, is taking a less prescriptive approach with its Waste Review that works towards a zero is already starting to reshape business waste economy by increasing reuse and recycling levels. The document is primarily based on businesses and other organisations meeting voluntary targets, but the Government is also looking to strengthen this with the models. In fact, one-third of companies we publication of a waste prevention programme towards the end of this year. surveyed said their business model was already changing to reflect this trend. The Government did consult over proposals to introduce a landfill ban for wood waste, but has decided not to go ahead with this for the meantime. Landfill ban proposals for textiles and food waste have also been put on Interestingly, this trend towards waste hold pending further consultation and evidence gathering. supplier consolidation and evolving business models appears to be most apparent in the Meanwhile Northern Ireland’s waste strategy, set out in Towards Resource Management: The Northern Ireland upper end of the value chain, i.e. the retail Waste Management Strategy 2006-2020, is currently under review. A framework for waste prevention in sector. Further downstream, the majority Northern Ireland was published in 2005 but this is likely to be superseded by a waste prevention programme later this year. The Department of the Environment NI has also consulted on introducing landfill bans for specific of manufacturers seem happy with their materials and a strengthened recycling policy for municipal waste. existing waste management arrangements and operational systems. | 14 |Sponsored by
  14. 14. 3.3 Opportunity knocks: maximising the Companies, by business sector, looking to to help them deliver on this. However,loop implement closed loop processes over the various other key stakeholder groupsLooking ahead to the immediate future, next 12 months such as manufacturers, reprocessors,30% of waste producer respondents local authorities, retailers and energystated they were planning to maximise providers were also considered important,resource use through the implementation suggesting that multi-disciplinaryof a closed loop process for their waste collaboration will be essential.arisings over the next 12 months. 21%Manufacturers in particular are looking 3.4 Agenda for change: the keyto seize on opportunities here – despite influencerstheir stated satisfaction with existing Retail Sector In terms of leading on the circular economycontractual and operational arrangements, agenda, waste producers perceivethis could result in fundamental changes waste contractors and reprocessors toon both fronts. be at the forefront, which is perhaps not surprising, given the expertise of these twoOf those seeking to close the loop, one-third (34%) of businesses have alreadyimplemented such a system while a fifth 29% Public Sector stakeholder groups on end-of-life materials handling and value extraction.(20%) were already in discussions with Further down the value chainkey stakeholders. Significantly, a quarter manufacturers and product designersof companies (25%) are actively looking were also ranked higher than average into engage with interested parties to terms of leadership by these respondents,help them do this, indicating significantcommercial opportunities in this field –particularly from within the manufacturing 33% Construction suggesting that target strategies around lifecycle analysis and systems thinking are starting to take effect. That said, only a fifthand construction industries, as well as the of waste producers are actively seeking topublic sector. engage with the product creation process to influence thinking in this field.In terms of closing the loop, mostcompanies (72%) are seeking to eitherengage with or target waste contractors 33% Manufacturers This would indicate that many businesses are not putting lifecycle thinking intoSponsored by | 15 |
  15. 15. practice early enough in the value chain. customer education and strong messaging along with technical know-how (22%),Unsurprisingly, the one business sector on behaviour change. Most lack of business model innovation (20%),significantly ahead of the curve in this risk-averse mindsets (20%), consumerrespect is manufacturing – three-quarters This concern is compounded by the fact companies engagement (17%) and value chainof manufacturers surveyed said they were that behaviour change was felt to be the (72%) are collaboration (14%).either engaging with or targeting product biggest barrier to achieving a circular lookingdesigners to address this issue. economy and also the chief blocker to Inside the four walls of an organisation, improving in-house resource efficiency. to either behaviour change and lack of awarenessAt the other end of the scale, retailers In terms of the main barriers to achieving engage around the business benefits of a circularscored lowest on average in terms of a circular economy, half of businesses with or economy were perceived to be the mainleadership, followed by brand owners surveyed (50%) cited behaviour change, stumbling blocks to achieving greaterand public sector bodies. This is a cause followed by lack of awareness (43%), target waste resource efficiency by 60% and 55%for concern since all three stakeholder insufficient policy drivers (37%) and contractors of companies respectively. Regulatorygroups are by their very nature, consumer- business inertia (32%). A weak economic pressures such as producer responsibilityfacing and could play a highly influential in climate was also felt to be a contributing to help them and duty of care regimes were felt bydriving sustainable consumption through factor by a quarter of businesses (25%), deliver 45% of companies to be a significant issue, while more than one-third (35%) thought staff engagement needed to Case be addressed. Meanwhile 27% thought greater board-level buy-in was required. John Lewis Partnership study Where changing business perception in snapshot Centriforce Products this regard appears to be impacting most upon the waste supply chain is in service In a move believed to be a first for any UK retailer, John Lewis Partnership is developing a provision. Nearly a third of companies pioneering closed loop business model for its plastics waste. said that a lack of skills and expertise in The company has entered into an agreement with Liverpool-based recycler Centriforce Products to recover plastics waste from Waitrose and John Lewis stores so they can be recycled into useable products. high value waste management (31%) and The retailer is also exploring opportunities to reuse Centriforce products such as plastic planks and sheeting in its inflexible waste contracts (30%) were new store construction programme to achieve a true closed loop process in its plastics waste stream. The move is issues that needed to be addressed. This part of a wider corporate strategy to create greater transparency in its waste management operations. would indicate there is growing demand for waste management services amongSponsored by | 16 |
  16. 16. businesses that address the waste Business attitudes to the circular economy to either have to streamline the numberhierarchy, with clear focus on high value of WMCs they deal with, or significantlyextraction and/or minimisation strategies. change the terms of their contracts going 76% say the concept of circular economy is important to their businessThis trend is starting to be reflected within 8 6% are looking to become more resource-efficient and move their waste up forward, compared with 43% of largerthe waste supply chain itself, particularly the hierarchy firms and 44% of smaller companies.among the more innovative providers who 5 2% now view waste as a potential resource or revenue streamare looking at service diversification (see 3 0% say they are looking to implement a closed loop process for waste Likewise big corporations are leading the arisings over the next 12 monthssection 4.2). 5 4% believe their relationships with waste providers will need to change field in maximising resource use through going forward closing the loop on their waste arisings3.5 Does size matter? with more than a third (37%) planning toNot surprisingly larger companies are implement such a process over the next 12furthest down the line in becoming more months. This compares with 28% of largerresource-efficient, but smaller firms are firms and 25% of smaller companies.also making strong headway. While 95%of medium to large firms (150 – 500 That said, it is smaller organisations thatemployees) and 94% of big corporates appear to be embracing the ideology of a(500+ employees) are looking to move circular economy the most – 82% stated ittheir waste management activities was important to their company, comparedfurther up the hierarchy, 77% of smaller with 78% of larger firms and 68% of bigcompanies (1 – 150 employees) are also corporations.looking to do the same. Similarly, 65% oflarger firms and 56% of big corporations 54% 30% 52% 86% 76% This could suggest that smaller firmsnow regard their waste as a potential profit do not yet have the scale of investmentopportunity compared with 45% of smaller to undertake more closed loop processbusinesses. implementation despite showing most willing.However it is the activity of bigcorporations in this field that is likely This finding is reinforced by board levelto impact most on existing contractual buy-in being less of an issue amongarrangements with waste management smaller firms (18%) than larger companiesproviders. The majority (65%) expect (25%) and big corporations (39%).Sponsored by | 17 |
  17. 17. 4 The waste supply Key Behavioural change Lack of awareness Insufficient policy drivers chain perspective Business inertia Weak economic climate Technical know-how Lack of business model innovation Risk-averse mindsets 4.1 The great reclaim game: will the What are the biggest barriers? Consumer engagement Value chain collaboration waste industry lose out? How waste producers and WMCs rank the barriers to change As businesses look to become more resource-efficient and extract greater value from their waste streams, concerns around feedstock security are heightening Waste producers Waste management companies among waste management companies (WMCs). Nearly a third of WMCs (31%) surveyed confirmed that issues around feedstock security are now impacting on their business, while 18% believe it to be of real concern. 13.6% 11% Looking ahead, these concerns are set to intensify – 42% of WMCs believe 17.3% 12.3% that feedstock security could become 20.1% 20.5% problematic in the future, while 14% say this issue is now on their radar. These 20.3% 26% fears are primarily driven by increased 22% 27.4% competition. 24.5% 27.4% While the majority of WMCs (61%) felt 32% 34.2% this competition would mostly come from within the waste industry, 47% believed 37.3% 39.70 new entrants into the sector such as 43.2% 43.8% manufacturers, retailers and power and 50.1% 47.9% utility firms, who are looking to reclaim materials and energy for their own benefit now pose a serious threat. Competition from overseas markets was also considered significant by more than a fifth (23%) of respondents. Sponsored by | 18 |
  18. 18. Other factors driving concerns over material waste stream that was felt to strategies remain weak in the absence offeedstock security include a greater policy pose a significantly higher security threat further landfill bans.focus at EU level on waste prevention than the rest. This could be due to theand reuse, which in turn is shaping the fact that the circular economy agenda is There are also emerging signs that localGovernment’s zero waste agenda in still forming and a vast amount of material authorities themselves might start side-the UK. A lack of quality materials for resource currently being sent to landfill stepping traditional waste outsourcingrecovery was also cited as a key issue could be unlocked and tapped into. models by aligning themselves with bigamong WMCs, along with the emergence corporates for targeted capture of certainof closed loop economies, the impact of The crunch point for WMCs may come if material streams. Unilever is alreadyproducer responsibility regimes and a lack national recycling levels start to plateau exploring pilot ‘take back’ partnershipsof treatment capacity in the UK. (latest evidence on the ground may with local authorities, for instance [LINK-8]. suggest this is already starting to happenIn terms of feedstock supply, looking in England - see section 3.3). 4.2 Survival strategies start toacross the municipal, commercial and take flightindustrial (CI) and construction waste Other than the landfill tax escalator, In terms of existing contracts, WMCs seemarkets, there was no single end-of-life specific policy drivers for diversion most opportunity in unlocking greaterWhere the waste industry sees the biggest commercial opportunities over the next five years 77% 64% 54% 47% 46% 37% 32% 31%Extracting greater Extracting greater Technological Producer responsibility Service diversification Circular economy Offering more client Targeting higher valuevalue from waste in value from waste innovation collaboration / closed loop consultation materialsform of secondary in form of energy collaborationmaterials recoverySponsored by | 19 |
  19. 19. resource extraction over the next five years to exploit future resource capture by unlock feedstock availability. Introducingin the CI sector – both from blue chip extending their reach into the CI market measures such as landfill bans of certainclients and SMEs. Slight gains from sub- while nearly half (48%) are looking to form materials including waste wood and foodcontractual arrangements with other waste new alliances with waste producers. This were considered to be important levers inproviders are also expected over this time is requiring greater flexibility in service this respect, coupled with better regulationframe, with even smaller gains forecast offering – almost two-thirds of WMCs and enforcement of existing policies.from the municipal and construction waste (65%) stated that they are diversifying A more prescriptive zero waste policy,sectors, suggesting these markets may their business portfolio in a bid to be more especially in England, was also thoughthave reached a plateau. competitive. desirable.The majority of WMCs (80%) are already Greater policy intervention is also being 4.3 Closed loop collaboration – a safereacting to these trends and looking sought by WMCs to stimulate markets and bet? In terms of working towards a circular economy, almost two-thirds of WMCs surveyed (61%) viewed the emergence Case of closed loop models and systems as a business opportunity. That said, a high study degree of uncertainty exists among nearly Coca Cola Enterprises and ECO Plastics snapshot a third (30%) as to whether it will impact upon them in a positive or negative way. In an industry first, Coca-Cola Enterprises and ECO Plastics have established a joint venture to close the loop on plastics bottle recycling in the UK – a move which the bottler giant is Not surprisingly, those that see it as now looking to scale up in Europe. an opportunity are also engaging with, The strategic alliance, Continuum Recycling, brings the recycling process full circle, with used plastic packaging or have plans to engage with, key sorted and reprocessed domestically, before returning to UK shelves as part of another bottle. stakeholders to explore closed loop The capability of this project has more than doubled the amount of bottle-grade recycled plastic (rPET) previously solutions in the next 12 months. Of those, created in Britain, and enabled Coca Cola Enterprises to meet one of its key commitments – to use 25% rPET in all more than a third (36%) are already part its bottles by the end of 2012. of an active closed loop project, while The company is set to build on its achievements by replicating this model in France with a new joint venture with 42% have plans to launch a closed loop PET recycler APPE to boost the capacity of its plastics reprocessing facility by 70%. project or are currently in discussions with stakeholders to embark on such a scheme. | 20 |Sponsored by
  20. 20. Meanwhile more than a fifth of WMCs Despite concerns around feedstock of business model innovation (34%),(22%) are actively looking to engage with security and the transformational business inertia (27%) and technicalinterested parties. dynamics underpinning the move towards know-how (27%). A weak economic a circular economy, two-thirds of WMCs climate appears to be presenting moreOf the key stakeholder groups that WMCs (66%) did not feel they would need to of a challenge to the waste industry thanare looking to engage with or target, local adapt their business models in order to to businesses in this regard, with 44% ofauthorities are cited as being the most position themselves at the forefront of this WMCs believing it to be a key barrier.important (by 73% of respondents). This likely to be because of their government 4.5 Always be prepared: take action tomandate to oversee the collection, 4.4 Mind the knowledge gaps future-prooftreatment and disposal of large tonnages While waste contractors, reprocessors As the resource management agendaof municipal waste and the fact that many Where and manufacturers are perceived by both unfolds over the next five years, theof these services are outsourced to private WMCs and waste producers to be the majority of WMCs (77%) see the biggestWMCs. WMCs top three stakeholder groups leading on commercial opportunities arising from see most the circular economy agenda, there is smarter value extraction techniques, eitherManufacturers were ranked as the second opportunity significant divergence on the perceived in the form of secondary materials ormost important stakeholder group to leadership of product designers and brand energy recovery. This will require a strongengage with by two-thirds (67%) of in unlocking owners. If these knowledge gaps between need for technical innovation, which is alsoWMCs, followed by government (60%), greater start-of-life and end-of-life industries are recognised as a business opportunity inpublic sector bodies (53%), reprocessors resource to be addressed, these stakeholder groups itself by 54% of WMCs.(51%) and retailers (47%). must step out of their silos and collaborate extraction to deepen their understanding of the In addition, 46% of WMCs felt that serviceThe fact government ranks so highly over the next issues at play. diversification will open up new businessis surprising, but this might reflect the five years is channels while 47% saw strategicwaste industry’s desire for more policy These knowledge gaps are underlined by alliances with businesses on producerintervention to in order to stimulate in the CI the fact that nearly half of WMCs surveyed responsibility compliance as a keymarkets around material quality. The sector – both (48%) felt that a lack of awareness was commercial opportunity.importance of engaging with brand from blue the main barrier to achieving a circularowners and product designers was seen economy. Behaviour change was also Interestingly, only about a third of WMCsas significantly less of a priority among chip clients cited as a significant stumbling block (37%) felt closed loop collaborationsWMCs (22% and 9% respectively). and SMEs by 40% of WMCs followed by a lack would offer a clear commercial opportunitySponsored by | 21 |
  21. 21. unlockING future feedstock availability for their business over the next five years.Factors affecting feedstock, ranked by waste management companies This suggests that many are still uncertain as to how the circular economy will unfold and impact upon their operations, and whether or not they will need to reposition their service offering in order to capitalise upon it. 3.50 What is clear from this survey is that better waste management is often seen as a 3.47 30 25 20 15 10 5 0 quick win for businesses looking to reduce their environmental impacts and potentially 3.42 30 25 20 15 10 5 0 30 25 20 15 10 5 0 boost the bottom line. 30 25 20 15 10 5 0 30 25 20 15 10 5 0 30 25 20 15 10 5 0 WMCs would be wise to act now in order to deepen their understanding of the 3.35 3.33 corporate resource efficiency agenda and how it is evolving. This will enable them to react swiftly and cater their service 3.27 provision more effectively to deliver this bottom line value for their client base. Not to do so would miss a clearly emerging business opportunity at a time when the waste management industry’s expertise and technical knowledge in materials handling and resource recovery is most urgently needed. Landfill bans of certain Better regulation and The landfill tax Corporate sustainability Higher local More prescriptive materials enforcement escalator and resource efficiency authority landfill government ‘zero measures diversion targets waste’ policySponsored by | 22 |