How to become part of the ‘circular economy’

You might have seen the launch of Marks & Spencer’s shwopping initiative this year, in which Joanna Lumley, as the face of the campaign, encouraged customers to hand in unwanted garments when buying new clothes.

To date, it has collected 5,500 tonnes of old clothes, making a small inroad into the £25m worth of clothes sent to landfill in the UK every year.

Or you may have heard about HP’s green printing initiative, which partnered with Universal’s The Lorax movie to urge people to return empty printer cartridges so they can be recycled into new ones.

These are two of the higher profile examples of “closing the loop”, a concept that has been gaining traction in recent years and is set tobecome the focus of the government-backed Waste and Resources Action Programmes’ (WRAP) campaigning efforts.

In addition, politicians are increasingly keen to endorse the concept. New Resources Minister Lord de Mauley told BusinessGreen he was “very excited” about the idea of developing a “closed loop economy”, although he has so far refused to reveal how the model will inform new government policies.

There are real opportunities to be had from closing the loop. Research by consultancy McKinsey from earlier this year found European manufacturers could save $630bn a year by 2025 if they moved towards greater resource efficiency and reduced their reliance on increasingly rare and costly raw materials.

But not every firm has the resources to drive major new initiatives and promote them via high-profile celebrities. So how do small and medium-sized businesses identify ways of becoming more resource efficient?

This question is a particular concern for WRAP, which at its annual conference last week noted that while a growing number of blue-chip companies are designing waste out of their products, many smaller businesses are failing to get the message.

M&S’s head of sustainability, Mike Barry, predicts the shift to a circular economy is inevitable, and warns that those businesses that fail to embrace the concept will soon be “on their knees”.

If his predictions are right, then some smaller businesses could become victims of the resource crunch, with a downturn in sales and increasing costs squeezing profit margins.

One man’s treasure

Many businesses already take part in basic recycling schemes, but the key to developing a closed loop model lies in recognising waste as a resource and potential revenue stream.

“It might sound dull, but the first place to start is to understand your material flows,” Barry tells BusinessGreen. “It’s not until you understand what comes onto your premises and leaves it, what value it has when it arrives and leaves, that you can start to work out were you make a difference.”

Richard Swanell, director of design and waste prevention at WRAP, says companies should first look to reuse their waste internally. For example, by turning discarded plastic product packaging into recycled carrier bags.

If there’s no opportunity to reuse waste internally, then they can start to look outside to other businesses that may want it. London’s City Hall famously sells its used cooking oil from the canteen to its neighbour PricewaterhouseCoopers, which uses the old chip fat to power its biomass boiler.

Design out waste

Closed loop thinking also means preventing waste at the start of a product’s lifecycle as well as at the end. WRAP is particularly keen to encourage firms to design out waste, with a particular focus on the electronics industry.

“Think about how you can make your products more efficiently, with less waste and more cheaply,” advises Swannell.

“Ask if you can incorporate recycled content into them. And is there a need for lessons that could allow your business to grow significantly if you take advantage of that close loop thinking.”

WRAP maintains this closed loop design process can be easily applied to all types of projects, ranging from consumer goods to giant civil engineering programmes. However, it will typically require firms to work with suppliers, recyclers, and even competitors to get a grip on their entire supply chain.

“You’ve got to understand that you’re not going to do this alone,” says Barry. “Someone might be up in Manchester making ball bearings and don’t know what to do, but if they find another ball bearing maker from Burnley, they’ve cracked it.

“It doesn’t matter what we buyers say you should do, there will be another supplier who’s already got his hands dirty, so this peer-to-peer learning is very important.”

WRAP has a wealth of information on its website on how to develop closed loop models, and those in need of advice are invited to contact the organisation. They can provide help in drawing up a business plan to understand the potential benefits of becoming more waste efficient, as well as tips on how to develop a full-blown closed loop strategy.

Trade associations also often have dedicated sustainability managers who can offer tips for their specific industry, such as manufacturers’ organisation EEF, or not-for-profit body Julie’s Bicycle, which helps those in the arts and creative industries become more sustainable.

If your business has a bit more cash to spare, you could also hire a consultancy to help with advanced closed loop design initiatives.

And if you don’t, you could apply for a share of WRAP’s Waste Prevention Loan Fund that aims to support businesses and social enterprises as they attempt to increase re-use, repair, and recovery capacity, and adopt innovative business models to reduce the products and resources consumed.

New business models

WRAP maintains that alternative business models will play a key role in developing new business opportunities that extend product life, conserve resources, and prevent materials from becoming waste.

Many of these models, such as hire and leasing are not new, but could become increasingly common as businesses seek to become more efficient. This can be seen in the rise of city-based car clubs, which have been shown to help slash the number of cars on roads.

Spotify and Love Film also provide everyday examples of “dematerialised services” business models, selling on-demand music and film via internet or email, eliminating the need for a physical’ product or retail outlet.

M&S’s swop shop, and Tesco’s electrical trade-in offer, give an incentive such as cash or gift vouchers to customers returning unwanted items. Amazon’s trade-in service also allows users to send back books or video games in return for a gift voucher. The old product is then made available for resale on the site.

For M&S, the simple act of returning products at the end of their life, presents another opportunity for a sale, and helps boost customer loyalty. Such is his belief in the concept that Barry reckons businesses should think about creating “closed loop consumers” as well as waste streams.

He maintains that by thinking this way, businesses will increasingly start to think about the service they offer, as well as the product.

It is this kind of thinking that could enable local manufacturers to gain an edge on their overseas competitors. “If you get in a commoditised market place and just try to sell a plastic widget – some guy in China will sell the same thing at half the price,” he says.

“But if you can offer a service proposition that says I’ll rent it and come and fix it if it breaks down in the middle of the night, that takes a different mindset because suddenly your shifting to thinking about the customer first.

“To me there’s much more economic value in that service proposition rather than the physical stuff.”

According to Barry, it is this shift that could play a major role in protecting the UK’s competitiveness over the coming decades.

“By and large the UK won’t succeed on a grand or large scale in 10-20 years’ time if all it’s doing is knocking out widgets,” he warns. “We’ve got to think about this end-to-end service proposition.”

This feature first appeared in BusinessGreen 


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