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New retail thinking on waste

The Government’s imperative on waste reduction and zero waste to landfill is increasingly being embraced by industry. Individual businesses are mobilising towards new models such as closed loop systems.

Several retail giants have led the way in going zero waste to landfill, or have committed to doing so, such as Marks and Spencer, John Lewis, B&Q and IKEA; significant progress has been made on packaging waste via a voluntary agreement that many retail giants have signed up to; and some brands are spearheading new ways of doing business that channel waste back into the economy.

WRAP’s chief executive, Liz Goodwin, told MRW to expect even more focus on reducing waste and thinking about different approaches in the coming year “as we become more aware of the issues around resource security and resource efficiency in general”.

“Resource security, energy costs, rising landfill charges, the need to adapt to and comply with new and changing regulation such as the Waste (England & Wales) Regulations 2011 and forthcoming WEEE legislation all present their own unique pressures – and all this against a backdrop of a tough economic climate,” she added.

The most compelling argument for businesses paying more attention to their waste strategies is a financial one. Defra estimates UK businesses could be losing 2% of their profits through the mismanagement of resources, and could save £23bn a year by using their resources, including materials, more efficiently.

A striking example of this is IKEA which in the UK and Ireland is now making a profit from waste. IKEA’s sustainable development manager Charlie Browne told MRW that last year the retail giant’s 19 UK and Ireland stores  diverted 86% of waste from landfill and made £120,000 from selling its recyclables  to reprocessors. In 2003, it spent nearly £1m getting rid of it from 11 stores.

Biffa’s Integrated Waste Management (IWM), a consultancy branch of the waste management company, say it has achieved ‘zero2’ - zero waste to landfill and zero waste costs - with a number of their clients, including Premier Foods, Maple Leaf Bakeries and Moy Park.

But it is not only big retail and catering brands that are taking on the challenge of waste reduction. Recently the Silverburn shopping mall in Glasgow increased its recycling rate from 9% to 97% in a matter of six weeks. Their waste contractor, Shanks, says this move has reduced their landfill costs by 50%.

Jonny Hazell, a policy advisor for the Green Alliance Circular Economy Task Force, predicts that in 2013 this trend will continue: “Large retail/commercial waste producers will increasingly turn costs into profits by taking steps to segregate waste streams and market them as resources.”

On some occasions whole sectors come together to tackle specific waste issues - and reap the financial and environmental rewards - by agreeing waste reduction roadmaps (see dairy roadmap case study below) or by signing up to voluntary agreements.

The most obvious example is the success of the Courtauld Commitment to tackle food packaging waste. The voluntary agreement’s 53 signatories, including M& S, Tesco, Sainsbury’s, Nestle and Coca Cola, have achieved their goal of a 5% reduction in supply chain waste. It is still too early to be definitive, but indications are that packaging waste cuts were on track to hit the target of 10% by the end of 2012.

This success has paved the way for a third phase in the agreement, which is likely to focus on waste arising across the whole supply chain. WRAP says details of this phase will be announced in the Spring.

Andrew Opie, food policy director of the British Retail Consortium (BRC) told MRW that the next stage will also cover utilising food waste, “with a particular focus on re-distribution” because of high food prices expected in the first half of 2013. WRAP figures indicate avoidable food waste has a value of £12bn per year, which works out at £480 per family in the UK.

Work will also be ongoing to cut food waste in the hospitality sector after WRAP launched the Hospitality and Food Service Agreement in June 2012. WRAP research revealed that work to prevent food waste and send unavoidable food waste to anaerobic digestion (AD) plants could save the sector £720m a year.

Supermarket giants have also been getting in on the act of tackling food waste. Waitrose has pledged to keep its waste out of landfill by the end of the financial year, Sainsbury’s diverts all of its food waste from landfill by sending it to food banks or to AD plants, and M&S has almost closed the loop on food waste by sending 89% of its food waste to AD plants - the resulting energy is used in M&S stores.

M&S, Ikea and Coca Cola are major players. But SMEs can find it challenging to access suitable waste and recycling services, David Caro, chair of the Environment & Energy Policy Unit at the Federation of Small Businesses (FSB) told MRW. This is a complex problem: many local authorities do not offer waste or recycling for businesses, SMEs produce low volumes of waste so they may find it hard to attract a service, and acording to FSB data, 26% of small businesses that are dependent on a private waste services have been subjected to unfair price increases.

Mike Barry, head of sustainable business at Marks and Spencer told MRW: “Business will keep pushing traditional waste/packaging reduction partly environmental partly to save money. But 2013 will also see a wider and more holistic look at closed loop business models that move beyond traditional efficiency focus.”

In November MRW reported comments from Barry that the circular economy was now inevitable and would protect retailers from resource price volatility. He said at the time: “Closed loop has a commercial imperative and responds to a rapidly emerging parallel economy – the sharing economy.”

In a sharing economy, made possible by social media and other platforms, people exchange or barter products with each other. One example is eBay, where consumers bypass traditional retailers. The sharing economy has grown from basic skill-sharing sites rooted in the environmental movement to a serious commercial challenge - indicated by the recent acquisition of Zipcar by Avis for $500m.

Shwopping

The sharing economy is a trend that M&S is taking very seriously and, in response, has been at the forefront of the surge to push different business models with their highly publicised ‘Shwopping’ initiative with Oxfam, which last year saw the retailer collecting clothes to recycle them into new garments. This closed loop system, where resources are fed back into the production cycle, turned out cheaper, with a winter coat made of recycled wool costing £89 instead of £150 that would be the equivalent in new wool.

In 2011, ‘Plan A’ saved M&S £105m net. Other retailers have followed the lead, with H&M announcing a similar clothes recycling scheme in December 2012.

The Shwopping initiative is a good example of collaboration, one of the key identifiable attributes - so far - of successful closed loop arrangements. (See the Coca-Cola and ECO plastics case study below, hailed as a blueprint for producer responsibility.)

There are financial gains in working collaboratively, as well as environmental ones. For instance, Biffa’s IWM works by linking waste producers with partners willing to pay to recycle the waste - for example cooking oil collected and processed into biodiesel, or timber waste into sawdust used in steel production. IWM says greater cost savings can be reaped through this approach than via the economies of scale that can be found via conventional national contracts.

“For the circular economy to work we need different parts of the supply chain to work together to build circularity into their business relationships.” said the Green Alliance Circular Economy Task Force’s Hazell, “Closer collaboration between supply chain partners will mean end of life treatment is increasingly considered at the design phase and enable more closed loop manufacturing and recycling systems.”

Collaboration and designing out waste go hand-in-hand. The BRC have said that this year supply chain collaboration to design out waste will dominate retailer efforts around sustainability.

Case studies: Innovative business models

 Collaboration

 A pioneering joint venture worth £125m between Coca-Cola Enterprises (CCE) and ECO Plastics marked the start of closed loop plastics recycling in the UK. Continuum Recycling, the world’s largest PET (polyethylene terephthalate) recycling plant, which is based at the ECO Plastics factory in in Lincolnshire, opened in May 2012 and doubled the recycled plastics produced in the UK (MRW.co.uk/8630243.article).

Continuum’s role is as a bottle to bottle plant, with packaging from Great Britain recycled here and rPET Coca-Cola bottles back on our shelves within a month. The factory can generate recycling 40,000 tonnes of bottle-grade rPET pellets a year. The deal allowed Coca-Cola to achieve its target of 25% recycled material in all bottles.

Lord Henley, formerly at Defra called the collaboration an “innovative blueprint for the future” in terms of producer responsibility.

 Design

Plastic Milk Bottles

The dairy industry, with the help of WRAP, has improved the recyclability and recycled content of HDPE (High Density Polyethylene) plastic milk bottles to create the world’s first process to recycle HDPE bottles back into food grade rHDPE milk bottles, effectively creating a closed loop system.  

 The Dairy Roadmap set targets for the use of rHDPE in new milk bottles of 10% by 2010 (achieved), 30% by 2015 and 50% by 2020.

 WRAP helped to support the roadmap by running an R&D project to improve the quality of rHDPE, so more of it could be used in milk bottles, and also by issuing a guidance on milk bottle design to allow designers to increase the content of the improved rHDPE.

 rHDPE is processed at plants such as Closed Loop Recycling in Dagenham, London.

There are ongoing efforts to focus on product design, such as the Technology Strategy Board’s competition into closed loop product  design, which is entering its second round of applications in February. The RSA (The Royal Society for the encouragement of Art, Manufactures and Commerce) has been putting on a series of supporting events in parallel, which explore designing out waste under the banner ‘The Great Recovery’.

The FSB’s Caro told MRW: “There is an opportunity for small business to respond to changing consumer demand for more sustainable goods.

“The FSB also urges the Government to explore the potential for upstream incentives to encourage businesses to ‘design out’ waste and ‘design in’ recovery of materials during the manufacturing stage. This could be done through reforming the SME R&D tax credit scheme to allow it to support businesses that need support to remanufacture and modify existing products.”

Another possible business model that retailer have been tentatively exploring is rental and leasing so that resources can be recaptured and then repurposed. B&Q has experimented with renting out tools but now its waste strategy focuses on increasing recycling and also reuse through its waste donation programme.

Towards the end of 2012 it was reported in the Financial Times that Ikea is exploring the possibility of the long-term leases of its kitchens, but Browne could not confirm this was going to take place, and said the company was still discussing the matter.

Rental models do not seem to have taken off, and there remains the need to demonstrate more examples of the circular economy in practice and generate more of an upswell of closed loop systems - but significant headway is being made.

“It is good to see a growth over recent months in really interesting debate around the concept of a circular economy,” said WRAP’s Goodwin.

Now it’s time for business to walk the walk.

 

Advice for retailers: How to get strategic about your waste

 Andrew Opie, BRC: “Make full use of the Government sponsored advisory bodies that are free of charge and geared up to give good practical advice. Bodies such as WRAP and Zero Waste Scotland are there to help all retailers but particularly useful for SMEs to help them focus on the issue and the potential cost savings.”

 Jonny Hazell, Green Alliance:  “Work with your supply chain partners to increase the reusability, recyclability and recycled content of the materials/products you buy in; review your waste management systems to ensure you are producing clean, segregated waste materials wherever possible; and make sure you are sharing in the value of those materials by marketing what you can for reuse/recycling.

 “For any problem waste streams get in touch with your local branch of the National Industrial Symbiosis Programme (NISP) to see if there’s anyone who would be happy to take it.”

 Mike Barry, Marks and Spencer: “Keep going. Virtually everyone of our initial Plan A waste targets in 2007 looked impossible – from zero waste to landfill, to 25% packaging reduction, to clothing recycling. We’ve not got solutions to them all because we kept pushing and the solutions have brought major economic benefits.”

 Liz Goodwin, WRAP: “We understand the pressure businesses are under, so we’d encourage you visit WRAPs business resource efficiency (BRE) hub; where they can find free online tools and resources to help them prevent waste and save money.

“We’d also encourage them to look beyond simple segregation and recycling, and ask, for example, can any materials be re-used?  Are there waste prevention measures they can take? Many of these measures are likely to incur no, or low cost.  Measuring and monitoring the resources they currently use (raw materials, energy and water) and the waste produced will help identify areas in which savings can be made.

“And we can offer access to finance through loan funds and grants.”

 

d also by issuing a guidance on milk bottle design to allow designers to increase the content of the improved rHDPE.

 rHDPE is processed at plants such as Closed Loop Recycling in Dagenham, London.

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