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Businesses take the closed loop lead

When I spoke at the CIWM conference in June, I was struck by how much conversation there was on the circular economy. This concept offers a truly sustainable opportunity for growth, whilst offering some protection against external instabilities, be they environmental, political, financial etc. In my WRAP role, I’m inspired on a daily basis by British companies forging ahead with ‘better business’, embedding a circular approach into the core of their business, without waiting for this to be driven from government targets, legislation or funding.

The circular economy is about re-coupling our natural resources with our future. It isn’t just about doing the right thing environmentally but integral to sustaining our economy. The McKinsey analysis for Ellen MacArthur’s recent report put a net material cost saving of up to $630 billion (£430bn), per year, by 2025. This is based on the premise that just a sub-set of the EU manufacturing sector adopted circular economy principles. In reality, there will be costs to set these savings up - we need collections, infrastructure, processing etc.

However these costs will be small fry compared to dealing with the impacts of climate change. In 2006, the Stern report found that the benefits of strong, early action on climate change would considerably outweigh the costs. Unabated climate change could cost the world at least 5% of GDP each year; if more dramatic predictions come to pass, the cost could be more than 20% of GDP. However, by taking early action, the cost of reducing emissions could be limited to around 1% of global GDP.

‘Closed loop’ is modelled on nature and since multicellular ecosystems have been functioning pretty well on earth for the last billion years; it seems to me a pretty good model to follow

Despite the disappointing lack of international agreement at Rio+20, I’ve been encouraged by businesses taking the lead, embedding a circular approach into their plans and delivery. Unilever’s recent partnership with Brentwood and Chelmsford councils is a good example of a big corporate spotting a unique opportunity to make a difference. PG Tips, amongst other Unilever brands, recognised the environmental impact of teabags going to landfill and wanted to do something positive. Teaming up with local authorities, Unilever, via PG Tips’ chimp mascot, aims to do encourage Essex residents to “do the right thing” by using their household food waste collections. This investment demonstrates real commitment by Unilever and this is a business living its values, outlined within the Unilever Sustainable Living Plan.

Coca-Cola’s investment into the world’s largest and most sophisticated plastic bottle re-processing facility has also received much write up and rightly so. It has succeeded in doubling the capacity for food grade plastic recycling in Great Britain. As Nick Brown, Associate Director for recycling at Coca Cola Enterprises said: “it’s about knowing where you can have an impact”. CCE isn’t alone, there are numerous other big corporates eyeing the business opportunities in sustainability, recognising the competitive advantage that partnership, leadership and ‘better’ business bring.

For around ten years now, I’ve been a judge on the Business Commitment to the Environment (BCE) Leadership Awards. This scheme is one of the most prestigious environmental award schemes in the UK and is sponsored by business, for business. Awards are only given if companies can prove they are meeting the commercial demands of the present, without compromising the environment for future generations.

This year AkzoNobel Decorative Paints UK (developers of brand names Dulux, Polycell and Cuprinol) won the Sir Peter Parker Award for leadership, commitment, innovation and demonstration of real environmental benefits. The company has not only invested a £100 million world-class high tech manufacturing plant in north east England, but also demonstrated the commercial case for sustainability in its sector. Living its approach, it created an ‘environmental impact analyser’ and used this to create the Dulux Trade Ecosure range. This range has 15% less embodied carbon and uses 20% less water during manufacture, and is sold in 25% recycled content packaging. It’s a hit with the trade too because AkzoNobel also invested heavily in training staff and raising awareness with customers.

Using the resources we have in a better, more efficient way in the first place is part of better business. But as I discussed in my March column, we can also extract valuable materials from ‘waste’ so they can be re-used. According to Chatham House, one tonne of ore from a gold mine produces just five grams of gold on average. A tonne of discarded mobile phones can yield up to 150 grams of gold – not to mention other critical raw materials such as indium or terbium, also essential components of mobile technology. As outlined in Defra’s Resource Security Action Plan published in March, the trick is finding the technology to extract these resources, and stimulating the market and price. WRAP is actively looking into this, particularly extraction from WEEE and we hope to publish further work later this year.

Encouraging this ‘closed loop economy’ is WRAP’s bread and butter. Finding ways to re-use, re-manufacture and recycle more, with ‘waste’ naturally eliminated as it becomes a new product (e.g. compost) is why we’re here. This flow of resources is modelled on nature and since multicellular ecosystems have been functioning pretty well on earth for the last billion years; it seems to me a pretty good model to follow.

We are living in an era of transformational, disruptive change. Moving to a circular economy is not just possible but essential, in my view, to sustaining life on the planet. The good news is that it’s already starting to happen.

Bluestone National Park resort in Pembrokeshire won the Premier Award in Management for Resource Efficiency. Bluestone opened at the height of the recession in 2008, employing 450 people and was described as ‘the biggest, most ambitious start up Wales has ever seen’. It is currently thriving, attracting 50-60,000 visitors every year. William McNamara, the founder, embeds true sustainability in the heart of his business plan. This means showing leadership and working in partnership. McNamara supports the local farming community buying locally grown biomass crops to supply all 280 lodges and its five star facilities with renewable, cheap energy. Each lodge features a range of sustainability driven designs including ‘superb’ insulation, LED lighting and solar panels. With plans to further utilize natural resources more efficiently, a solar farm, energy from AD and wind turbines are all due to be complete over the next 12 months. Bluestone is another business going from strength to strength, embedding a circular and partnership approach at its core.

In ten years’ time, I believe businesses, not Governments, will be leading this loop, and reaping financial, social and environmental rewards. If the Earth was a business, we’d be looking at cutting out the waste, improving the inefficiencies and working smarter. We need to see more ‘firms of the future’ – flexible, adaptive, creative – determined to do ‘better’ business. All of this year’s winners of the BCE awards have demonstrated not just the possibilities, but also the realities of ‘better’ business. What else is possible? Sir Nicholas Stern believes shifting the world onto a low carbon path could eventually benefit the economy by $2.5 trillion a year. The future is ours to make, the answers may be yours.

Marcus Gover, Director of the Closed Loop Economy, WRAP

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