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Time to refocus the corporate mindset

To some, the circular economy may seem a rather fashionable statement.

But it is something many parts of the waste industry have been doing for years: closed loop recycling. It is about getting the best value from a resource that can be used time and again, following the principles of the waste hierarchy. In this way, reduction and reuse are given priority, making ‘zero waste’ a reality and not just a target on a spreadsheet.

Simple? Well, no, because the complexities of generating a resource-efficient economy require new ways of thinking and new business models if we are really going to achieve the potential benefits.

So what challenges are businesses and organisations facing? DS Smith does not profess to know all the answers but, in the spirit of collaboration, it held a workshop earlier in the year to bring people together from all industries to discuss some of the issues and opportunities around the topic. What did people understand about the circular economy and how did they think it applied to them?

Following the debate, DS Smith collated the discussions within a white paper, One Step Away from Zero Waste, which illustrates that a collaborative approach across the supply chain is the best way to achieve zero waste.

The discussions centred around so-called ‘enablers’ and ‘blockers’ surrounding the four pillars or building blocks of the circular economy: product design, business models, reverse networks and enabling conditions.

Product design

The design of products and packaging plays an influential role because decisions made at the design stage affect the whole supply cycle, especially at end of life. Improving requirements in procurement is essential. In the past few months, there have been calls for a greater emphasis on green public procurement to help drive momentum. But the role of procurement divided delegates, who saw it as both an enabler and a blocker of the circular economy.

When things have worked well, why change? In some quarters, there is a reluctance to try a different approach, meaning that people may face an uphill battle if they wish to introduce something new. But others felt that procurement offered great opportunities to challenge, ask questions and find new solutions rather than produce something because it has always been done that way.

As one delegate said: “The role of procurement… is going beyond just having a defined specification and getting people to think about it. What is the actual end result?”

Business models

Adopting new business models is a fundamental part of moving towards a circular economy. Each industry sector will need to think clearly about the type of model that works best for it.

The structure of companies can often be a huge barrier to change. Senior managers can be resistant to change, seeing greater risk than potential opportunities. Creating effective change in any organisation requires buyin from the top, alongside a sufficient structure to enable proper delivery throughout the company. ‘Institutional inertia’ was one term used by workshop groups to describe the situation.

Data is crucial to drive change but, in many instances, there is a lack of available data and auditing protocols are required to highlight areas where change can be beneficial. Without data, businesses are unable to review the fiscal and environmental benefits delivered back to them to facilitate widespread change.

But those with entrepreneurial spirit will forge ahead, taking risk and rethinking the fundamentals.

Reverse networks

This is about redefining how people think about linear models and encouraging them to move towards a supply cycle. It is about considering the way materials flow and how they are reused and recycled.       

The regulatory framework was found to have both a positive and negative impact on reverse networks. On the negative side, legislation was said to be too restrictive in places and market forces were better at driving change. But food waste regulations are helping to drive up volumes and build an infrastructure of reprocessing facilities.

Some delegates felt there was a lack of political leadership and no clear direction. While not wishing for over-subscriptive enforcement, they said that relevant guidance was useful. Many doubted that the UK has the positive and powerful leadership required to make the changes across the economy and for all to benefit from the potential opportunities.

Enabling conditions

A clear policy framework with relevant and specific Government support will be required to make the step change toward a circular economy. But we need a stronger framework than currently exists: a combination of regulations and fiscal measures can help to shape the circular and shrink the linear model.

The existing legislative framework in the UK and Europe is causing barriers to progress. Anti-competitive legislation makes it difficult for companies to talk across different sectors on a European scale and manufacturers to share information across the supply network.

While there is a weakness in the understanding of how a circular economy can work, and the potential benefits, there are plenty of successful ventures. We should make the most of sharing the systems and processes that work, while highlighting those that have not succeeded is equally important. Getting into the habit of regularly sharing experience and knowledge is central to how the circular economy will function.

Collaboration is also central to developing a resilient circular economy. Everyone within the supply cycle needs to collaborate to achieve its potential.

As resource security becomes constrained, businesses will have no option but to refocus their corporate minds. Building a resilient organisation will be the only option for survival, led by senior management commitment and perhaps a redefined purpose of the company. Those that take this thinking on board sooner rather than later will reap the benefits and achieve zero waste.

Mathew Prosser is european commercial director for DS Smith’s recycling division

The white paper One Step Away from Zero Waste can be downloaded at www.dssmith.com/recycling/campaign-landing-page

DS Smith White Paper One Step Away From Zero

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