A circular economy, where we increasingly recover the materials and energy from our discarded products, is moving higher and higher up the political and business agenda.
--BY VAIJAYANTI KHARE
As our global economy continues to grow, by 2030 the planet will be home to nearly nine billion people, including three billion middle-class consumers in the developing countries,the challenges of meeting this increasing demand for products and services will be unparalleled.
The linear take-make-waste industrial model is no longer viable in the face of rapid population growth, resource constraints, urbanisation, water insecurity and other trends.
The good news, though, is that, this paradigm is giving way to the circular economy, a model that focuses on careful management of material flows through product design, reverse logistics, business model innovation and cross-sector collaboration.
In essence, the circular economy is about moving from a system of waste to one of “endless resourcefulness.” This more regenerative model affords a viable business opportunity to drive performance, innovation and competitiveness, stimulate economic growth and development and successfully tackle environmental priorities.
In the last few articles we saw how the benefits and models of a circular economy work through the manufacturing, retail, tourism-hospitality and healthcare sectors. The other sectors that add to this paradigm are pharmaceuticals, education, transport and logistics, communications and home-grown cottage industries.
The nemesis of the hard work in all these sectors, towards an effective circular economy, would be packaging and waste management. The role of these two is not just inter-related and about closing the loop, it is about leading and driving the initiative, the process and the outcome.
And if you think there is not much ‘business sense/profit sense’ in these two industries, think again and think hard.
Packaging is about to join the one-trillion-dollar club. That many dollar bills, laid end to end, would wrap around the world almost fourfold. With global sales of USD 975 billion forecast by 2018, industry numbers are up and rising.
Nicholas Mockett, head of packaging M&A at Moorgate Capital, identifies three market segments to watch– food, pharma, health and beauty. “In food, the burgeoning middle class will drive up the value of protein, so packaging which prolongs food life will become increasingly valuable,” he says. “In pharma, that same demographic, coupled with the ageing population will drive demand. Finally, ageing will also drive health and beauty products, such as hair dye or anti-wrinkle cream.”
Packaging companies have a critical role to play, listening to the needs in terms of collection and reprocessing, ensuring the design is simple for deconstruction, reuse and recycling. Waste is the default sustainability metric for packaging. The perception persists that the industry is both directly and indirectly responsible, so part of the problem. The industry can show efficiencies and eco innovation, but given the number and mix of variables in the diverse product life cycles, can packaging companies truly influence the circular economy debate? The answer is most definitely: yes, they can and they should. They perhaps have more influence than any downstream players, and must help drive the debate and instigate change, and must embrace this role.
As industry mindsets shift, going circular also calls for a break with the language of linear-thinking. We should not be talking about packaging in terms of supply chains, instead, effective packaging is part of a ‘supply cycle’, where materials rotate around the economy in a circular loop. This supply cycle envisions packaging services in a continuous, circular resource flow from responsible sourcing and design with the end in mind, through efficient manufacture and low-carbon transport, to retail connectivity and smart messaging, then via better post-consumer collection back to the beginning again.
And this brings us to waste management. A circular economy, where we increasingly recover the materials and energy from our discarded products, is moving higher and higher up the political and business agenda. National leaderships across the globe are spearheading proposals to embed circular economic thinking into legislative frameworks, while business leaders are embracing the concept at various Summits and Conclaves and the World Economic Forum in Davos.
The World Bank estimates the amount of municipal solid waste will increase from 1.3 to 2.2 billion tonnes per year by 2025, with most of this increase coming from cities in developing nations. According to the Ellen MacArthur Foundation, in the consumer goods sector alone about 80 percent of the USD 3.2 trillion value is irrecoverably lost annually.
The waste management industry will play a key role at the heart of a circular economy. It has already begun the transition away from the old linear model of truck and tip to landfill, towards a resource management approach where the industry acts as a provider of raw materials and energy to the rest of the economy. To close the loop on the old linear approach we need the waste and resource operators, who work at products' end of life, to talk to the designers who work at products' start of life. The old waste industry has adapted to some extent, and has to adapt further still.
It is now a resource industry and at the heart of the new circular economy.
The inter-related-ness of packaging and waste and their respective roles as loop-closers in a circular economy is not lost on the stakeholders, and the readers here. Strategies to make these two sectors, or functions, lead or contribute to a sustainable model of your business are aplenty. And can be designed to suit your particular industry, environment and legislative frameworks.
Look around your own products and services and the processes of manufacturing, retail and logistics that are entailed in your raw material procurement, product making, packaging, warehousing, transport, sales and marketing. Also, track the after-use disposal and recovery. Allocate specific people, time, funds and deadlines to study and report. Make it a top management priority to come up with gap analysis and a road-map to change. Compare with industry practices of competitors and neighbouring countries.
You would be surprised to discover that there is so much you can do differently.
It is not just change, it is a Transition and a Transformation. Meaning that, it cannot be achieved through mere tiny changes, but needs to be taken up as a progressive transition to a sustainable transformation.
Accelerating and scaling up of the circular economy in our country, and globally, will require a combination of business models,innovation and collective action across different stakeholders, industries and geographies. It is time for industry associations, federations and chambers, for business houses and other stakeholder groups to come together and identify viable opportunities for how the circular economy approach can translate into positive environmental impacts, real cost savings and greater profits.
With the world rapidly changing, resources becoming more scarce and expensive, and consumer preferences and expectations shifting, there’s no time like today to capitalise on the transition to a circular economy.
Vaijayanti Khare is known for her dynamic engagements in the corporate, academic, social and development fields in Kathmandu over the past decade. Her writings are a reflection of her hands-on work, insights, studies, success and challenges.