Why start-ups are leading the way to circular economy - Rashmi Dube

Mandatory Credit: Photo by REX/Richard Jones 'The all welding and riveting robots in the body manufacturing section of the new Honda Accord, the new Guangzhou Honda Automobile Co Ltd factory. The plant, built at a cost of 140 million USdollars, is one of the most advanced car plants in the world. It has a state of the art production line as well as the world's first total water recycling system.'Honda Car Factory, Guangzhou, China
Mandatory Credit: Photo by REX/Richard Jones 'The all welding and riveting robots in the body manufacturing section of the new Honda Accord, the new Guangzhou Honda Automobile Co Ltd factory. The plant, built at a cost of 140 million USdollars, is one of the most advanced car plants in the world. It has a state of the art production line as well as the world's first total water recycling system.'Honda Car Factory, Guangzhou, China
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There is a tectonic shift in the world of recycling. We have now firmly moved into a circular economy and this has opened new markets of opportunity. The traditional approach to any consumed goods was what is known as a linear economy; the model of production was a ‘take, make, dispose’ method/thinking both from business and consumer.

The growing concerns of the planet and resources, and changes in consumers’ beliefs and buying habits, together with some business concern over their corporate social responsibility, have forced businesses to reconsider their approach to recycling. We are now in an economic system which aims to minimise waste and make the most of resources. This approach is known as a circular system.

The driving belief behind proponents of the circular economy is that “a sustainable world does not mean a drop in the quality of life for consumers and can be achieved without loss of revenue or extra costs for manufacturers. The argument is that circular business models can be as profitable as linear models, allowing us to keep enjoying similar products and services”. Wikipedia. I would go a step further and say that there are new markets opening as a result of this approach.

The move towards the circular economy based on a reduce/reuse/recycle model that focuses on minimising waste and recycling or reusing all end products is being seen across the board in most sectors. The businesses most taking advantage of this though are start-ups.

A recent report by Sainsbury’s (2017) revealed that “British people are the biggest consumers of clothing in Europe per head, throwing away 235m items every year”. Another sector that has also identified that if they can reduce their dependence on raw materials, it will help control their costs and operations is the manufacturing and automotive industries. So how is there a new market in recycling?

An upsurge of start-ups has emerged in the past 10 years, providing ways for customers to recycle or resell their unwanted possessions. Ostrowski, who runs Yellow Octopus, a business that helps leading retailers recycle unused stock, said “the circular economy is going to change the world…[he predicted] “It feels a bit like Silicon Valley 30 years ago.”

He went on to say, “we can all see the crisis of fast fashion, but it is also an opportunity for us to work out how to make fashion circular… We need fast recycling to keep up”.

Another company benefiting from the circular economy is Worn Again, a business which produces clothes from non-rewearable clothing and textiles. Worn Again “is aiming to open 40 textile-to-textile recycling plants by 2028-2030”, according to head of strategy and deputy CEO Phil Doolan, speaking at the ICIS PET Value Chain conference.

Where recycling was once placed in the balance sheet as a cost, it is now considered a potential profit. Crucially, consumers are keen to support sustainability on a worldwide level. The business therefore does not need to “sell” the idea – it’s a done deal. Take a look at how consumers are approaching electricals; there has been a shift to lease or repair models.

Although this works for most sectors, construction and demolition appears to be falling behind. As far back as 2014 a report by TendersInfo identified “the growing volume of construction and demolition (C&D) waste has become a significant concern in Europe. The need to recycle C&D waste has prompted waste management companies to optimise collection systems and thereby, increase recycling volumes”.

An analysis from Frost & Sullivan found the market earned revenues of $18.75bn in 2013 and expects this to reach $23.85bn in 2020. There are issues with C&D waste in that it is often difficult and expensive to sort, collect and transport.

The circular economy is inspiring a new breed of start-ups that have identified opportunities that not only make commercial sense but help support the environment and cater for the consumers’ desire to recycle.

Mayan Grace, head of projects at Edinburgh Chamber of Commerce, said: “Traditional business models have failed to derive maximum benefits from the materials used and by-products produced, which has led to many tonnes of potential feedstocks being landfilled. This practice is not only environmentally unsustainable, it reduces the economic performance...”

In other words, a circular economy will be better for the environment, better for businesses, and better for Yorkshire’s towns.