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Blog: Does recycling focus threaten resource efficiency?

Date: 24/09/2013 | Author: Jamie Pitcairn

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A focus on recycling targets threatens to undermine the resource revolution, says Ricardo-AEA Scotland director Jamie Pitcairn

The concept of the circular economy (CE) is widely supported and the benefits are
 clear but what is less clear is how to get there. The idea of a circular economy and 
resource efficiency are not new and are currently undergoing a renaissance having
 been overshadowed by the focus on ‘carbon’ in the early 21st century.

I welcome the new focus but nice diagrams in a circular format do not allay my concern whether we can achieve this ideal. As I said earlier, the concept is not new, yet we are still a long way off achieving anything like a circular economy.  Waste is the UK’s sixth biggest export, a situation which exists at the same time as the threat of diminishing resources grows. This is especially true where some rare earth elements are concerned. Rare earth elements are an important component of many advanced materials, especially in the high tech and green energy sectors which is driving demand for equipment with robust performance, durability and low carbon emissions. As a result of demand and geopolitical factors (such as Chinese export quotas), these rare earth minerals are expected to be in short supply over the next 10 years.

Over the last 20 years a huge focus has been placed on recycling but let’s face it, recycling is still the second worst option for managing our resources, with only final disposal (landfill or incineration) being worse. Recycling will not fix the UK's dependency on primary material use nor reduce its exposure to resource scarcity or inevitable commodity price rises. So manufacturers and any business that uses primary materials need a clear vision of what materials they use and to develop more ambitious strategies to reduce their use as the price and supply of these materials cannot be guaranteed in the future.

So how can we move to a CE and where are businesses currently on that journey?

My experience of working with many large manufacturing and FTSE 100 companies is these companies all acknowledge resource efficiency as something that is important and an area in which they ‘probably’ should be doing more. However, their key indicators are all about transport, energy efficiency and recycling. Most have targets for recycling – and these targets are being achieved which is of course good – or is it? If a company has an 80 per cent recycling figure then incentive to do more is removed. There has been a more recent trend for zero waste to landfill which inevitably means incineration fills the gap once occupied by landfill. While this may be an improvement on disposal we need to think about and target what we use as opposed to what we throw away.

My view is many businesses are using the wrong metrics to manage their operations. Trying to engage larger businesses on issues like prevention, material efficiency and opportunities for reuse is, however, very difficult. Going forward businesses need to understand the value chain and focus higher up the resource hierarchy – not just for economic reasons which has historically been the case, but to ensure their business continues to operate (their ultimate goal must be a sustainable business, not one that is highly profitable today and gone tomorrow).

There are some sectors which have been successfully deploying reuse and remanufacturing strategies for years and it is no surprise to find that these are some of the most successful manufacturing companies in the UK. The automotive/engineering sector is a good example. Caterpillar for instance, has been remanufacturing for years in the UK and contributing to the estimated UK remanufacturing sector which is said to be worth £5 billion per year and employing 500,000 people. Not many people appreciate the UK has such a large remanufacturing industry.

Reporting – businesses need to change what they target

To double-check my experiences of larger businesses I looked at some of the FTSE 100 CSR reports to see for myself what these companies view as the right metrics to manage their business. The results were disappointing but surprising. The terminology has not changed in 15 years - the only difference is carbon which dominates most of the reporting and which itself is dominated by energy consumption. As energy is generally the highest cost to businesses this is understandable.

However, in light of the pressure on dwindling raw materials, surely the business risks of resource scarcity must now start to impact on what businesses view as important.  Take for example a report by Spada, which reviewed the sustainability reports of the FTSE100 companies and found the term waste occurred 2,429 times and the term recycling 777 times. However, there was no mention of reuse or raw material use, and the term waste reduction only appeared 35 times.

Are businesses using the most appropriate metrics for reporting? And if they are based on recycling targets could they also include a target for raw materials reduced/avoided? That would be a significant step forward. Unless our largest companies step up to the challenge represented by global resource shortages then the circular economy is only ever going to be an academic concept.

These observations are not intended to criticise, their intention is to spur thinking and discussion of the issues because I believe they are important to businesses, the economy and to the long term maintenance of our modern society which is so reliant on them.

Measure prevention and reuse as recycling is not enough

The concept of prevention is widely understood although not widely practiced. However, the concept of reuse is neither well understood nor widely practiced. Yet the benefits are plainly obvious. A good example is the mobile phone: a recent example from the Circular Economy Task Force states that a reused smart phone retains around 48 per cent of its original value, whereas its value as recyclate is just 0.24 per cent of its original value. So why is reuse not more popular?

Historically, reuse and service-life extension were often adopted in situations of austerity or poverty and led to products of inferior quality – this stigma of poor quality still hangs over reused and recycled products.. However, views can change as the widespread use of recycled paper, which was for a long time viewed as an inferior product shows. Also, the rise of online auction sites has demonstrated that the vast majority of people are more than happy reusing products and goods. Today, reuse should be viewed as good management. However, reuse has an image problem and it needs a better PR manager.

Then there are the barriers. Unless an organisation has a procurement system in place that encourages reuse, it can be both difficult to buy something ‘used’ and also difficult to track the benefit of a reused item. This is generally compounded by the absence of a good asset tracking system within an organisation and an unsupportive/inflexible procurement policy. In my experience procurement systems are usually a major barrier and for those wanting an excuse not to change behaviour they also provide a convenient excuse. Unfortunately, the sector with one of the biggest opportunities to benefit from greater product reuse is the public sector but it has some of the most rigid procurement policies. This does however create an opportunity for smaller, less bureaucratic organisations with less structured procurement systems. Maybe reuse will first take-off within SMEs as opposed to larger organisations.

It will be interesting to see how reuse develops and matures in the next few years as it surely must. The Scottish Government is trying to support the transition as the adoption of reuse by businesses undoubtedly needs a good shot in the arm. One of the single most important enablers to drive reuse would be a greater focus by businesses on the materials and products they use as opposed to those which they discard, like recycling. But can we engage enough of the businesses to make this paradigm shift happen?

This blog first appeared on www.ricardo-aea.com and is reproduced with permission

 

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