Circular Economy Roundtable Discussion Part 2
Recently, Prodware and Resource Efficient Business hosted a roundtable discussion and networking event to discuss the circular economy.
The discussion looked at whether conditions were right for new businesses to be created from scratch to exploit the opportunities of the circular economy or whether challenges lay in the way.
Today, in part 2, we look at what a new business in the circular economy might look like. The final part will be here tomorrow.
In attendance were:
Anthesis - Debbie Hitchen
Axion Consulting - Jane Gardner
CycleLink - Craig Robinson
Palm Recycling - Mandy Kelly
Prodware - John Anderson
Prodware - Mark Breeden
Prodware - Rebecca Hallworth
Recycling Association - Simon Ellin
Resource Efficient Business - Paul Sanderson
Saica - Michael Challans
Smurfit Kappa – Paul Clarke
Matthew Tickle – University of Liverpool
Forbes McDougall – Veolia
Highlights by Josh Robins and Paul Sanderson
Paul Sanderson (PS) - A few things that we need to talk about. Paul Clarke talked about maintenance and repair of products and logistics and also Mark Breeden’s thoughts about using software to help with this. So any further thoughts on those ideas? Where can they be taken and why haven't they been taken further so far?
John Anderson (JA) - I think we've needed the internet, cloud computing and mobile broadband to really come together for people to really get past the first generation of that technology where it has been hit and miss. As people understand how to navigate and use and benefit from it and once you have that platform, you have something that you can use and take it forward really.
Craig Robinson (CR) - Is there a bit of fear of the unknown? That people operate within safe business models as what they are perceived to be today and they look to the future beyond three and give years and people like to play it safe. They are thinking what works today will work for the future, but knowing in their hearts of hearts it probably won’t as fairly radically change probably has to be made. But that's a very difficult decision to make, if you put your head above the parapet, you potentially increase your costs in the short term considerably and make yourself uncompetitive in the short term and put your business at risk. It’s a brave step to take, particularly guys like yourselves in the software side, you probably invest a lot of money in R&D and obviously you want some sort of return in that. Maybe it’s a sort of linking back to millennials and how we as consumers have changed.
Maybe we want to consume in a more short term way and that goes against the long term R&D projects which cost a lot of money.
Maybe something businesses have to do is change the way they engage with the customers. For a car manufacturer it is not a lease over three years or a software company over a period of time, it is having the confidence that you've got the turnover in business or customer to keep that level of business alive.
Because if we want to consume that sports car the following weekend, we don't want the three year lease, we don't want to own the vehicle we don't want to hire it in that way, it’s a radical business model and how companies are going to regain their investment in that.
Debbie Hitchen (DH) - Doesn't that come back a lot to attitude and behaviour change? We've had since the war this concept that we have the right to consume and own then dispose, but actually I think research is showing that necessarily isn't the same outside of UK, Europe and North America. In the emerging economies, there seems to be, in certainly some material streams and sectors, textiles being a good example, research that suggests people are a lot more concerned about the longevity of the product. People are more concerned about brand and quality and that sort of thing than they are by fast use, quick dispose, cheap, kind of attitude. So if that trend is global, but certainly in the emerging economies where you have massive growth in consumers and users, then potentially that change becomes a lot less risky for businesses because the market is demanding something different of them and they have to step up to that challenge or they wont have access to that consumer market.
Simon Ellin (SE) - I think a lot of it is about timing. The circular economy is almost five years too late as we have just been through the deepest darkest recession the world has seen and that confidence to invest I believe is still not out there.
It’s certainly not in our industry. At the moment we are seeing that the Chinese stock market and the Chinese growth is stalling.
In five years time the world economy may be more ready for it, but for some of these more radical ideas at the moment, is the appetite and the investment actually there?
Forbes McDougall (FM) - I think it’s an interesting point Simon. I definitely agree that this is evolution not revolution. It’s very difficult to make the big leap of faith for multiple reasons. If it ain’t broke don’t fix it is a real sticking point.
I think there is almost going to be this parallel development. You'll be looking to go circular as new business opportunities and you will hope that if there is a top of the roller coaster ride you'll hope the majority of your business is on the circular side by the time everything falls over the other side. So I think that's a real reality for a lot of companies. An interesting thing will be to see whether new companies starting up will have a circular mindset or the old linear take dispose mindset. If we have more of the latter, we are not going to evolve.
Mark Breeden (MB) - I take your logistics point. If I am a consumer, I say I want something picked up today, say I have to return a fridge or something. If I can today do that it’s a long process. If i can just say I want it picking it up now, so someone picks that up somewhere, and it flags on the system there is a fridge to be picked up, they say great, they tell somebody to pick it up, it goes to somebody and he finds a truck, he phones somebody to organise the rate, then they have to see if they are full going out on a return, it is a very complicated set of transactions. So with what is coming up, how connected can the supply chain be to satisfy the on demand consumers that we have got now? That will be the questions for the logistics sector and then at what cost?
So the cost will be the people and the time to organise that opposed to the cost of getting the truck there, as you can argue that there is a truck somewhere near you ready to pick up and go back to the plant. And then if you know somebody is chucking a fridge away are they looking to buy another one? So what is the connectivity there, if you tell them to chuck it away, what actions do you put in place to repair it recycle it or re-make it into a new product? I think it is all about the on demand and how fast you can do it as we are very much a on demand culture with mobile phones.
FM - Isn't that the stepping stone to the theoretical, completely circular end point. Where you are actually just renting all your home goods and they are all connected, so if your fridge isn't working it sends a message to the company that manufactures it, you don't even know about it. They know your fridge isn't working, they take out the part and exchange it if they can or the fridge goes away and a new one comes with the guys, so you don't feel any of the pain. That's the end point.
MB - Have you seen AO, the adverts for AO? Six months ago I hadn't heard of them and now I have bought two things from them, two pieces of kit broke. My washing machine and fridge, so next day I had a new one delivered done and they take away the old one. That's it, it is all done on demand.
FM - Did you try and get either of them repaired?
MB - No, it is so cheap to get new ones.
FM - I tried to get a Bosch washing machine fixed thinking, ‘well this will be easy its Bosch and German’, but the engineer said the board has gone, fixing it will cost more than a new machine, Bosch could not fix it.
Michael Challans (MC) - That's a prime example of video and DVD repair, you might as well buy a new one, that's a whole culture.
FM - That's a culture. But also there isn't all this repair infrastructure. That's what needs to grow. Again i am trying to live the dream.
I had to get my lawnmower repaired, a petrol good lawnmower, not a cheap one.
I found a place - it was a thirty-minute drive to get there, I took it in they said that is a bit of an old dog, but it does the job. They had it most of the summer, that was a bit of a nightmare really, got it back they hadn't fixed it properly and it was so far way taking it back was too much effort. So i ended up getting bolts and trying to do it myself. So we don't have this infrastructure.
DH - IFixit, has anyone heard of that? They are working with some of the big brands - not all of them, but a lot - to put repair manuals online so you can access it and fix it yourself.
I don't know if it extends to lawnmowers but it does cover relatively simple repair things on electrical equipment.
I think that is quite interesting as it is responding to your millennials thing which is that we actually expect this thing to last, we want to be able to repair it. I don't know so much about electricals, but there is an increase in repair based hobbies.
Think about the number of programmes on TV, the Great Sewing Bee etc. They are teaching people skills that could have been lost. Think about consumers since the war. Those are habits and traditions and crafts that each individual would have had up until the 1940's when we got into that consumer mindset. But it seems the millennials are changing and some brands are responding by saying yes, here is some information that is made publicly available.
Mandy Kelly (MK) - YouTube have no end of examples of how to fix things.
FM - They are not always great though. I have fixed an XBox and that didn’t go well.
PS - Is part of the problem with the repair culture that if you do find a repair shop, it is an old fella with a lot of stuff round him. There isn't a repair brand where you can go and trust to get something fixed.
MC – Doesn’t PC World have one? Again its all about cost of repair vs cost of a new one. Are they motivated to do it?
SE - Well a lot of it comes to you. When we had our kitchen done, we had the microwave and fridge done, we got insurance out on them - £10 a month or whatever - and the microwave has broke god knows how many times, hoping I will get a new one. But they manage to repair it. I managed to extended it to five goods for £20 so I put the washing machine etc on and soon after the washing machine, which is old, completely broke.
I thought new washing machine, the guy came half hour later it was as good as new again. Likewise the dryer, came out, repaired it, so it can be done - it comes to you. It was a real eye opener to me getting back to the repair culture. Uou don't need a new one it can be fixed and it comes to you. The IFixit or whatever it was, if they come to you, you buy into it and possibly the time is right for that.
Jane Gardner (JG) - I think the key is that you have to design equipment so it can be repaired, we have an old washing machine. It has been repaired loads of times because the engineer comes and says it has got the old parts, it easy to get out and repair, but the new ones have the drums made of plastic. So if they designed things that were more easily repaired, then it would all last longer and wouldn't be an issue. Maybe I just buy 1,000 washes and then they come and take it away or reuse it or repair it.
FM - That's the design for longevity and the manufacturer taking responsibility throughout its lifecycle - that would change the game.
DH - There is some quite interesting stuff in the textiles sector. I have worked with a client that helps customers look after their clothes better. They are working with a dry cleaner as the best way isn't to put them through the wash 150 times. In fact did you know as a nation the British wash their clothes more frequently than any other nationality. So if you buy European clothes they are testing at different levels and different frequency. EU clothing washed in a UK market machine won’t last as long.
But if your recognised brand tells you to dry clean it, you will. What’s interesting about that is often with a dry cleaner, is a tailor and the tailor is often somebody not in grubby overalls. They will change your clothes for whatever reason, you can often have advice from some of the websites of the brands so you re-imagine clothes, you take your coat of four years ago and turn it into something fashionable this season. I think this is quite interesting.
PS - Some people around this table have logistics operation already in terms of local authority collections or household waste recycling services or banks. From your point of view, can anything be done where you become that place where you start to advise people on repair and rental models before they throw it out? Or do they not care? Do they just want to dump it and move on?
Paul Clarke (PC) - I hate to say it but a lot of it comes down to cost with the consumer. So if I could or any of us could, fix a lawnmower, I would be willing to travel a long way to do it. But if it can be fixed in an economically fashion, you would try and that would be your intention. Even if you failed, you tried and it didn't work at least you tried the right thing. So from the consumer point of view, you've got to get the cost piece into the supply chain before you make it work. I think the technology is there to make it work, we just have to link it up in someway, somehow.
DH - Isn't that where producer responsibility takes its part? You are talking about funds filtering through the supply chain. Actually if that fund was used as part of the cost repair modelling, then you may well see that economics in certain products to the consumer might stack up.
SE - I think there is the appetite at the consumer end. I know I have talked about how the market’s appetite is not ready but I think at the consumer end it probably is because we most definitely are switching back to a more thrifty time.
We were in London at the weekend and down Brick Lane and the difference now is what was called secondhand clothing it now is called vintage - it’s a way of marketing it.
My kids when they need a new piece of clothing they will go to New Look, Top Shop very cheap places.
Because vintage is in vogue, they are more likely to buy these clothes.
It is the same with Lidl. People use their bags as a badge of honour, because they are proud of being thrifty.
FM - I don't quite agree with producer responsibility making it less of a burden. With producer responsibility the consumer pays for that, because the price will be hidden in the product. The manufacturer isn't going to take a hit.
SE - We will one way or another. It will be you and I who pays for it. It will be interesting seeing how it works, Morrison's are selling two different sets of milk at the market price at at an extra 23 pence. That goes back to the farmer, you have the choice of buying milk at a two tier system. Me being me, I ask why don't Morrison's pick that up, but I will pay for it by default one way or another.
FM - I think from a slightly different perspective from that, is house hold waste recovery. We operate the tip basically. You have the big skips where people take their waste. But you get the pick of the electrical items,
My kids used to like and see what people used to take and actually going in and seeing bikes etc. The problem is a charity wanted to take some of the electrics and train people to fix them. I thought great, I will find out if it can happen. I spoke to our legal department - what a nightmare. You are potentially handing over fire hazard stuff, if they fix it and sell it on where does the liability fall, We have a 15 page liability document about how we have to manage it.
There is a piece there perhaps for legislation, whether it will come out the EU I doubt it. There is a challenge over liability for all of us. If its your own item, it’s fine you have a contract with the person who fixes it.
At our site in Southwark, we have a furniture reuse scheme, but you have to ensure the fire retardant labels are on them.
It gets very complicated, for what seems like sensible and straight forward stuff. As a consumer if we have to pay to get rid of something, you want something constructive to happen with it.
PS - Actually about the fire return thing, they are now saying manufacturers should spray it to the furniture as customers don't like to see it hanging down and remove it.
MK - I was going to say the same thing. I had a three piece suite - perfectly serviceable. I couldn't give it away because I had taken the fire tag off, so they wouldn't take it. We had to take it to a tip and it was heartbreaking, even though we tried to give it away for free.
MC - We were the same. We are lucky that we found a local sale, but charities and others couldn't take it because there is so much legislation. I think at the tip they have got better but they are daunting place, they are not that user friendly. If you are timid and all these blokes are walking around in hi-vis jackets, it is just not customer friendly.
PS - On your point about legal liability if someone takes it to HWRC and you are advised to take it away and fix it, does it it still belong to them?
FM - I don't know if its our responsibility to say you should get it repaired. Once I am there, I want to get rid of it and I can’t fix it now. I don’t know if that should be our role. I think the awareness has to be with the manufacturer, whether its error messages or whatever. I get an error message on my car that tells me when I need a service, which is good for the garage. But it doesn't tell me I can do it myself.
DH - So is there a relationship between IFixit and Ebay? If we want a repair mentality, saying you have bought a new TV but if you fix the old one and sell it on Ebay, it is a source of revenue for you. I don't know how that will happen but I am thinking if you had a connectivity there and a willingness on behalf of the consumer could you make it happen?
PS – Often the manual has a troubleshoot guide, which most of the time is turn it off and on etc, but you know actually with error messages with the internet, perhaps there could be a website or app that you put the symptoms in and it tells you whether its is repairable or not.
JA - I was speaking to a mate who was trying to cook dinner and help his kid play the Xbox, he was being pulled between both, as it turned out he realised he hadn't helped his son, so he went on to Google and he looked up how to solve the problem in the game. This just shows how comfortable people are finding the problems online.
SE - It also goes back to what we were talking about earlier with this fire tag. When the circular economy package comes into place, it has to be a joined up approach and the regulator has got to buy into it.
One of the biggest barriers in our market is shipping out recovered materials is regulators opening up boxes to find that 1.5% out throw of cans, bottle and paper.
One of our exporters - the biggest exporter in the country in terms of number of containers - has pulled out of Scotland because SEPA are all over them like a rash, and it puts targets in front of everyone and the regulator puts barriers up.
What worries me is they come with radical approaches for the circular economy and you have to change regulation for anything in EC law and it takes years and years to get through, it does worry me its not a simple overnight effort. For me the fire tag on the sofa is an overnight decision to spray it on, but it will take ages to get accepted by the EU.
How regulators and the law enforcement buy into it as well will be massively key.
Matthew Tickle (MT) - They have done it with the 5p bags in supermarkets. If you have fish or meat it’s free as soon as anything else goes in it cost 5p. Who thought that would be a good idea?
PS - So we have looked at logistics and repair and the impact and new business, but we haven't come up with a new business, which maybe says that the whole system is so complex that it's very difficult to bring it all together, or has it been made too complex and just needs to be simplified?
JG - I am not sure why we have to look at it is a new business, why not look at the ones we already have and make them more circular and work with each other?
PS - Well I think the reason to look at the idea of a new business is so we can look at the potential disruption to your existing businesses at the moment. Is there something that is going to appear that changes everything? A good example is newsprint. People consume news digitally now rather than in newspapers
Is there a new technology that could just wipe out all of your businesses? That's why we are looking at this new business to see if there is potential out there for things to change so much that it completely changes the way our businesses are run at the moment.
MK – I think a good example of someone trying to pitch something niche is the Smart Solutions model. They went into the market of recruitment of lower level staff. The reality is this is seen as a more risky side of the business and people didn't want the headache of employing lower level staff.
Smart Solutions became well known for supplying recruitment on demand, they then take the risk and have adopted it as a business model from a recruitment perspective.
But they have now expanded into training, taxi services, they do accommodation, so within that business model they have made a circular economy within it, just by picking up something to adapt to the market and take risk from other companies.
But then what they rely on is partnerships being the partner of choice.
CR - You say it’s a transient sector, in and out the key is to retain these contracts. Having invested the money in training etc keeping the money in that loop, with taxi and accommodation etc, those are key challenges in life to keep people in work. The longer they keep contracts, the more added value they can bring to their customers.
MK - That goes back to Forbes’ point originally. It’s about concentrating on the service, not the goods, so that we are making the service the focus of the circular economy.
FM - There still will be goods but they will be different having take back, they will be rented and a lot of stuff that wasn't serviced before will be.
MK – Smart SolutionsIdentified that recruitment gap and they have demonstrated they are very successful at plugging that gap, finding that niche. They took a lot of market share by taking the initial risk and pushed onwards and this is how a new circular economy business might emerge.
MB - Packaging and waste paper are very much a closed group cycle, packagers and recyclers are very much hand in hand. Regarding other recyclers and organisations, if we take the blue chip ones for example, do their designers or product people have any idea of what the challenges are that you guys face in the waste and recycling industries?
MK - The forums are there.
JG - I think that's why we are working with them on this Reflex project as I mentioned with a waste management company, a recycler, someone with sorting technology and main packaging brands to sit around the table. Because it affects each part of the supply chain, that's why its important to work together and not just on your own. There is no point in thinking about the new technology sector in just the waste sector if you can’t handle the material coming into you, everyone needs to speak together.
CR - An example is Flexographic ink, which is a water based ink and not a traditional oil based one. On the face of it Flexographic, which is water-based, is more environmentally friendly for a printer. It is less volatile and is less of a hazard - all pluses. There are a few publishers in the UK, Daily Mail and Metro, use Flexographic, but the problem from a recyclers point of view or paper mill view, if you remove that ink it will dissolve in water.
So the infrastructure that Aylesford etc have would all be made redundant. It would turn the water brown. With only some of the industry going this way it’s not a problem. A few years ago News International wanted to go this way and fortunately their suppliers talked them out of it as it would have killed the UK newsprint sector over night.
FM - Is that because they were late to the party? Did the others make financial savings?
CR - Yes there were some financial savings.
FM - So they were late to the party and if they had done it purely for financial savings, they would have killed their own supply chain. It comes back to circulatory - the early adopters make the savings.
CR - In the printing infrastructure they were investing in new equipment, so they had a chance to see if they wanted to go down option a or option b. It was touch and go for a good few months to see if they would have done it and killed the industry overnight.
SE - You till don't see the simplest things designed for recycling purposes. An example, I bought a new pair of shoes, and a few shirts from a retail outlet and recycled the box. And I went to break it and I had to rip it apart, because it was so heavily laminated to look the part.
I am sure the technology exists to have that same box look good, but make it recyclable. The bag that my shirt came in was paper-based with a string handle and metal to hold the string. Now if you want to talk about something radical for the circular economy that should be outlawed. It should all be made so it can be broken down to its components.
MC - That's my point about pharmaceutical packaging that's been going on for years, its all about branding and moving stuff off shelves.
FM - But again that's the tail wagging the dog again guys. That's going back to saying we need to make everything standard, it has to look the same, be the same, so we can recycle it.
SE - Its producer responsibility again isn’t it?
FM - The manufacturer who has made the shoes or the shirt wants to sell them, and they they will say if it stays on the shelf all the resources are lost.
So we have to get things in perspective. If you waste the shirt and shoes because you have made the packaging standard, the beauty care sector is an example. Ladies perfume for example, multiple materials that look all fancy. I have spoken to them and asked why is this? They say because it's expensive and has to look like a premium product and has to get off the shelves and sit on a ladies dressing table while it's being used, so the last thing they are thinking about is packaging otherwise it just sits on the shelf.
MC - Going back to the shoe example though, why would you need that packaging for the shoe, you are buying the shoe not the box. You don't see the box - it’s a complete waste of time and money. I would love to see the design brief of the person who has designed that package. That is where a lot of it falls down.
JG - I think your point is right - we can’t just make all packaging standard. We need to understand why the packaging has to look like that and go away and speak to the people who get it at the end of its life and work with the designers to make it work together.
MK - If you look at advertising it’s the bottle not the box.
FM - I think the point is the design brief. OK if you want it to look like luxury shoes etc and you want luxury packaging, surely you can still do that and make it recyclable. That's the point.
PS - Can’t you have a standard frame work, for example the Fiat 500 and the Ford Fiesta have the same chassis, but have a quite different body design so if you have the same sort of basic bottle that is recyclable, but has a different design on it.
FM - You tell some of the designers they have to use someone else's bottle and they will have a hissy fit.
DH - I think perfume is a niche product and there is always going to be certain niche products. Maybe shoes less so, but certainly perfume.
We have a technology for designers which offers substitution alternatives. You buy a license, you upload your product and packaging info and it provides sustainability information about alternatives and that goes across a whole range.
Beauty products is a range we just did work with the European provider on.
So they covered everything from all the minerals they put in their face powders etc all the way through to the packaging.
They modelled all of the sustainability footprint of all the different materials and said if we switch this for that, what is the overall impact with that? I think that is the starting point, but interestingly that tool doesn't have much information on the end of life. It has some but not a lot at the moment and that is the part of the conversation that is missing.
It is impossible for us to have those conversations or has been in the past, on the broad scale that we need to have, but I think using technology, there is a huge platform that we can provide the information and reach a huge number of people to provide about our waste services.
FM - But life cycle assessment takes into account the waste part.
Thinking about washing powder packaging, the technology has changed. The powder became concentrated and the box got smaller and did the same amount of washes. Then it went from cardboard to the film rap, because the life cycle showed it used so much less material - you are shipping the product and not just the packaging.
So the cardboard packaging went, and that's why things are moving from cans to pouches. Even though these are totally non-recyclable, inside a multi-national organisation, we are buying steel cans at 5p a can, but we can buy pouches at 2p a pouch.
The lifecycle analysis shows overall environmental benefits are untouchable with pouches. Manufacturers make financial savings, and the planet saves despite the fact that it is non-recyclable and a material lost.
I raised this to a lot of packaging guys and the lifecycle analysis shows they are doing a great job. But you have to justify that a resource is lost, people don't like putting stuff in the bin. Anything that goes in my grey bin, I am not happy about, but anything that goes in my recycling bin, I am more comfortable with.
I think the packaging has done its job and now it will be recycled.
And they kind of took that on board but there is the efficient vs effective packaging.
Efficient packaging can justify putting stuff in the bin and not being recycled and effective packaging will be effective all the way round the system. But is very difficult.
While a lot of designers want to do that, they have to fit in with the machine that makes x amount of product a minute etc.
There is existing infrastructure and you would have to consider the impact of that when designing product and packaging too.