Why the circular economy is primed to improve social sustainability and value chain resiliency
EXCLUSIVE: The coronavirus pandemic has highlighted the fragility of both society and the sprawling value chains that the economy relies on. Shifting nations to a circular economy could be key in delivering a green recovery that champions sustainable income and environmental stewardship.
It was apparent before the sudden emergence of the coronavirus pandemic that new business models would be required to deliver a radical shift to consumption and consumerism patterns that are compatible with efforts to limit the rise in global average temperature to below 1.5°C above pre-industrial levels.
Even as part of a response to the public outcry on the impacts of single-use plastics that dominated the social consciousness during 2018 and 2019, many businesses focused on in-house changes to packaging. While the focus was welcome, it was just a first step towards embracing a circular economy, with some organisations now selling recyclable products and packaging as part of an economy that is still inherently linear.
When the pandemic hit, businesses also realised that their supply chains may no longer be fit for purpose. The impact of the coronavirus pandemic on international commerce was described as “ugly”, with the World Trade Organisation (WTO) forecasting declines in international trade and commerce of between 13% to 32% in 2020. Impacts to trade through transportation limits and production slowdown are impacting business productivity, with 94% of the Fortune 1000 seeing supply chain disruptions.
The pandemic also highlighted that some societies are more at risk from macro-disruption, whether that be disease-based or climate-induced. The UN reported that the majority of developing nations were ill-equipped to deal with the pandemic, and with many global businesses relying on on-the-ground workers in these countries as part of their supply chain, some proactive organisations are seeking to improve resiliency by embracing a circular economy that contributes to a just transition.
One such company is the international distribution and services group, Bunzl, which has set up a long-standing partnership with the WasteAid NGO. The two organisations are working together to create jobs through the collection and recycling of plastic waste in Cameroon.
WasteAid’s partners will recruit and train 30 young workers in the city of Douala to recover value from plastic waste and create long-term employment opportunities in the green economy.
For Angela McDermott, WasteAid’s Head of Programmes and Impact, private sector involvement in the circular economy can act as a “great enabler” to improve social sustainability across the globe.
“This isn’t work WasteAid, as an NGO, could do on its own,” McDermott says. “We vastly appreciate the enabler that Bunzl is providing. In the countries we’re working in, waste is a huge untapped resource, and there’s huge scope for people to enter into a workforce of some kind, whether it’s the local municipality or on projects similar to ours.
“They’ll enter into a more sustainable income stream and secure employment by tackling this massive issue. There are environmental, economic and human benefits and we see the private partnerships as really critical to not just the funding, but the implementation in creating an enabling environment to deliver change.”
The Cameroon project was set up in response to solid waste management being identified as one of the major environmental concerns in the city of Douala. Additionally, around one-third of the economically active youth in the region are unemployed. As such, WasteAid and Bunzl believe that the circular economy can address both these issues.
WasteAid will work with existing partner RED-PLAST to train the 30 new employees that will collect and sort plastic waste from market areas and divert it from waterways and the ocean. WasteAid is using its relations with the local municipality, market managers, stallholders and surrounding businesses to set up the initiative, which is aiming to collect eight tonnes of plastic by the end of the year.
It builds on a recent joint initiative between the two organisations in Indonesia, which has seen marginalised communities increase waste recycling from 10% to 90%.
The benefits of this collaborative approach are clear to see in the local community, but what about Bunzl, the company supporting the work? The company’s head of sustainability James Pitcher believes that businesses that are truly embracing the circular economy need to do so through a holistic approach that covers the entire value chain.
“One of the reasons why we wanted to link up with WasteAid is so we could find a mutually beneficial relationship where both organisations could grow, and achieve something that would’ve been impossible if we had tried on our own,” Pitcher says. “Plastics pollution and climate change are becoming the defining challenges of our time. But few people understand the human side of the story, the issues that we face are caused by large populations with poor infrastructure.
“To stay competitive, companies need to look beyond their own operations and start looking at their total environmental footprint across the whole value chain. A lot of businesses focus on the front end, so smart material choices and recyclability, but companies also need to consider what is happening further down. It’s been a long-held mantra of Bunzl that the life of packaging does not end at the point of sale and our ambition shouldn’t either.”
The benefits that Bunzl will gain from the partnership are multifaceted. There is the obvious reputational benefit of being seen to help suppliers and supporting job growth, but in the current situation where globalisation is being questioned, a closed-loop process strengthens the resiliency of the value chain.
A Chatham House report notes that “Developing countries are in a strong position to take advantage of the new economic opportunities”. It reports that “with enough investment, developing countries can ‘leapfrog’ developed countries in digital and materials innovation to embed sustainable production and consumption at the heart of their economies”. This, in turn, alleviates the limited infrastructure issue that Pitcher mentions.
Doing so, will require these initiatives to become macro in scope, and not only by focusing solely on extractive resources but also by focusing on basic human necessities like water.
Sustainable Development Goal (SDG) 12, Responsible Production and Consumption, makes specific reference to the need to significantly reduce water pollution and to accelerate the application of reduction, recycling and reuse processes across natural resources – water included – by 2030. Already many businesses are introducing closed-loop practices when it comes to water use.
This week, beverage giant PepsiCo along with its Foundation arm announced that it has helped more than 55 million people gain access to safe water across the globe since 2006, leveraging almost $700m in funding to support water stewardship efforts through partnerships with leading non-profits worldwide.
According to the company’s social impact director Silvia Cruz-Vargas, water is one such area where businesses can improve the social prosperity of the communities it relies on.
“While water security is a global challenge, it is at its core a hyperlocal issue that requires hyperlocal solutions, Cruz-Vargas says. “To be able to provide safe water and use this resource to help foster widespread adoption of agricultural, social, and public health practices that help communities thrive, we need to have buy-in and involvement from the community and engage directly with community members to not only facilitate change but ensure that this change is sustainable.
“Our water stewardship strategy is holistic and restorative in nature with the overall objective of improving the health of the watersheds that we, and the communities we operate in, rely on. We aim to avoid and reduce water use, reuse and recycle what we have used, and return to nature and communities the remainder through replenishment and safe water access initiatives.”
Much like Bunzl, PepsiCo has realized the value in working with external partners to drive change across the entire value chain, rather than focusing solely on operations.
While collaboration and partnerships are key to driving social sustainability through closed-loop models, current efforts are fragmented, limited in uptake by a select few proactive businesses. If these informal trials are to become a societal norm that drives job growth, more businesses need to be aware of the influence they can have outside of their own operations.
Improving water usage at facilities, for example, is now considered a quick win by many businesses. Indeed, PepsiCo has enshrined water efficiency into its updated sustainability strategy which is also targeting net-zero emissions by 2040.
For Cruz-Vargas, making the circular economy and restorative business practices part of a new normal requires “deep-seated knowledge about the communities you’re working in”. This can be gained through collaborative mechanisms with local communities and NGOs and helps to inspire new ways of working.
“When it comes to water access, we’ve learned that we cannot take a top-down approach,” Cruz-Vargas adds. “Water projects require the input and active participation of local communities. Sustainability and scalability must be a true partnership and encourage community ownership or interventions will fail.”
Practice makes permanent
But creating a new normal that embeds the circular economy into ways of thinking is no easy task, especially at a time when some businesses are itching to return to “business as usual” to drive profitability post-pandemic.
Pitcher notes that a holistic approach to the circular economy is required, one that examines all areas of the value chain and the transformations required to co-create closed-loop models.
“To fundamentally move away from a linear mindset to a circular one, people need to take more interest and more care and understand what happens beyond the boundaries of their immediate operations,” Pitcher adds.
“Once you understand the issues and challenges downstream, you can change the ways of working upstream. The more projects like these happen, the sooner we’ll reach a macro- solution. The circular economy has to go mass market to be effective, and impact all our lives.”
As nations and businesses muse over how to build back better from the pandemic, some have already signalled that a closed-loop economy is one that can tackle the twin disruptions of the climate and ecological crises and social inequality. The long yards are ahead, but a circular future is in sight.
Join the conversation during edie's Circular Economy Week
The publication of the report comes as edie celebrates its Circular Economy Week - an exclusive editorial campaign dedicated to accelerating the shift to closed-loop models of production and consumption. Read more about the full schedule and find out how to get involved here.
The headline attractions of Circular Economy Week are the Inspiration Sessions, taking place on Thursday (25 March) from 1pm- 4pm GMT. The three events range from Q&A style debates with circular economy experts, to business-led panel discussions and a masterclass. Experts from organisations including the Ellen MacArthur Foundation, Zero Waste Scotland and The Body Shop are taking part.
For full details and to register, click here. Tickets, which give holders access to all three events live and on-demand, cost £49 plus VAT.