Recycling the Circular Economy

Recycling is at the heart of the Circular Economy. Embracing the Circular Economy, a post from 21 March 2016 discuses the concept of a Circular Economy, especially as it applies to smaller manufacturers. Embracing the Circular Economy is worth recycling — so here it is:


Embracing the Circular Economy

The Circular Economy

In an industrial sense, the term circular economy refers to a systemic view of resources utilization. It replaces the linear one pass take (from the natural world) … make (something incompatible with the natural world) … and dispose of (that is, burden the natural world with) production wastes along with the product itself at the end of its useful life. Instead, the circular economy envisions closed loop production which minimizes impacts on the natural world. Circular economy begins with products designed with multiple cycles of reuse and recycling in mind. Corresponding industrial processes are designed to minimize interactions which degrade the natural world, including interactions which occur anywhere along the product’s value chain.

Cutting to the Chase

It is readily apparent that a circular economy mindset might lead to lower costs, as well as a better world. The question becomes how to improve on what you are already doing to improve resource utilization. Here are some comments and examples to stimulate your thinking:

BMW i3 Press Kit Photo

BMW i3 Electric Vehicle

>> BMW i3 – The BMW i3 all-electric city car is an example of a circular economy product. Attention to sustainability is obvious in just about everything about the design and construction of the BMW i3. Recycled materials are used extensively.  Plans are in place for disposal of each component of the i3 at the end of its useful product life. For more on the i3, see BMW – A Case Study in Sustainability. [1]

>> Waste Management Corporation – Waste Management makes more than half of its money on recycling and upcycling refuse that people like you and me pay them to take from us. Sustainability – especially the circular economy aspect – Is integral to Waste Management’s business model. For more on how this works, see Waste Management Corp – A Case Study in Sustainability [2] and Waste Management’s 2015 Sustainability Report Update (which is entitled “The Circular Economy Revs Up”!) [3]

>> USBCSD – The United States Business Council on Sustainable Development is a not for profit business association that, among other projects, seeks to match bi-product streams with firms – often in other industries — that can use those bi-products as raw materials. In other words, one firm’s waste becomes another firm’s feedstock, to the benefit of both. See USBCSD’s website [4] for more on their work.

Scrap Tires 350pxh>> Tires – Where Waste Management Corporation seeks to find uses with the broad range of wastes it collects from residences, commercial facilities and industry, the tire industry focuses on new uses for its hard to dispose of product. Tire Recycling: An Industry Success Story was one of the first posts to this blog, almost five years ago. This lightly edited version still provides a useful example today: 


Tire Recycling: An Industry Success Story

(From 29 June 2011) 

American motorists discard a lot of tires; roughly one tire per capita or around 310 million used tires annually. On the average, tire carcasses weigh about 37 pounds, so that’s something like 11 billion pounds of waste rubber and metal every year. In the past, most of these used tires went to dumps, where they were ugly, mosquito – breeding fire hazards. Today, the recycle rate is sufficient to handle this year’s carcasses, while also significantly drawing down inventories at tire dumps nationwide.

Tire dealers add a state–mandated “tipping fee”, usually around $4.00, to each new tire sold. The “tipping fee” is passed on to the tire reclaim firm when the tire reclaimer collects carcasses from the tire dealer. The tire reclaimer converts the scrap tires into some useful form, usually by shredding the scrap tires and separating the rubber from the steel tire cords. The rubber scrap may be processed further, depending on the intended application. 

More than half of the recovered scrap rubber is used as tire–derived fuel, burned as an alternate to coal, primarily to fuel cement kilns. Ground rubber has a multitude of uses, ranging from landscaping mulch, to athletic fields, to molded rubber products, and on to de-vulcanized rubber, which can be used to produce new tires. Those who are interested can download a free report chock full of information on scrap tire products and markets at www.rma.org/scrap-tires. 


One take-away for all manufacturers is that the conversion of billions of pounds of scrap from dangerous eye-sore to useful products came to be through the efforts of a trade association. Trade associations offer a particularly useful vehicle for addressing many of the industry-wide problems and opportunities that Sustainability presents. 

>> Learning from Nature – Proponents of the Circular Economy point out that there are no wastes in biological processes. Everything eventually becomes food for something else. Actually, it is better than that. Biological processes operate at or near ambient pressures and temperatures, as opposed to the energy intensive demands of many industrial processes. I was surprised to learn that the Department of Chemical Engineering where I studied is now the Department of Chemical and Biomolecular Engineering – a strong indication of the growing importance of bio – based products and processes.

>> Books – Consider the entire value chain for books and other printed matter. Start with cutting forests, then the environmental concerns with paper making, ink chemistry, collecting end of useful life products, transportation costs across the value chain, and recycling or disposal costs. Compare all of that that with a Kindle. Replacing a tangible product – or a component of a tangible product, such as the operating instructions – with a virtual (digital) product changes everything!

For Smaller Manufacturers

The ideas behind the Circular Economy are quite powerful and potentially disruptive. Every manufacturer needs to consider how to modify its business model to embrace those ideas. As you can see, there are a lot of ways to approach this – new product development / new manufacturing processes / teaming with somebody like Waste Management or USBCSD / through a trade association / even virtualization – are just for starters, there are many more possibilities.

Chuck - FranceThoughtful comments and experience reports are always appreciated.

…  Chuck Harrington

(Chuck@JeraSustainableDevelopment.com)

This blog and associated website (www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome.


[1] http://jerasustainabledevelopment.com/2014/10/04/bmw-a-case-study-in-sustainability/

[2] http://jerasustainabledevelopment.com/2015/01/30/waste-management-corp-a-case-study-in-sustainability/

[3] Download for free at http://wm.com/sustainability

[4] www.usbcsd.org

 

Waste Management Corp – A Case Study in Sustainability

The Circular Economy

Waste Management Corporation – the folks that pick up your trash – is a remarkable example of a business in pursuit of Sustainability, unlikely though that may seem. Waste Management’s 2014 Sustainability Report is titled Creating the Circular Economy. They mean it. The company focuses their efforts on profiting by converting wastes into useful materials and Green energy. Today, over 60% of Waste Management’s revenues come from recycling and upcycling[i] your rubbish into profits.

Recycling or, better yet, upcycling is a good thing. It applies to essays as well as to scrap metal. This post recycles an essay from late in 2013, and upcycles it with some timely updates. Waste Management provides real insight to the possibilities that can arise by founding a business model in Sustainability.

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A Case Study in Sustainability – From 20 November 2013

It is one thing to talk about Sustainability as an abstract sort of business quality that one might desire. It is often quite another to examine examples of businesses that actually demonstrate Sustainability in practice. From case studies, one can learn what Sustainability in practice actually entails, and how it works. This essay discusses one such business.

The best expression I have seen of what Sustainability means in a business context comes from Adam Werbach: [ii]

“… being a sustainable business means thriving in perpetuity. In this business context, sustainability is bigger than a public relations stunt, bigger than a green product line, bigger even than a heart-felt but part-time nod to ongoing efforts to save the planet. Imagined and implemented fully, sustainability drives a bottom-line strategy to save costs, a top-line strategy to reach a new customer base, and a talent strategy to get, keep and develop employees, customers and your community.”

In Werbach’s view, clearly Sustainability is nothing less than a key driver of business strategy — an organizing principle that drives strategy at the business model level. Let’s apply Werbach’s ideas to an example — Waste Management Corporation.

Waste Management’s traditional business has been in refuse collection — guys with trucks that charge to collect trash from your home or business and haul it to the dump. In recent years, that business model has expanded and changed focus. As Waste Management’s CEO puts it: “Sustainability is a central motivation for our transformation from a waste collection and disposal company to one that views and uses waste as a resource.”[iii]  In other words, Sustainability drove a change in Waste Management’s business model from focus on profiting from collection and disposal to focus on profiting from the waste itself.

To Be More Specific

Here are some of the ways the new business model is working:

>> Shift in focus to profiting from the waste itself — In 2011, 57% of revenues came from Green services (up from 49% in 2007), the balance from disposal related collection and landfill activities. David Steiner, the CEO, says: “Our ultimate goal is to use all of the waste we receive and leave nothing discarded.” The company plans to continue to profit from collecting wastes, the difference being that they want to profit from that waste, rather than simply disposing it.  (Update: in 2013, 59% of revenues came from Green activities.)

>> Recycling — In 2011, Waste Management profited from recycling almost 13 million tons of stuff that you and I threw away. That includes collection and brokerage of waste materials usually associated with recycling, such as paper products, metals, plastics and glass. It also includes specialized recycling services, like electronic equipment and organic wastes. (Update: in 2013, 15 million tons of “stuff” was recycled)

>> Green Energy — There are three primary ways to produce power from rubbish. One is by using trash as fuel to generate power. The second is to collect landfill gas (mostly methane) and use that gas like natural gas. The third is to transform certain wastes into more specialized fuels, such as diesel fuel. Waste Management uses all three routes. In 2011, Waste Management produced (and profited from) Green energy equivalent to almost 23.5 million barrels of oil or nearly 6.1 million tons of coal. That’s many times more than the total solar energy production in this country in the same year! (Update: in 2013, revenues from sales of landfill gas were restrained by competition from cheap natural gas. Revenues were “flat” – approximately unchanged from 2011 figures)

>> Fleet Efficiency — Operating Waste Management’s fleet of collection vehicles constitutes a major portion of the company’s operating expenses. Vehicle operating expenses are being reduced by several means, the most important of which is conversion to natural gas — WM’s 1,600+ natural gas powered vehicles constitutes the largest heavy-duty natural gas fleet in the U.S. Natural gas burns cleanly and costs less than diesel fuel. (Update: by year-end 2013, WM’s natural gas fueled fleet increased to 3,075 vehicles)

Sustainability in a Business Context

Look again at the quote from Adam Werbach with which this essay begins. “Sustainability”, says Werbach, —

“drives a bottom-line strategy to save costs” — like fleet operating costs and landfill disposal costs reductions.

“drives a top-line strategy to reach a new customer base” — like generating fresh revenue streams from waste materials that were previously buried.

“… a strategy to get, keep and develop employees, customers and community” — like 80 annual hours of driver training that has resulted in almost 50% reduction in recordable injuries since 2005; or creating 100 certified wildlife habitat sites on over 25,000 protected acres; or making wholesale reductions in greenhouse gas emissions.

Waste Management’s Sustainability based business model is very clearly successful. It offers a case study worth investigating, especially since, as an NYSE listed company, financial information is readily available. Will a Sustainability – based business plan work for your business, even if you aren’t in a sexy, high-tech industry like garbage collection? If you intend to thrive in perpetuity, maybe you should give it some thought

Chuck - Red Rocks3Thoughtful comments and experience reports are always appreciated.

 

…  Chuck Harrington (Chuck@JeraSustainableDevelopment.com)

P.S: Contact me when your organization is serious about pursuing Sustainability … CH

This blog and associated website (www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome. New blog posts are published on Wednesday weekly.


[i] The term “upcycle” means more than “reuse” – it infers adding value. The term, and the concept, are from McDonough and Braungart, The Upcycle, North Point Press (2013)

[ii] Adam Werbach, Strategy for Sustainability, Harvard Business Press (2009), page 9. Adam Werbach founded and led Saatchi and Saatchi’s Sustainability practice. He is also a former President of the Sierra Club.

[iii]  Facts and figures on Waste Management Corp. are from Waste Management’s 2012 Sustainability Report, available at: www.wm.com/sustainability/pdfs/2012_Sustainability_Report.pdf. Update figures are from the 2014 Sustainability Report, available at: http://www.wm.com/sustainability/pdfs/2014_Sustainability_Report.pdf

Note: I recommend the 2014 Report as a real world take on Sustainability in practice.