In Short : Businesses pursuing net-zero goals adopt innovative revenue models. This includes providing carbon offset services, energy efficiency consultancy, sustainable product lines, renewable energy investments, and engaging in carbon credit trading—creating opportunities within the expanding sustainability market.
In Detail : Can we save the planet and turn a profit at the same time? Peter Taylor-Whiffen looks at five circular business models that aim to do just that, and meet some of the companies using them.
The circular economy. The shift away from making things first to making things last. Retrieving, reusing, restoring, recycling – most of us are aware of the broad concepts of circularity and agree that we need to make it happen, as soon as possible. But how do individual waste-sector organisations actually do that?
The phrase “circular economy” was coined in the 1980s, but has only been embraced as a necessary way of protecting our environment in the past decade. The waste sector, and CIWM members in particular, are keen to adapt to a more circular business model, but it can be difficult to know where to start.
“The first thing to do is understand the three principles that underpin circular business models: eliminating waste and pollution; circulating products and materials of a high standard; and regenerating and promoting restorative solutions. These are embedded in the UK’s resources strategy and are a good starting point in understanding where you should be heading,” says CIWM junior vice-president Professor David Greenfield.
Waste organisations can then think about adopting a circular economy business model. The World Economic Forum (WEF) recently published five: circular inputs, the sharing economy, product as a service, product use extension, and resource recovery.
“These models should be something waste-sector organisations are putting into their forward plan,” adds Greenfield. “We should all be saying, ‘Whatever we do, are we doing it in this manner’.
“When we’re buying something new, are we looking at it as bio-based or fully recyclable? If we’re capturing waste, are we recovering the highest value by recycling or reusing it? Where we have fleets, assets, are we extending their product lifespan as long as possible?
“How much of those assets is being stranded and how much is being maximised in terms of efficiency? Where we are buying stuff, do we need to consume or move to a service-based model, such as leasing?
“That’s the sort of conversation we all need to be having. But what that looks like in detail will depend on the individual waste-management company’s business.”
The sector already embraces some of the key concepts of these models, adds Greenfield. “We recover resources very well, and we’re not doing too badly when it comes to dealing with end-of-life materials. Our waste minimisation isn’t so good, however. We tend to focus more on circulating products – but while some of that is done at the highest value, a large proportion isn’t.”
Waste-management companies can begin or continue their journey to circularity by using one of WEF’s models – or, in most cases, adopt aspects from more than one of them.
“People can be led into thinking this is a big change – perhaps too big for them to take on,” says Zoi Kontomidou, chair of the Chartered Quality Institute’s Sustainability Special Interest Group.
“Sometimes it does take a long time to move to circularity, especially if you have to develop a new, fully sustainable product. But there are things companies can do straight away, sharing or replacing parts rather than buying new, or using products as a service. Shifting mentality is the biggest challenge. It can be hard and feel risky to embrace a new way of doing things. Everyone has the power to make an impact.”
To become more circular, Greenfield believes the waste industry and local authorities must think about how waste streams have changed, and offer specific solutions for different materials.
“Until the 1960s, the majority of the household bin was dust thanks to home fires and hearths,” he says. “That disappeared when we got gas central heating, but then the plastic economy meant most of our waste was plastic. In this past decade, more than 40% of our waste has become organic. It changes and we have to keep up and be aware that different materials have different outputs.
“These waste streams need to be broken down so that it’s more than just people taking their rubbish to the tip and putting it in the general bin. We also need to understand the differences between streams and offer the correct approach for each.
“For example, you can’t recycle food waste, but you can prevent it. But you wouldn’t want to prevent, say, garden waste, because the only effective way to do that is to concrete your garden, which is ridiculous from a biodiversity point of view.”
All of this still treats materials as a waste stream, however – and companies with circular ambitions should be treating them more as a resource.
“Waste-management companies need to better understand the materials collected at source,” says Greenfield, “and that the collection system is feeding into a reuse-recycling network rather than just a recycling and disposal network. We have to move away from disposal being the easy way out and push more towards reuse.”
Organisations should start with a baseline assessment of where they are, and measure which of the WEF’s circular models would fit them best, adds Greenfield. “It could be that they already do some things and need to improve in others. They can look at it themselves or bring in consultants.
“That way, they can understand where they are, what infrastructure exists or needs to be implemented, the catalysts for what they do, and what is happening to the waste they process. It’s worth doing. The circular economy is vital to our environment and our future, and if we are to meet net-zero targets, it will be the way we all do business, ultimately.”
Model one: Resource recovery
Reusing and recycling component parts is a laudable aim – but to be a truly circular model, the process has to glean the maximum possible value from the dissembled product.
Tech-Takeback, a not-for-profit organisation co-founded by Greenfield in 2016, collects end-of-life phones and maximises their value for reuse or recycling of their components.
“IT has significantly more resources in it than anything else – rare earth materials, critical raw materials,” Greenfield says. “We try to get every one of them reused if we can. We make that possible by offering doorstep collection. If you took it to a household waste site, every electrical device – whether working or not – gets scrapped; recycled, yes, but not kept at its highest value.”
The tech giants are promoting their own resource-recovery credentials. Apple recently unveiled its recycling robot, Daisy, which breaks down iPhones and their batteries into 15 component parts, recovering and separating materials such as gold, copper, tungsten and steel.
This has the potential to make a huge difference: Apple claims one metric ton of recovered iPhone parts avoids the mining of 2,000 metric tons of metal-rich rock – but there is still some way to go. Daisy can dismantle a phone in 18 seconds – about 1.2 million a year – but with only two such robots in existence, in the US and the Netherlands, it will be a struggle to offset Apple’s 240 million annual global iPhone sales.
Fairphone goes further, designing android smartphones that enable users to replace and upgrade individual components – the only ones on the market that use 100% Fairtrade gold and include batteries machined from Fairtrade cobalt and lithium. Its customers can replace components with simple procedures they can do at home, giving them the opportunity to upgrade their device without spending hundreds of pounds buying a new handset.
“The key is making component and material recovery easy,” says Kontomidou. “There’s a financial incentive, too. People generally want to do the right thing and realise why sustainability is so vital, but part of the challenge of a business model like this is that, quite often, the ethical choice is more expensive. However, if you can persuade customers they don’t need the very latest phone because they can upgrade to the same standard by changing components, and it’s cheaper, you can change people’s mentality.”
Model two: Circular inputs
Most UK motorists who need new tyres for their vehicle don’t give a second thought about the disposal of their old ones. Each year, however, 20 million tyres reach the end of their life and are an excellent example of a (literally) circular input – a circular economy business model that transforms waste from a liability into an asset.
Rubber has long been reused in a variety of ways: refurbishing or retreading old tyres; being broken down for ground surfaces on running tracks and in children’s playgrounds; and in construction engineering for items such as bridge foundations.
Although not circular as defined by purists, old tyres can also be a source of energy – pyrolysis can extract gas and oil, which, in some instances, can replace coal in cement kilns and paper mills.
Now, a firm called Genan is close to a solution that will retain such value in the retrieved rubber so that there is no quality difference between it and the virgin product, so it can be endlessly recycled.
“Our cryogenic rubber powders are being used in the tyre industry to substitute a fraction of the virgin rubber compound material,” says Genan. “Consequently, the circular economy loop in rubber and tyre production is gradually closing, and will ultimately make cradle-to-cradle tyre production a reality.”
The firm also melts down the wire from old tyres for the production of steel to go in new ones.
“Circular input is about making waste an asset,” says Greenfield. “Things cost less to manufacture because they are made from excess and recycled material, and then cost less to dispose of because their components are not at the end of their life, merely the end of their current usage.”
Model three: Sharing economy
UK businesses have £59bn worth of capital tied up in equipment that they don’t use, according to recent research – but sharing that equipment can benefit businesses and protect the planet.
This business model uses equipment that would otherwise be standing idle, renting it out to another company and, thereby, bringing in extra cash for the business that lends it, and enabling a cheap hire for the firm that borrows it. Crucially for the environment, it maximises the life-cycle of the machinery by keeping it in constant use, negating the need for the manufacture and purchase of more equipment than is necessary.
Cumbria-based BAF Contracting’s main business is site clearance and groundworks – but it helps other businesses by providing equipment that it is not using. “Anyone can borrow one of our diggers, with or without one of our operators,” explains director Amy Edwards. “It makes sense; if a machine’s not in use it’s taking up space – so if it can be serving a purpose elsewhere, that’s great.
“Other businesses might need an excavator, a dumper or a telehandler for just a week or two, either because they haven’t got one or they have one that is tied up on another job or at the other end of the country. It’s easier for them to just use one of ours – and certainly much cheaper than buying one!”
The sharing economy turns physical assets into services, maximising their useful life. It is a concept that has been in existence for centuries – people were renting spare bedrooms long before Airbnb became a thing – but it’s only now that businesses are truly seeing the potential of sharing assets with other businesses.
BAF Contracting rents its equipment through Shareplant, a nationwide network – founded by engineer Mark Watters – that connects those who have idle assets with those who want them.
“I became increasingly frustrated with the difficulty of renting high-quality specialist construction equipment while, at the same time, observing local equipment standing idle,” Watters says. “It was such a waste of money to have this expensive equipment underused, and a waste of time and carbon emissions to transport it large distances for short-term jobs.”
He says he established the Shareplant marketplace with the aim of becoming “the leading sharing and circular economy provider in the construction and engineering industries. Just imagine the opportunities to reduce our climate impact.”
Model four: Product as a service
Wouldn’t it be great to pay for your washing machine only when you use it? With this circular business model, you can – without paying for the appliance itself. Dutch company Bundles runs subscription services for a variety of home equipment that it owns and maintains, but rents to householders. Instead of a set monthly payment for the machine, however, customers only pay for the time when the appliance is in use.
Adopting a product-as-service model would cut the vast mountain of electrical goods thrown away in the UK every year. Research by Material Focus has revealed that 234,000 tonnes of electrical goods are incorrectly dumped into general waste by businesses and other organisations each year, with only 108,000 tonnes recycled through approved authorised treatment facilities. That’s in addition to the 155,000 tonnes of electricals incorrectly ditched by householders.
“Let’s stop the throwaway society!” says Bundles founder Marcel Peters, who works exclusively with appliance manufacturer Miele to rent machines fitted with sensors that use internet-of-things technology to track when, and for how long, the equipment is used. The customer is then charged accordingly.
Bundles claim this system makes customers use the machines more efficiently – using relatively little energy, water and detergent – and, therefore, they last longer than appliances sold or rented out through traditional business models. The sensors also enable Miele to identify immediately any faults or problems with the machine and arrange a speedy repair – not least because, if the machine isn’t working, Bundles isn’t getting paid.
“If you pay attention, you can see the waste everywhere,” adds Peters. “That costs money and is disastrous for the environment. And yet we do it… why? Because the alternatives are limited? Because it’s much easier to throw things away? It is vital – quickly – to make stuff-as-a-service better than buy-use-dispose on all fronts.”
As well as washing machines, Bundles offers pay-as-you-use deals on tumble dryers, dishwashers, and even coffee machines. The challenge, says Peters, is the same as with all sustainability business models – convincing people to change behaviour.
“You need to get into a consumer’s mind that taking out a subscription to a product is not only possible but also nice, comfortable,” he says. “That’s the hardest part, because the moment your washing machine breaks down you start exhibiting the behaviour you always showed – you walk to the store, buy a new one, have it installed and continue washing.
“The subscription model is still very new for a lot of people, but it does work and it is key to protecting the planet.”
Model five: Product use extension
Rolls of carpet are one of the most common sights at a household waste facility. Depending on where you live (and on the type of carpet), disposal advice differs, but many centres say to haul them into the non-recyclable bin.
For the past decade, however, one flooring company has been using recyclable yarn that can be stripped and used over and over again once a carpet is no longer needed. When Dutch firm Desso launched the product, its then CEO, Stef Kranendijk, said: “The idea is to become a service industry relying on a leasing system: you don’t buy the product, you only pay for its use, which means materials remain our responsibility – and it’s not in our interest to see them wasted.”
“Product use extension” means designing items with a view to repairing, reusing, easy dissembling, reconditioning and recycling – all, crucially, while monetising these stages. Desso invites customers to dispose of their old carpets through a take-back programme then separates the yarn to reuse, and sells the bitumen backing to road and roofing industries. Non-recyclable parts are sent to be used as secondary fuel in the cement industry.
Desso has also developed a biodegradable carpet base made from a corn by-product and a yarn created from bamboo that can be recovered from a carpet and returned to the food-farming system. All of its products are 100% recyclable or biodegradable, and Desso’s plants in Holland and Belgium are run on hydropower.
Many other manufacturers and retailers are promoting the concept of product use extension. The fashion industry, for instance, is keen to mitigate the 8% of greenhouse gas emissions that come from the manufacture of clothing and footwear.
Customers of high street chain H&M can deposit their old clothes in store and be rewarded with vouchers. The retailer then sorts the garments into “rewear”, “reuse” and “recycle”, and rents many of them to customers.
“Textiles that cannot be resold are repurposed or recycled into new products and fibres,” says the store, whose YouTube channel also shows customers how to repair their clothes.
H&M has yet to convince everyone of its values, having recently won lawsuits that accused it of greenwashing, but it has promised to use only recycled and sustainably produced materials by 2030.