Liz Goodwin, CEO of WRAP, the Waste and Resources Action Programme, blogs on WRAP's vision for 2020 and what it means for manufacturers. It is the first in a series of expert guest blogs on climate, energy and environmental issues and the manufacturing sector.
UK manufacturing is facing a healthier year. Growth forecasts of 2.7% make encouraging headlines and I was heartened to read Terry Scuoler of EEF in the Mail on growing positivity within industry. I share this optimism. Economic growth, job creation and expanding exports are possible for the UK and manufacturing clearly has a key part to play in making this all happen.
We all know we are not out of the woods yet, despite these green shoots of recovery. The important thing is that the economy and the environment are not mutually exclusive – they're intrinsically linked, both need repairing, and both growing together brings multiple benefits.
Much is now written about the challenges we face from present and future consumption levels, not least the result of the ballooning middle classes in China and India. The stark truth is, if we continue consuming resources globally as we do today then by 2050 we'll need three times more material resources and 70% more food, feed and fibre. In just 20 years we'll need 40% more energy and water. As a world, we urgently need to work out how we can live the lifestyles we all aspire to, without using as many resources.
One way is the concept of the circular economy: using as few resources as possible and keeping them in play for as long as possible, renewing natural capital.
For me, the circular economy can both help safeguard scarce resources and provide economic growth. It ensures we get the maximum value from materials and brings significant business benefit. It's the antithesis to the “take - make - use - dispose” model we've favoured for far too long, and can help protect us against material price volatility and supply chain risks. Embedded in business thinking, it is good for business not a “price to pay” for sustainable resource use.
WRAP's role in helping the circular economy develop is research and practical implementation. We help businesses make things happen on the ground, and set out what we believe possible for the UK economy, and indeed wider…given the global supply chains of some of our major partners.
Our assessment is that by 2020, if we were able to make significant strides towards a circular economy, the UK could increase net exports by £20 billion plus and create 10,000 new jobs in the recycling sector. We could reduce material use and environmental impacts, and reduce business costs by over £50 billion a year.
The key questions are: what does the circular economy look like in practice, how can we make it happen and how can my business unlock that value?
New business models, to my mind, are the absolute key to answering those questions. Not easy…but essential. WRAP's work with businesses to help develop new business models is already showing companies how they can improve profits by changing the way they work. One project with Carillion identified assets that could be redeployed extending their life and saving Carillion significantly. In the first six months alone, Carillion redeployed 75,000 assets and generated a net-book saving alone of £120,000 through re-allocating assets; and considerably more through the additional money saved that would otherwise have been spent replacing them.
Our work with retailers is already identifying how they can improve profits through trade-ins, leasing and service rather than “business as usual” sales models. These new, resource-efficient business models require strong, long-term partnerships with equipment suppliers and manufacturers. Many suppliers see the benefit in developing longer-term relationships with their clients, and will profit from getting used products back for remanufacturing, just as Caterpillar does with the plant items it remanufactures.
Many leading companies have grasped an important point: they're making savings ahead of the market and can out-perform the competition because they're recovering greater value from their assets and investments.
Some of the changes required to realise the benefits of a circular economy are straightforward, easy to implement and offer no-cost or low-cost advantages. Others take time and are a challenge for businesses because change is disruptive and on the face of it, the status quo isn't broken. But with global demand increasing, this mind-set threatens the resilience of SMEs and large corporations alike, and cracks will appear unless a long term plan of action is taken.
To help address this WRAP is leading the REBus project, an international programme helping businesses pilot and develop Resource Efficient Business Models (REBM). These models help extract maximum value from products by using them more intensively, extending their life and enabling them to be re-used, which helps increase business resilience and reduces resource dependency. Such models can help develop new markets and products, and identify new ways to increase turn-over per tonne of material.
WRAP provides technical expertise and guidance to help businesses develop REBMs at no cost, and analyse and appraise opportunities. These give companies the confidence to trial new approaches and demonstrate the business case.
Continuing as we are isn't an option. We don't have enough resources on one planet to consume products as we do. Global demand increases daily and many resources are internationally traded commodities and, while this may not always mean higher prices, it could spell increased volatility and challenge regular supplies.
New Resource Efficient Business Models offer the ideas, the means, and the support to equip manufacturing against these threats, and open up new possibilities for a circular economy.