Dr Nick Murry, chief sustainability officer, Ecodesk, says moving to a circular economy will not be a choice, but a necessity.
"If we want to compete, we have to get the most out of our resources, and that means recycling them back into productive use, not burying them in landfills as waste." These were the words of EU environment commissioner Janez Potocnik as he unveiled a set of proposals aimed at reducing landfill waste across Europe, last July.
With targets for packaging waste re-use and recycling of 80% by 2030, packaging companies in particular will need to innovate and collaborate with customers and suppliers more than ever before.
The concept of a ‘circular economy’ isn’t new but it has recently become more main stream. At its core is an approach to waste reduction and resource efficiency that keeps resources in use for as long as possible, maximises their value in use and recovers as much as possible in terms of energy and materials at the end of each service life.
The can be little doubt that Potocnik is right to champion the circular economy, and to precipitate a move away from the linear landfill model, which is clearly no longer sustainable. And he claims "it is not only possible, it is profitable", something which the Ellen MacArthur Foundation has been promoting since its inception in 2010, when it published the first ever report series highlighting the economic rationale for the transition to a circular economy.
The proposed targets themselves are steep, but as the cost of raw materials continue to rise, along with the cost of commercial landfill, even the short term case for businesses to grasp the benefits of more circular business models is becoming more compelling. In the (not too distant) longer term, most manufacturing industries will be looking to have greater control over the resources they depend upon (or alternative ways of delivering their products and services), something we are already seeing in the automotive sector in relation to remanufacturing of car engines, for example.
Potocnik proposals undoubtedly present some immediate challenges for European businesses, but they will also stimulate opportunities for saving money and reducing risk, not just within the business but in partnership with suppliers. Knowing where in the supply chain to look for efficiencies (‘hotspots’), and having the ability to target these, will become increasingly important, however.
According to an Ellen MacArthur Foundation report last year entitled Towards the Circular Economy, the market is likely to "systematically reward companies with an edge in circular business practices." The report goes on to say that by embracing innovation these businesses have an opportunity to "win by scaling up the concept of the circular economy".
While understandably bullish, the report cites examples and suggests that in packaging in particular there will be rewards where waste streams of nutrients, heat, partially treated wastewater and CO2 can be converted back into high value biological products or energy, using much shorter and more resilient supply chains. "The time to invest in building a circular economy is now," it says.
The sentiment is supported by European commissioner for research, innovation and science Máire Geoghegan-Quinn, who said recently that "research and innovation are the keys to success for the Circular Economy". The packaging industry has already started this journey with mushroom based boxes, for example, but it has much further to go.
So how can the industry evolve?
There is no doubt that the EU proposals present some huge challenges. Researching and developing innovative products is not cheap and the development of packaging products designed for re-use to the specifications of particular customers will demand more effective ways of working together.
Of course, packaging firms should not have to bear the brunt of the up-front investment but they do need to work with both customers and suppliers to drive innovation that will help businesses cut out waste at raw material level. Without a more joined-up approach, progress will inevitably be slow and any imposed targets on commercial waste will not be met.
While the European Parliament will no doubt take time debating and ratifying the proposals, there is an opportunity now to sow the seeds of a circular economy throughout the supply chain, potentially by proactively working with those suppliers that are prepared to innovate – as Potocnik added: "The 2030 targets that we propose are about taking action today to accelerate the transition to a circular economy and exploiting the business and job opportunities it offers".
At the end of the day, moving to a circular economy will not be a choice, it will be a necessity. The question for business is how much longer they can afford to delay taking action.