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Tuesday 27 October, 2015


Circular Dilemmas

Last week, we hosted the second roundtable in our ‘Rethinking Business’ event series, in partnership with the Financial Times. The event brought together business leaders, NGOs and think tanks to discuss the issue of resource scarcity.  Here, Julie Hill, Chairman of WRAP,shares her thoughts on the challenges that the circular economy brings for businesses.

Depending on where you are sitting, the circular economy presents either a threat or an opportunity. Opportunity if you are able to run with some of the new business models emerging; threat if your product or supply chain is unable or unwilling to adapt. But in between those scenarios sit a host of leading companies who are either trying to move towards more circular models, or would like to, but see multiple barriers.

That dilemma was very evident in a conversation hosted by the FT and Coca-Cola Enterprises featuring some large corporate players – brands, retailers, resource recovery, finance industry – plus think tanks.  The theme was resource security.  It was evident early on that the circular economy was uppermost in participants’ minds as a possible answer to resource insecurity, but that there is a long road to travel to make it a reality.  

The articulation of the opportunity was familiar – for instance, Accenture’s illumination of the trillions of dollars available for those able to offer better materials, longer-lived products, get resources back, share platforms, and offer services instead of products. Then there is Zipcar’s runaway success though providing transit on demand rather than selling lumps of metal. These examples confirm what we already know at WRAP through the work we’ve done to understand the success factors in new business models, and we can also add to these opportunities our projections of the additional jobs likely to be available in a more circular future. 

The discussion then turned to the barriers: there is no consistent consumer pull, insufficient underpinning from international policy, supply chains don’t always co-operate, investors don’t understand, and falling commodity prices have undermined markets for recovered materials. Again, these problems confirm what we know at WRAP – circular models work best where a company has a high level of control over its product or supply chain, can drive the necessary design and service changes, and changes improve consumer experience or are so seamless that the consumer doesn’t even notice. WRAP has worked with many companies, through collaborative agreements, to help deliver exactly those outcomes. 

Less familiar in the conversation was the prominence of risk, and a warning from one of those representing the finance community that risk is being underestimated. We know that resource risks come in different forms: running out of the physical stuff is not always the most prominent. More immediately threatening are the prospect of not being able to access resources when needed, suffering the consequences of using them (carbon emissions for instance), as well as the reputational risks that surface when a material source is exposed as ethically dubious. What loomed largest for our discussion group, however, were price volatility and the quest to find some certainties in an uncertain world.  

In black and white, these risks appear to be reasons that the investor community would be on high alert, and desperate to put money into approaches that hedge these risks to any extent.  But somehow the message that better resource use and recovery could provide that hedge is not getting through.

My take-home message for WRAP is to ensure that the successes we have won through our work with companies, and the evidence and insight we have gained from 15 years of studying material flows and markets, are comprehensively plugged into the investor communities that will shape the future through their decisions over the next decade. Many people in those communities already understand that business as usual won’t work for the future, but they are not yet the mainstream. 

We started the conversation repeating the challenge – 9 billion people on the planet by 2050, requiring more food, more energy, more materials and more wealth than ever before. No-one demurred – the burning (perhaps smoldering) platform is acknowledged. Would the same be true if we sat a group of investors around the table? 

 

Julie Hill

Chair, WRAP

Julie Hill has worked on environmental policy for over twenty five years. Her areas of particular expertise are waste and resources policy, biotechnology and sustainable buildings. As Director, and then an Associate of Green Alliance, she has developed the resources theme over a period of fifteen years, most recently chairing the Circular Economy Task Force. 

Ms Hill has held a number of senior advisory posts in government and in commercial organisations. These include a total of fifteen years on government regulatory and advisory committees governing Genetically Modified Organisms (GMOs), and four years as Deputy Chair of the Agriculture and Environment Biotechnology Commission (AEBC), where she was responsible for the implementation of innovative approaches to public and stakeholder engagement. She has also served terms as Non-Executive Director of the Environment Agency for England and Wales, and of the Eden Project in Cornwall, and is presently an Independent Board Member of the Consumer Council for Water.  She is also a Senior Fellow at the University of Surrey.

Ms Hill read English and Philosophy at Leeds University, and holds a Master’s degree in Politics and Government of Western Europe from the London School of Economics, and a certificate in Ecology from the University of London. Her publications include The Secret Life of Stuff (Vintage, 2011) and the influential reports Reinventing the Wheel (Green Alliance 2011) and A Zero Waste UK (IPPR/Green Alliance 2006).

http://www.wrap.org.uk/

 

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