Value for Business in the Circular Economy: Generating ROI by Eliminating the Concept of Waste

Quantifying sustainability’s impact on the bottom line can be a challenge. Short-term, bottom-line pressures are top of mind as parties at all levels of consumption strive to contain costs and waste reduction and environmental initiatives take a backseat. This is especially true when their bottom line benefits are not as concrete as the immediate return of cost savings up front.

Companies and major brands want visibility of the bottom line benefits of integrating CSR and sustainability in order to gain perspective on long-term returns. Businesses are in a position to gain competitiveness and influence in the marketplace by designing for more circular systems, but reconciling sustainability and profitability for optimal ROI is complex. Key for businesses on the fence about taking that leap is being able to quantify and monetize improvements in the value chain from adopting more sustainable practices.

That being said, eliminating the concept of waste is a vast yet simple idea that, when applied to company processes, generates tangible, reportable returns. By definition, waste constitutes unwanted or unusable materials, things that have no value or no longer have value. This concept is a purely human invention, as in nature, there is no waste. The importance or usefulness of something is not inherent, but subjective. And yet, certain materials and assets are considered more valuable than others.

When you think about phrasing such as “a waste of energy” or “a waste of food,” they refer to resources that could have been used for something, but have not. This is valued as a negative because there is a quantifiable loss of capital. If we were to view all that we now consider “waste” with this perspective, it would be plain that not keeping these resources at high utility at all times is not only inefficient, but a threat to business and the bottom line.

Last year’s report from the World Economic Forum, for example, found that 95% of plastic packaging material, worth $80–120 billion annually, is lost to the economy after a short first use. That’s a significant amount of money wasted, money that could have been placed towards any number of things, including profit. These linear material chains have been long favored due to the lack of economic incentive to produce items that are recyclable or reusable, or work within a system that vests materials with value. However, when you look at the numbers, these equate to drawbacks that are bad for business development.

This is of course to say nothing of a planet in peril, a finite cradle of resources that has not only been mined past the point of possible replenishment, but polluted where an excess of technology is required to make these resources useful to us. Our water requires treatment, the atmosphere is changing the earth’s climate and we continue to dedicate more and more land towards storing what we consider garbage.

The environmental ROI for working to reverse the cycle of linear sourcing and disposal processes is a planet left to live on, but using key performance indicators (KPIs) for accessing waste reduction programs and internal sustainability initiatives can help businesses measure returns generation in other areas. Tracking supply chain waste, utility consumption and energy efficiency will reveal savings and spends that can help reallocate resources to scale for growth.

Then there’s the sustainability marketing ROI from addressing consumer demands and pioneering solutions in the product and service space. Consumers increasingly want to spend (and earn) their money with socially responsible companies that value their employees, the resources at their disposal, and the influence they have on the world. Where the public sector may fail to address the inefficiencies of current systems, consumers look to private entities to step up and create the tools they can use to reduce waste.Hi.

Zero-waste retail and service establishments and the success of bloggers and lifestyle advisors inspiring people to change the way they consume demonstrate that consumers are hungry for products and services that help them reduce their impact. Companies that dedicate resources towards streaming their internal and backend processes stand to garner the same attention and benefit.

Sustainability is holistic. Pinpointing the benefit of short-term infrastructure changes alongside long-term returns can be a moving target. But waste as a concept is a constant: something either is waste, or it isn’t. Both are matter of perspective. Allocating the resources, monetary and mental, towards reducing and doing away with waste generates opportunity and the emergence of new markets that brands and retailers can grow with.

Join me at SB’17 Copenhagen to gain some insights on how to eliminate the idea of waste — for brands, retailers and consumers — while generating both long-term and short-term positive ROI in the process. Taking a circular design perspective and helping make it a practical reality, Terracycle has established itself as a leader in this space with access to the latest and most brilliant thinking from around the world. See you in Copenhagen!

Tom Szaky
September 20, 2017

Share this with your network