LAWR

CIRCULAR ECONOMY Find business models that work the best for you New business models are required to help the UK extract maximum value from it materials and adopt a circular economy, argues DS Smith's Mathew Prosser. Here, he explores why. dopting different busi- ness models is a fun- damental part of mov- ing towards a circular economy and achieving zero waste. There will be opportunities for entrepreneurs to develop new ways of pro- moting their offering, resurrecting some ideas from the past. We've already started to see more repair shops and cafes setting up over the past year, for example. But there won't be a one size fits all approach. Each industry sector will need to think clearly about the type of business model that works best for them – some practices are clearly better in some indus- tries than others. Manufacturers or brands that sell prod- ucts with a high turnaround using a single source of material have a better chance of creating closed loop models than those selling products with a longer life made out of a complex composite of materials. I see the ownership of materials and products changing. New models will have everyone within a supply cycle renting materials for finite periods of time before these materials move on to the next organ- isation in the cycle, creating a continuous loop. Investment Investment will need to come from new areas – crowd-sourcing projects have already shown how to get the necessary finance when traditional funding sources dry up. Again greater industry collabora- tion on processes and technologies will speed up and lower the cost of adoption. At our Supply Cycle Think Tank work- shop, held by DS Smith last year, speaker Markus Zils of Returnity Partners said it was about making return loops more efficient as well as effective product and component reuse and remanufacturing. "It's to do largely with goods and ser- vices being passed on to consumers/users in B2B and B2C, by means of selling," said Zils. He added: "Though after the point of sale there is less access to that material or product. We rely on public utilities and other specialised services to bring that back. "One of the fundamental questions the business model needs to address is [wheth- er] you actually ensure ownership of the product for a retailer or manufacturer and move to a service-based model, so leasing or rental based, to make it viable?" During the workshop discussion our delegates found the structure of compa- nies can often be a huge barrier to change. Senior managers can be resistant to change, seeing greater risk than the poten- tial opportunities that introducing a new business model could bring, they said. Creating effective change in any organi- sation requires buy in from the top, alongside a sufficient structure to enable proper delivery throughout the company. Institutional inertia was one term used to describe the situation in the workshop groups. Protocols Data is crucial in making changes, for assessing and measuring how well the changes are being made. But in many instances there is a lack of available data and necessary auditing protocols are required to highlight the areas where change can be beneficial. Crucially without data businesses are unable to review the fiscal and environ- mental benefits delivered back to the organisation in order to facilitate wide- spread change. In some instances the regulatory and legal environment can hinder different processes, though equally it can help to move thinking forward. There are often conflicting interests, for instance between a landlord and tenant, where leasing arrangements do little to help facilitate change in practices. Another example is in short-term waste management contracts that don't allow for investment in long-term sustainable solutions that could generate opportuni- ties to move to zero waste and enter the circular economy. New players, particularly those with entrepreneurial spirit will help to drive a new approach and demonstrate what can be achieved. They will be happy to take the risk and rethink the fundamentals to develop new business models. Different attitudes aligned to companies' incentive programmes and profit motives can help to drive this forward. I'll leave the final word to one of the workshop delegates who stated: "If a busi- ness can build itself into a resilient com- pany it will ride the transformation much better. Change is always happening but you have to manage that change and resilience is a fundamental thing in making sure that the circular economy is arrived at." Mathew Prosser is European commercial director at DS Smith (Recycling Division). A February 2015 Local Authority Waste & Recycling 21 Mathew Prosser

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