Why collaboration is the key to a circular economy
A version of this post first appeared on BusinessGreen.
“If you want to go fast, go alone. If you want to go far, go together.” These wise words, borrowed from Johannesburg airport via Richard Branson’s blog, reflect a frequently heard idea about business in the 21st century: that you can do more for people, planet and profit by collaborating than competing.
But this shouldn’t dissuade the forward thinking business person from pursuing collaboration. In the long run at least, UK manufacturing needs a less volatile, more secure, greener supply of the resources that manufacturers depend on. A circular economy can deliver this, and collaboration is key to delivering a circular economy.
Don’t take my word for it. The government’s Foresight Programme, a sort of in-house think tank based in the Office for Science, recently highlighted how much collaboration matters. The results of its two year enquiry into the future of UK manufacturing identifies that manufacturing will need to be “more sustainable”, a theme that piqued the interest of the manufacturers association EEF. This will be driven in large part by higher resource price volatility, disruptions to international supply chains caused by climate change, and regulation. So far, so familiar, with their analysis echoing that of McKinsey, Chatham House, and numerous others who have looked at the future and seen a price spiky, resource supply challenged world. What’s interesting though is their recommendation for how to get ahead of the curve on this problem. They call for industry-government-academic partnerships that support experimentation and circular economy business models (reuse, remanufacturing, and closed loop recycling) to increase resilience to resource supply shocks.
Japan, Coke and the milk industry show us how it’s done
Collaboration as a means of securing resource supplies is nothing new. Japan, Coca Cola and the milk-bottle industry all provide instructive examples of what this approach can deliver:
- Japan is something of a poster child for using circular systems to mitigate resource risks, with a circular economy worth 7.6 per cent of GDP in 2007. Achieving this has meant systemic government intervention across the whole of Japan’s economy: from forcing electronics manufacturers to co-operate in delivering a national waste electronics recycling service, to funding research into new recycling techniques that recover rare earth metals.
- Coca Cola is the single biggest user of PET plastic in the UK. A disruption in the plastics market would put its sales at risk. To mitigate this risk, and to hit its self-imposed sustainability targets, Coca Cola has committed to increasing the proportion of its plastic that comes from a recycled source. But when it made this commitment, there wasn’t enough recycling capacity in the UK. So in 2011 they more than doubled the quantity of food grade recycled PET produced in the UK by signing a joint venture with Eco-plastics. It was an expensive and risky step, but has secured Coca Cola’s supply chain and improved their environmental footprint.
- Similar to Coca Cola, the various companies that manufacture milk bottles have collectively agreed to increase the recycled plastic content of their bottles to reduce their environmental impact. However, due to the practicalities of the recycling process, the manufacturers had to agree to some shared design principles. In this case, they agreed to reduce massively the amount of dye used in bottle tops to prevent the recycled bottles developing an ever greener hue.
These examples show collaboration can be forced, as in Japan, or chosen as with Coca Cola and the milk bottlers, but the common denominator is that developing a circular system for resource use and supply requires the co-ordinated activity by multiple partners. Unfortunately for the circular economy, getting this kind of collaboration isn’t easy.
There are two big reasons for this: first, it’s hard to remould relationships that have been characterised previously by competition, especially when it comes to sharing commercially sensitive information. It takes an iconoclast like Richard Branson to make collaboration sound like a good business choice. This cultural aversion is reinforced by the second reason: misguided concerns about competition law.
How the government can help
The example of Japan shows that the government can help. The UK’s own Foresight Programme shows it should. Mostly easily, the government can clarify what is and isn’t allowed under competition law: collective design decisions and recycled content targets are fine; agreements on price, not so fine.
Second, the government should continue to support bodies that already promote collaboration: organisations like WRAP that help to convene sectoral agreements such as the Courtauld Commitment or the TSB that make collaboration a prerequisite of their funding.
But, to really help business in a world where access to resources will determine where industries flourish, the government should make circular product systems a key part of the industrial strategy.