Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily on July 9, 2018

KUALA LUMPUR: The circular economy is a US$4.5 trillion opportunity over the next two decades waiting to be tapped by companies savvy enough to understand what it is, where they fit in and how to carve their niche in it.

The Edge Malaysia managing editor, Anna Taing, in her opening speech at The Edge SME Forum 2018, defined the circular economy model as one that is relevant today because of the potential it offers to industries while at the same time being about sustainable development.

“It has been estimated by some experts that the circular economy can generate a market worth US$4.5 trillion by 2030,” she added.

Taing defined the circular economy model as one that is purposely regenerative and restorative by design. “It is aimed at keeping products, components and materials at their highest utility at all times. What does this mean? What you can’t repair, you refurbish. What you can’t refurbish, you strip down to its essentials and use the parts.”

The Edge SME Forum 2018 was themed: “The Circular Economy: An Amazing Untapped Opportunity.”

This is The Edge’s fourth SME Forum so far. The first forum, held in 2015 looked at the challenges faced by small to medium-sized enterprises (SMEs) at the time, including the introduction of the goods and services tax and the difficulty in getting financing while the second focused on IoT (Internet of Things).

The third SME Forum, held last year, delved into the opportunities and challenges brought about by Industry 4.0.

 

Transitioning business  

For every percentage increase in gross domestic product, there is a 0.4% surge in the use of natural resources, said Pavithra Mohanraj, the founder of Mumbai-based Infinitive Research and Advisory, who kicked off the forum with an overview of the circular economy.

“The linear economy today is where we mine resources, we make them into products, we sell them and at the end of the life of the product, we don’t know what happens to it.

Most likely it ends up in a landfill,” said Pavithra.

“Just by doing that we used close to 50 billion tonnes of resources in 2014, and that is expected increase to 130 billion tonnes by 2040, if we continue with this linear economic model.

“But we don’t have that kind of resources, and we can’t materialise them from thin air,” she said.

Pavitra’s start-up, Infinitive, works with businesses in helping them transition to a circular model of business and provide thought leadership on circular economy in India.

 

Value and innovation

Dr David Gonsalvez, Malaysian Institute of Supply Chain Innovation chief executive officer (CEO) and rector, revealed two golden rules for this particular economic model: “There is value in waste [products]. Also, you will need innovation if you want to make the supply chain [circular].”

Gonsalvez was addressing the supply chain component in the circular economy. He cited the example of Spanish giant Saica Group, a plastics and packaging manufacturer that has a reputation for retooling almost all of its waste and packaging products.

“It makes paper and plastic packaging for everything from cereal to automotive spare parts. It is one of the largest packaging manufacturers in Europe and has paper mills all over the continent. Last year, it produced over 2.5 million tonnes of packaging products using only recycled materials. Not a single tree was harmed.”

According to Gonsalvez, it was a matter of the company rethinking its approach to the delivery of the used packaging. “Grocery stores have so much cardboard and packaging material in their back rooms. This is because all our produce and food items come pre-packaged,” Gonzalves explained, “This represented a huge resource collection point for them.”

He acknowledged, however, that at present, it is the bigger companies — the mining giants, consumer manufacturing conglomerates, and the like — that are better positioned to adopt circular economy production principles.

However, he still believes small businesses have a crucial role to play. To this end, he said, SMEs need to be creative in how they make their supply chains more “reuse-friendly”.

 

Creativity

Seah Kian Hoe, founder and CEO of Heng Hiap Industries Sdn Bhd, practices the circular economy in his recycling factory by creating high-value plastic products and generating his own electricity from plastic scraps.

His presentation was mainly about how his company turns waste into wealth and what happens to this waste if not addressed properly. “If a plastic scrap goes into landfill or the ocean after consumption, it becomes stagnant and it becomes plastic pollution.

“Once we recycle, it goes into a loop that evolves. After that one use, you can make really good smart material from mechanical recycling, really good energy feedstock from thermal recycling, and really good renewable energy from chemical recycling,” Seah pointed out.

His company recycles 3,500 tonnes of plastic every month, and he has over 600 formulas to create high-value smart plastic products from scraps. The biodiesel he creates from plastic scrap also generates more than enough electricity for the factory.

“With that closed loop system we try to stretch that forward. Can we do it at a state, country or regional level? The integrated recycling technology innovation that we have is not one that we will keep in our own backyard. It is something that belongs to the public and we need to share it, we need to work with our fellow recyclers, and combine our resources so we can make a positive impact faster,” Seah said.

 

Strategic thinking

Azim Pawanchik, innovation strategist at Alpha Catalyst Consulting Sdn Bhd, said SMEs should embrace innovation to hop on the circular economy bandwagon.

He gave the example of Kaffeeform, a Berlin-based backyard start-up which used strategic thinking to turn what was essentially a waste product into something of high value. Julian Lechner, the start-up founder, turned coffee grounds into coffee cups. This is while most people would only think of throwing them away or merely using them as fertiliser to grow plants.

The coffee cups were later commercialised and sold in the market. They received a positive response from coffee lovers and consumers with high environmental awareness. “I would love to buy one myself as I’m a coffee lover,” joked Azim.

He added that there is a company that creates pots that allow people to grow mushrooms via coffee grounds. Furthermore, a UK-based start-up created a coffee-derived biofuel that is being used to power buses in London.

 

Buy-back programme

Acer Sales and Services Sdn Bhd general manager of sales, products and marketing Chan Weng Hong, talked about how his company, in particular, is incorporating circular economy practices in its day-to-day operations.

He pointed out that personal computers and related electronic equipment contain substances such as metals, glass, plastics and certain chemical compounds that are highly recoverable, recyclable and reusable.

By recycling their old equipment in a responsible manner, users can keep electronic products out of landfills and help maximise the use of natural resources, he added.

“Lithium, for example, is a highly sought after material today, being used in smartphones, laptops, and even self-driving cars. Not many people know this, but it actually takes 70% more energy consumption and 70% more carbon dioxide emission to mine lithium than to recycle it. This is why we think these kinds of efforts are important,” said Chan.

To promote responsible hardware recycling, the company has introduced the “Acer Buy Back Programme”. By handing out their old hardware, customers are eligible for subsidies, which can then be used to purchase newer, better, and greener PCs from Acer, said Chan. The old PCs will either be refurbished, resold, reused or recycled, depending on their condition.

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