With growing pressure on natural resources and sharply rising costs for raw materials, a fundamental shift is needed in the way we buy, use and dispose of goods, as Tom Robinson, chief sustainability officer at Carillion, explains.
Waste management is a critical factor in any sustainable business plan, however, true sustainability requires much more than simple recycling of materials. Awareness of sustainable waste management has certainly accelerated throughout the last decade, with more and more businesses examining the way in which they manage resources. Demand for raw materials is increasing, leading to supply constraints, price volatility and environmental damage. Indeed, nearly a third of profit warnings issued by FTSE 350 companies in 2011 were attributed to rising resource prices.
Availability of resources represents a key risk for future growth and as such, organisations such as Waste and Resources Action Programme (WRAP) – a government funded body with the remit of helping people and businesses manage waste more sustainably – are working to develop alternative business models that offer long-term financial and environmental benefits. Central to this approach is the move towards a circular economy, in which all aspects of the supply chain are tightly focused on reducing inefficiencies and ensuring better end of life management of materials.
A circular economy is an alternative to a traditional linear economy (make, use, dispose) in which resources are kept in use for as long as possible, maximum value is extracted from them while in use, before they are recovered at the end of the item’s service life to be regenerated into further useful products.
Why then is this so important? According to some forecasts, the world’s population is expected to reach nine billion by 2050. As a society, we are consuming more resources than ever – between 45-60 billion tonnes of raw materials are extracted every year. If the global population carries on growing at the same rate, this figure could triple by 2050. What’s more, many day-to-day products, such as televisions, cars, computers, glass and pharmaceuticals, depend on rare earth elements that are becoming harder to source.
As well as creating new opportunities for growth, a more circular economy would reduce waste, drive greater resource productivity, deliver a more competitive UK economy, position the UK to better address emerging resource security/scarcity issues in the future and help reduce the environmental impacts of production and consumption in both the UK and abroad.
The adoption of a circular economy offers considerable economic benefits; Defra calculates that UK businesses could benefit by up to £23 billion per year through low-cost or no-cost improvements in the efficient use of resources, whilst McKinsey estimates that the global value of resource efficiency could eventually reach $3.7 trillion per year.
A circular economy is about valuing products differently and creating a more robust economy in the process. By assessing how we design, make, sell, reuse and recycle products we can determine how to get the maximum value from them, both in use and at the end of their life. But what does this mean in practical terms for the facilities management sector?
One project that is leading the way in this field is the WRAP Facilities Management Strategy Group – a diverse group of senior facilities management practitioners from a range of companies including Carillion, working collaboratively to explore new ways of doing business that uses fewer resources, reduces costs and environmental impact. Throughout the project, members will define where to focus efforts to maximise benefits to facilities management businesses, their clients and the environment, as well as determining how to work together in order to deliver these benefits as rapidly as possible.
For example, work will consider how to overcome existing inefficiencies by taking a whole life costing approach and optimising deployment of assets between contracts and clients. Approaches could include encouraging the purchase of more durable, higher value goods, as well as developing a framework to support the reuse and second market potential of those goods. Additionally, alternative ownership models will be examined, such as transferring asset ownership to the facilities management service provider.
Following the inaugural meeting in August, the group identified three key strands for further development, to be tackled by two smaller working groups. The first group will consider common standards and guidance for asset management and resource efficiency, including in contract arrangements. This will look to develop performance criteria, KPIs, model gain-share arrangements and guidelines for contract duration. This area of work will be developed in partnership with the government and key industry bodies to provide ‘standard’ guidance for clients and facilities management providers, identifying good practice contract arrangements for different situations.
The second group will look at how to create standardised product information for key purchases, specifically HVAC and cleaning equipment. This information will include details of durability, embodied carbon and whole-life cost, and will aim to create a procurement guide that will enable more informed choices to be made throughout the purchasing process.
It will also concentrate effort on developing a method for independent evaluation of assets. This area of work will look at providing an independent assessment of key information on assets including utilisation, performance, remaining life, financial value and residual value. This will help to enable the transfer of assets and risk where whole life costing has taken place when a contract is passing to a different company.
The ultimate aim of the project is to represent the best interests of the facilities management industry, by developing a set of working practices that can be adopted by any facilities management provider, whether large or small. At Carillion, work is already underway on a ‘Stock and Asset Management’ project, designed to develop clearer visibility of stock and assets held at both contract and corporate level. From this, a robust management system will be implemented to create an internal marketplace where stock and assets can be traded between contracts or disposed of in a sustainable and economic manner. Two contracts have been identified as pilots for the project and operational feedback is already being gathered.
Clearly there is a great deal of work still to be done throughout the facilities management sector, but projects such as this are a strong indication of the desire within the industry to collectively embrace the challenges we are facing, by working together to develop long-term solutions.
The European Waste Hierarchy
At the cornerstone of most waste minimisation strategies is the ‘waste hierarchy’ – a five-step system that aims to extract the maximum practical benefit from materials and generate as little waste as possible. In Europe, this system is referenced in the Waste Framework Directive (WFD) – a European Union directive brought into place on 17th June 2008. According to the WFD, the European Waste Hierarchy is legally binding except in very specific cases.
At the top of the pyramid is prevention, which means reducing waste generation at the source by employing more efficient systems and solutions as well as reducing overall consumption.
Second in the hierarchy is reuse, in which products are re-purposed, giving them a second lease of life. Following this is recycle, which refers to any recovery operation by which waste is reprocessed into new products or materials.
The penultimate step is recovery by methods that extract value from the waste product, such as anaerobic digestion or incineration with energy recovery. The final and least preferred step is disposal, which refers to landfill and incineration without energy recovery.
A circular method of waste management, like that proposed by WRAP, focuses strongly on the first three stages of the European Waste Hierarchy by ensuring that no material is wasted and all products are incorporated back into the production process at the end of their useful lives.
Extract FMJ March 2013