waste opener iceberg

“Waste is the new black,” insists Vik Bansal FAICD, managing director and CEO of Cleanaway Waste Management, the largest company in the sector in Australia.

“You would expect me to say that, wouldn’t you?” he adds. But Bansal is right. In a short time, waste and what happens to it has gone from being ignored or taken for granted to becoming a hot topic.

“The average consumer had a utility mindset to waste,” he says. “They saw their garbage being taken away or, at an industrial, commercial or construction site, going off in a truck, and frankly, they didn’t care what happened next.”

Suddenly that changed. A series of events, including top-rating, prime-time TV shows such as ABC TV’s War on Waste, popped the lid on waste and where it goes. This peaked with an industry crisis in February 2018 when China’s National Sword policy restricted imports of various plastic, paper and solid wastes, affecting Australia and about 100 other countries, causing the price on post-consumer plastic as a commodity to plummet. The restrictions excluded 99 per cent of the recyclables Australia had previously sold to China.

What followed was a swift reckoning for the local industry, which turns over $15 billion annually. For public and private sectors, it has triggered a sharper focus on waste as a financial and reputational risk in an era of escalating environmental, social and governance (ESG)-consciousness — and it has put plans for transformational industry change on fast-forward.

Bansal, who is responsible for the turnaround of Cleanaway operations through a sustainability bent and several strategic acquisitions over the past three-plus years, wasn’t surprised by China’s decision. “We knew it was coming, just not that quickly,” he admits. Amid the scramble for other offshore markets, a consensus has quickly formed that Australia must take responsibility for its own rubbish. A new National Waste Policy that puts the emphasis on “waste as a resource” via a circular economy approach was published in December 2018.

“The average consumer had a utility mindset to waste. They saw their garbage being taken away in a truck, and frankly, they didn’t care what happened next.” Vik Bansal FAICD, Cleanaway

The World Economic Forum estimates a collaborative circular economy could add $26b to the Australian economy by 2025 and would also deliver $9.3b to Australian business. A revolution is underway in the formerly overlooked waste industry, with implications for everyone — from waste creators (everybody) to retailers, manufacturers, packaging companies, waste managers, resource recovery operations and recyclers, entrepreneurs and all levels of government.

Spurred in no small part by costly levies on landfill now in soon-to-be five Australian states, loud voices are echoing across the value chain. They are calling for new infrastructure, marketplaces and policies for recycled products — glass, plastics and polyurethane, for starters — to meet the expectations of a growing population and an increasingly waste-aware community. Topping the industry wish list is harmonisation of regulation and policy between the states — all of which run their own races — and environmental protection agencies.

No matter where you look, what’s happening in the waste industry is as exciting and potential-packed as it is complex and highly challenging.

Collaboration matters

Brooke Donnelly MAICD, CEO of the co-regulatory not-for-profit Australian Packaging Covenant Organisation (APCO) is charged with working across the entire waste value chain to deliver on Australia’s response to the China ban, with targets for 100 per cent recyclable, reusable or compostable packaging by 2025. It’s a massive job that provides a unique vantage point to assess the appetite for change in the waste sector.

After months of meeting with industry and governments across the country in 2018, Donnelly is pleasantly surprised, not least by the alignment between government and industry.

“It wasn’t a discussion about whether we should have targets, but how to achieve them,” she recalls.

While a recent Credit Suisse report predicted winners (waste managers) and losers (FMCG — fast moving consumer goods) in the plastics crisis fallout, Donnelly demurs.

“We all create waste, so it’s a shared problem and it’s going to take collaboration and cost-sharing. Waste has a value, whether it’s from the materials recovered or the expense it creates for the community to manage,” she says. “There’s no silver bullet, single or simple answer. No organisation can do this on its own.”

She felt strong headwinds of change in September last year in Melbourne, when federal Environment Minister Melissa Price launched the National Packaging Target and the Australasian Recycling Label. “We were joined that day by the top 30 brands across the entire supply chain — waste industry, packaging, retailers, logistics, importers, manufacturers — they all turned up to support the shift.”

That’s not saying there aren’t serious concerns. Donnelly has heard from packaging companies about the capability and capacity in Australia to manage reprocessing on-shore, while big waste management is worrying about infrastructure and the sustainability of the recycled materials market, with particular uncertainty about “the entrepreneurial phase” or end market. Despite misgivings, it’s widely recognised as a time of innovation and opportunity.

“People are prepared to pay for a better product, one they know is truly subject to recycling. Michael Coleman FAICD, Planet Ark

The uberisation of waste

Strategically positioned and growing fast are agile players such as waste manager, Bingo Industries, which has grown from a small, family-owned, four-truck, 10-employee skip bin operation in Sydney in 2005 to almost 300 trucks and 17 reprocessing facilities in NSW and Victoria today. Boosted by several capital raisings since listing on the Australian Securities Exchange in May 2017, the company’s pivotal acquisition is Dial-a-Dump, approved by the Australian Competition and Consumer Commission (ACCC) in February. With an 82ha site at Sydney’s Eastern Creek, Bingo is planning “a recycling ecology park” to accept and recycle every type of waste stream.

Specialising in separating and recycling the mixed waste that many other operators send straight to landfill, Bingo’s main focus is now commercial, industrial, construction and demolition waste streams fed by the infrastructure boom, which represent almost 80 per cent of Australia’s total market.

The company is ahead in the collaborative stakes. “We see Bingo as a disruptor,” explains Michael Coleman FAICD, who chairs both the upstart waste manager and the pioneering environmental not-for-profit (NFP) Planet Ark. In partnership, Planet Ark helps keep Bingo on the recycling front foot and, via sponsorships, Bingo “helps to pay the salaries” at Planet Ark, Coleman explains.

Tech-powered customer-centricity is a differentiator for Bingo which employs 10 software developers and counts big retailers McDonald’s and Bunnings, and major shopping centres, among its customers. Three years ago it went paperless, running instead on a live network, providing driver apps and portals for customers to track their trash. It’s the “uberisation” of waste. “Customer focus is giving us a better response and people are prepared to pay for a better product, one they know is truly subject to recycling,” says Coleman.

For CEO Daniel Tartak, this is what best practice waste management looks like. “There is so much talk about waste and a fear that it’s being mishandled. People go to a lot of trouble to understand where their waste is going, what we’re doing with it, how much we’re recycling, and we have to report back on that,” he says. The company says it is the only waste manager in NSW to verify recycling with independent audits. Trackability means some major customers can cut costs.

“We don’t see these contracts as short-term grabs, but as lifetime relationships. We want to hold McDonalds for 20–30 years, and we believe we have a better chance if we save them money and help them recycle.”

“A forward-looking public commitment sends a clear signal right through the business that waste is something we need to deal with.” Margaret Stuart, Nestlé

Set the target

Many multinationals are ahead of the game. “What it takes is a big, fat target,” says Margaret Stuart, head of corporate and external relations at Nestlé Oceania. Three years into its five-year target for “zero waste to landfill by 2020”, the company reports extraordinary success. “A forward-looking public commitment sends a clear signal right through the business that waste is something we need to deal with,” says Stuart.

Most of Nestlé’s seven Australian factories are well on the way to achieving the goal, with one reducing 1000 tonnes of waste to under 300 in the space of five years. Its Tongala factory in north-west Victoria has managed to eliminate it entirely.

With a hard target to hit, a form of “intrapreneurialism” arises, Stuart explains. “Production staff, not just management, have to come to grips with every single item in the factory. How do I find a new home for this?” Staff get creative. Solutions have to be local. Outcomes vary depending on the waste product and location, which tends to be regional.

At the Nescafé factory in Gympie, Queensland, for example, the primary waste product — coffee grounds — goes into a biomass burner to produce power. At another, canteen waste goes to a worm farm or animal feed, which Nestlé buys back as fertiliser for its gardens.

Suppliers also toe the line. When goods were delivered to a factory wrapped in plastic that couldn’t be recycled due to the way it was labelled, a Nestlé operative requested a change of labelling process, and the supplier obliged.

How are staff motivated to do this? For some there are incentives, broader sustainability KPIs and training, says Stuart.

Finding the sweet spot

At Campbell Arnott’s headquarters in Sydney’s North Strathfield, a packaging team of 11, headed by Liza Vernalls, is also tapping innovation and finding some financial sweet spots. One surfaced with a recent graphics upgrade on the enduring favourite Tim Tam biscuits’ pack, which has allowed it to save 11 tonnes of ink by switching print processes and using solvent-free inks — and has reduced carbon dioxide emissions for the manufacturing process, adds Vernalls.

The company works closely with APCO, which sets its packaging KPIs. Notably, it collected a 2018 APCO award for converting 1400 tonnes of white corrugated cardboard sourced from China to locally produced recycled board for its shelf-ready boxes, and has a long-running partnership with consulting and recycling organisation REDcycle to recycle soft plastics, receiving an annual breakdown of the company’s packaging coming back through the scheme.

Team members are currently getting their heads around the implications of the government’s 2025 packaging goal. Every project begins with Sustainable Packaging Guidelines to consider best options for material, thickness, speed and efficiencies, she says. “Are we maximising the number of products on pallets, so we put fewer trucks on the road?”

While self-starters on the sustainability front, they are also driven by consumers. “We’ve seen a fair amount of calls asking questions through our consumer complaints line,” says Vernalls. “For example, when we support REDcycle, why isn’t it on our packaging? We’re listening and rolling that out.”

Vernalls is on the frontline for spotting sticking points for big manufacturers. One is the availability of post-consumer recycled material and the need for reprocessing facilities for these, she says. “It depends on what material you’re talking about. The corrugated cardboard industry is pretty much there — it can be sourced from sustainably-managed forests or recycled sources. That loop is closed, but PET is one area we’re keen to address and there’s no post-consumer recycled content on the market.”

Vernalls is also eager for one national recycling policy — “so we are all working with the same data”.

Growing national markets

Now all states are planning circular economy approaches in synergy with the National Waste Strategy, but details for a singular way forward remain unclear. The Waste Management and Resource Recovery Association of Australia wants a roadmap to guide the industry’s future development, amid hopes the strategy will stymie “what looks like buck passing” between the states. The association identifies a lack of “robust data throughout the supply chain, specifically, the areas of production, manufacturing, and distribution” as making policy formulation impossible. It also wants extended producer responsibility, tax and research and development R&D incentives for organisations to work towards targets and a polluter-pays system, as in the EU.

“National leadership in waste is like the same-sex debate, it seems the last people to arrive at the conversation are the federal government,” quips David O’Loughlin, Australian Local Government Association president, and mayor of Adelaide’s inner metropolitan City of Prospect.

The current state of play is frustrating for corporations working Australia-wide, he observes, pointing to some potential easy national wins, including common ways for goods to be disposed of and regulation to phase out some materials, “such as expanded polystyrene because it’s difficult and costly to recycle”, along with a unified container scheme. No-one would dispute O’Loughlin’s conclusion. “We need a much more stable onshore marketplace that’s large and can sustain some volatility, with proven purchasers for material that’s recovered.”

“No matter how advanced our technology is for recycling, it’s pointless if there’s no end market for it.” Daniel Tartak, Bingo Industries

There’s a chorus. “No matter how advanced our technology is for recycling, it’s pointless if there’s no end market for it,” notes Bingo’s Tartak. “Governments need to help the industry by regulating for the use of recycled products.”

One major opportunity is for the use of recycled plastics and rubber crumb, derived from processing truck tyres, which has been shown to improve bitumen performance in road seals.

“If governments at all levels were mandated to include recyclable materials into road products, overnight the marketplace would change,” suggests O’Loughlin, adding that as the community touchpoint for waste, “local councils have been good testing grounds for new technologies in waste minimisation, sorting and processing”.

He believes councils and corporates should partner to improve practices, volumes and material recovery with a firm focus on it being viable and profitable. One standout area is in collecting and processing food waste into fertiliser for agribusiness. Few corporates, and only 10 per cent of councils nationwide, are recovering and processing food waste. Consequently, most leftovers end up producing methane in landfill. How to fund industry-wide transformation? It’s a no-brainer for O’Loughlin, who’s staring at the coffers of the NSW, Victorian, SA and WA treasuries and $1b raised from landfill levies.

Too little, too late?

It’s a critical time. Beyond an urgent makeover for the industry itself, “all organisations and corporations must ask questions now about what is happening to their waste, just as an evolved organisation today knows whether their power is from renewables or fossil fuels. You need a line of sight to where your waste is going,” says Cleanaway’s Bansal.

It’s a board-level issue, not only for planet saving and risk mitigation. It’s on the agendas of the next generation of executives and young investors who’ll soon be raising it at AGMs, Bansal predicts. “And it’s a leader’s job to set parameters for procurement. For waste it can no longer be ‘go and get the cheapest price’, but ‘get the most credible player and a sustainable offer on the table’.”

There’s momentum on multiple fronts. “Change is not coming, it’s here,” notes APCO’s Donnelly, who has spent 20 years working on sustainability practices. Companies that don’t step up to the strategic change now risk being left behind, she cautions. “Australia has a wonderful industrial history — we’ve given the world Google Maps, Cochlear implants and the black box recorder. When it comes to managing our own waste, I have confidence we can deal with it.”

“We ask retailers and FMCG brands if they want to sponsor the recycling of their own products.” Jean Baillard, TerraCycle Australia

Everything old is new again

What happens when a brand produces a successful product that’s tricky to recycle? Think beauty products, coffee capsules or contact lenses, for example. US-founded TerraCycle has built a business on the basis of turning what could be environmental, reputational and financial bad news into a positive story for corporations worldwide. At the same time, it’s turning toothbrushes into playground furniture, used contact lenses into sunglasses frames and coffee capsules into planters, for example.

The business model is simple. “We ask retailers and FMCG brands if they want to sponsor the recycling of their own products,” says Jean Baillard, general manager, TerraCycle Australia. His local team of 10 then creates a program to suit for clients including L’Oreal, Colgate, Bunnings and Woolworths, and works, where possible, with local recyclers.

Typically, programs engage the community for the collection of the products for recycling and competitions run for prizes made from their recycled materials. In January, a new playground — mostly made from recycled L’Oreal Garnier hair and skincare containers — was installed at Queensland’s Park Lake State School. The national contest to win the playground was promoted by teachers and students on social media, providing a promotional bonus for the brand and its sustainability credentials.

Business is building in Australia where TerraCycle, which operates in 21 countries, has been running for five years, but its offshore operations show what’s to come. The company recently made the first shampoo bottle from ocean plastic for Procter & Gamble’s Head & Shoulders brand. At the World Economic Forum in January, the company revealed its online platform for everyday household products in refillable containers to be delivered to the consumer’s door and collected for refill, slated for launch in New York/Paris in 2019, Australia in 2020.

Issues for boards to consider

Growing public awareness and the urgent need for policy responses to the waste crisis may be a surprise to directors.

Every organisation, large or small, produces waste and directors can consider the issue through several lenses.

“For the past 10 years, many of us assumed the issue was being managed and many of us have not realised the significant environmental impact it has,” says Maria Atkinson AM GAICD, a global sustainability specialist.

“At the board level, it should at least sit in risk management — as a direct impact risk and supply chain risk — and there is the opportunity for more positive impact through the strategy lens,” she says.

“In the same way, the Modern Slavery Act forces companies to have assurances in their supply chain, an organisation should have measurement and assurances in place for their generation of waste and pollution,” says Atkinson.

Questions to ask

  • What types of waste does our organisation generate?
  • Where does it go?
  • What policies and practices do we have to ensure segregation and correct disposal?
  • What contracts do we have in place and what is our assurance around them?
  • Can we strategise to have a more positive impact with a reduce/reuse/recycle approach and circular economy principles?