The second episode of series one of Tech for Good Live and the Circular Economy asks the questions "Are their any examples of the Circular Economy in action?", "Why isn't everybody doing it?"
Bex-Rae Evans - Consultant at UX agency Sigma
Tom Passmore - CEO and Co-Founder at Dsposal
Amanda Reid - Network Manager for Waste to Resource Innovation Network at the Manchester Metropolitan University
Professor Amir Sharif - Professor of Circular Economy in the School of Management at the University of Bradford
Anthony Sant - Sales & Marketing Director at AO Recycling
Note: Tech for Good Live and the Circular Economy has been made to be listened to and not read. We strongly encourage you to listen to the podcast, which includes emotion and emphasis that's not on the page. Transcripts are generated using a combination of speech recognition software and human transcribers, and most definitely contain errors. Please check the corresponding episode before quoting in print.
[Guitar Music "He Swear He Would" by George Fell]
Bex Rae-Evans: Welcome back to the Tech For Good Live and the Circular Economy podcast as part of the Disruptive Innovation Festival 2018. This is episode 2. If you've not listened to the first one what are you doing here? Go back and listen to it.
Bex Rae-Evans: In the previous episode we examined what the Circular Economy is and why it matters. We talked about zero burden and being efficiently effective. But we ended on a huge question: is it all just theory or does it actually work? Let's find out.
Bex Rae-Evans: Tom, you promised me some examples of organisations that are acting in a kind of circular way.
Tom Passmore: Yes
Bex Rae-Evans: Can you give me some examples then?
Tom Passmore: I can. So I'm going to introduce you back to Amanda from the MMU and Circular Economy Club Manchester.
Amanda Reid: Michelin Tyres they're they're quite a good example. They are basically selling a service or the use of the product rather than the product itself. And they doing this for years. Apparently I think it was in the 1920s that they set this up. They lease tyres rather than you actually buying the tyre out right. And they leased tyres for around three hundred thousand large trucks from I can remember. So they don't sell the tyres but they give them away through lease schemes. So the customer pays per kilometer of use which is monitored by a little chip within the tyre. So it provides more emphasis on better made tyres.
Tom Passmore: Yeah.
Amanda Reid: They last longer as the company want to gain in terms of kilometer used. And it produces less waste. The first part of their strategy is to reduce. So they can actually look at designing lighter tyres and using fewer raw materials. So they're capable of carrying heavier loads and lasting more kilometers and the emphasis is also placed on reducing and rolling resistance of tyres. Which also reduces your fuel consumption your CO2 emissions which is perfect. Then the second R is reuse and they repair so they retread and they reprove the tires. Then you've got the recycling bit where they take them back and recycle the parts. And then you've got the renewable element which is I suppose it shows they dedicate dedication to recycling and recovering. And where possible they're looking at using renewable biomaterials for their manufacturing areas. So it's in my head that's quite a nice example of an existing model and an existing circular model. I don't know with you to call it truly circle circular.
Tom Passmore: I think is.
Amanda Reid: I think. I think it is Michelin manage well they managed this design of the elements and source of the new and secondary materials, and so they can put back into the tyres. They also own the tyres which means they can then go back into the design system and be reused so essentially it's ticking off all those those areas. So and also the the consumer doesn't end up with having to get rid of the waste.
Tom Passmore: Yeah.
Amanda Reid: And the local authority doesn't have the burden upon them to have to think about recycling routes for it becomes the ownership of the the company who is it a manufacturing.
Bex Rae-Evans: Well that kind of answers my question about is it is it a new thing? That's been around for a while.
Tom Passmore: Yeah 1920s. I don't think they had chips back in the 1920s though.
Bex Rae-Evans: Chips. Oh I like that they don't shout about it either. I've never heard about that.
Tom Passmore: No no no.
Bex Rae-Evans: And that's part of my worry I think in the short term I think people will jump on the bandwagon and maybe not do it properly but talk about it when they're not really doing it.
Tom Passmore: Yeah.
Bex Rae-Evans: But that's they're clearly not doing it for the press. Because I haven't seen any press about it not that I see tyre press particularly but. I think they're doing it under the radar. I think they are doing it for genuine reasons. Would you agree?
Tom Passmore: Yeah I think so. I mean there are like so one of the genuine reasons and I think Amanda kind of commented on there is that. They have control over that tyre. So they increase the durability on it. They're kind of, they look after that tyre and then as they're charging on a per kilometre basis they're able to actually create more profit for their business, I think. And then they can look after their tyres at the end so then there's a whole kind of CSR so Corporate Social Responsibility around that as well. She mentions about this as a service idea as well. So that idea of leasing these tyres to these truck manufacturers. And it's a concept that I kind of struggle with a little bit. So I asked Amanda about it again.
Amanda Reid: So it's looking about again about whole value chain and ensuring that the manufacturers and producers, as I said, are looking at how you can deconstruct at the end of life. Not just about oh we're input as part of the EPR levy we're going to stimulate recycling collections and recycling treatment processes. That's not where we need to be hitting. That's just going back to resource efficiency. That's not Circular Economy. Sorry I'm banging hand on the table.
Tom Passmore: So we're getting to a really fascinating place now where we question the whole idea of ownership and instead consider a move towards as a service models. So I asked Amanda to explain the difference between the two.
Amanda Reid: So, I suppose ownership the ownership model is one where we buy. We own the products or the service is out right. Yeah. And we end up bearing the responsibility at the end of life. As a service model or what is also known and I've talked about this before. l call this leasehold but there's so many different models.
Tom Passmore: Oh yeah yeah.
Amanda Reid: It could be a pay per use arrangement or agreement etc. And so service model is where a products are provided to you and you pay maybe on a monthly basis and then those products are maintained and upgraded for you.
Tom Passmore: Yes okay.
Amanda Reid: However long you know the agreement is is you know maybe the company. Similar to mobile phones I suppose in a way. Isn't it? You pay for your monthly ... it's not updated. Oh it is Apple Apple phones update don't they?
Tom Passmore: Oh yeah.
Amanda Reid: They provide updates and installs.
Tom Passmore: Yeah.
Amanda Reid: That's your service plan model.
Bex Rae-Evans: So does that mean that mobile phones are already no zero burden? Already in the in the Circular Economy somehow?
Tom Passmore: Well. So Amanda and I talked about this a little bit more and. I. No.
Bex Rae-Evans: No. But it kinda fits though right.
Tom Passmore: It kinda fits.
Bex Rae-Evans: Especially with an iPhone's you can send it back as well at the end and at the end of its life you get paid as well.
Tom Passmore: Yeah this is something I've been thinking about a lot too. So, using the iPhone as an example. So a lot of time and money goes into the design of those phones. And like a lot of rare earth materials too. And then these phones get sold to network providers who then just sell them to their customers on a payment plan. Then once this contract is up and those phones ultimately find the way back to the network providers, or in a drawer somewhere. I'm just wondering like, why don't Apple want these phones back? Why, why are they losing their rare earths? I also spoke to Amir from the University of Bradford about this. You'll remember him from the last episode.
Amir Sharif: Well I think that is happening actually we don't necessarily see it. So there's a there's a robot that Apple have made. You may have seen this in the news. It was it was last year actually. The robots name is Alice, I believe, and there's another one called Daisy. And this robot is is all it is is a robotic arm that disassembles iPhones. And they do, they can disassemble about, I think at the moment, it's between two to three hundred it might be higher actually I might have got the figures wrong. Two to three hundred iPhones an hour they can disassemble. Pull off the front of the case, pull off the glass, disassemble the whole phone. You know, extract all the all the all the bits inside so there are even with a large global global supply chain manufacturer like Apple, for example. There are methods and there are techniques to to to get involved in that reuse and regeneration of products. Is it happening in the right way? Is it happening in the most effective way? Well there could be improvements. Of course. You know for example there there is still I believe in in Ghana in in West Africa there is a hub. There is a township is a township called Agbogbloshie that is the world's dumping ground for electronic components. And the whole of that Township is totally dedicated as an industry to disassembling electronics, electrical items. So there's literally rivers of cadmium and cobalt and other electrical waste that are running through the the township but that the livelihood of that Township is based upon disassembly. Now that has a massive environmental and health impact of course and that shouldn't really be happening although. The argument goes well, and the people who live there say well we have to make a living as well. And this is very very difficult because we don't really want that to happen. But we don't want the health effects to happen of course we want people to have livelihoods but how can we square this circle of resource reuse, stock maintenance and this idea of disassembly. So one of the challenges that companies will have and should have is. If we are going to reuse our products can they be disassembled? Can they be are they easy to break down into separate components? So that you can actually reuse them, so you can actually regenerate them or recycle them or put them to better uses.
Tom Passmore: So I think talking to Amir about that like that the phones are almost there. Like almost there. So you've got your phone manufacturers doing that kind of thing, giving them to a telecommunications company. You have that leasing model so people are already primed to pay every month. But at the end of it very few phones are going back to Apple. I mean they do have them like.
Bex Rae-Evans: They have a little robots doing - did I hear this right two to three hundred phones an hour?
Tom Passmore: Yeah.
Bex Rae-Evans: Little Alice and Daisy.
Tom Passmore: Alice and Daisy yeah so. But I wonder how many Apple phones are made every hour.
Bex Rae-Evans: And they only have those two robots taking.
Tom Passmore: And they only have two yeah. And so it's the start it's like the start of that process. But yeah and it's good and it's exciting but he kind of touches on that other side of it. Which is if if Apple for instance take these phones back. Then what what happens to those people that have a livelihood?
Bex Rae-Evans: Yeah this this whole thing about Ghana that's that was so sad that there's an entire town full of rubbish and that's their like what they do.
Tom Passmore: That's their economy.
Bex Rae-Evans: Their entire life like rivers of cobalt I think that just said so much.
Tom Passmore: Yeah.
Bex Rae-Evans: But like I think that shows that it's really complicated. Right? You can't just tomorrow go we're gonna take all that rubbish off them because an entire town then loses its livelihood that's like super complicated.
Tom Passmore: Yeah and like like Amir said how do you square that circle? And but then also what what's like you do have to think about the environmental impact of it as well so. This is where I'm going to introduce the the fourth person I interviewed Anthony from AO Recycling.
Anthony Sant: So I'm Anthony Sant. I'm the director of AO Recycling which is part of AO World PLC, AO.com being a retailer of electrical goods. Well AO Recycling was set up as a division of AO.com to recycle the large domestic appliances, fridges that we collect from AO retailer's customers. You see AO.com is UK largest online electrical store. It started back in 2000 as one of the first online stores selling white goods and eighteen years later we're a multi-country, multi category retailer. Which sells everything from washing machines to laptops, TVs, mobile phones etc.
Tom Passmore: So yeah I talked to Anthony about his plant down in Telford, Bertha. That's the name of the plant. Main focus is on AO recycling fridges.
Anthony Sant: If we look at the way that fridges have changed. You only have to look at the fact that the the amount of collection so since 2007 we've seen collections by retailers of fridges grow from 7% to over 30% and getting very close to 40%. So there's definitely been a move to retailers collecting it. And I suppose when you think about it it kind of makes sense. If we think back in 2007 think about how many American fridges you saw in 2007. I always joked about it that if I ever went to anybody's house in 2007 and they owned an American fridge they were rich folks. Certainly now, but I may look at American fridges now okay they're very affordable. We have many thousands that come back to our plant every month. And I think that that how does a consumer get that American fridge in their car and get it back to the council tip? Yeah. You know it's not sustainable, it's not going to happen and fridges have just got bigger and bigger. So if you think about that challenge for the consumer. We know that basically our customers, when that we are taking away a large double door or american-style fridge away they don't really have an awful lot of choice. You know. How do they get that in their car? I don't know about you have you actually tried to get one of these fridges in your car? it's not possible.
Bex Rae-Evans: No. I have never taken my own fridge to a tip. It is really hard to do. But usually companies charge to take your fridge away.
Tom Passmore: Okay.
Bex Rae-Evans: Do you know if they charge?
Tom Passmore: I don't know I didn't I didn't look into that.
Bex Rae-Evans: It doesn't specifically matter I was just curious as to how that fit in.
Tom Passmore: Yeah no I mean it's an interesting comment cuz. I mean yes you could you can take it to the tip and it's free to do so. In most household waste recycling centres. But if you give it to anyone else you do have to pay for that service and yeah like to get all the right documentation and again like actually AO are a licensed waste company that can take away your fridge.
Bex Rae-Evans: So you can't just give it to anyone. Can't just give it to that guy with the van that you know off the internet and then what does he do with it?
Tom Passmore: Exactly, exactly so.
Bex Rae-Evans: Takes it to the tip right?
Tom Passmore: Well he can't because he's not allowed to.
Bex Rae-Evans: What?
Tom Passmore: Yes.
Bex Rae-Evans: Why?
Tom Passmore: Well because actually the the tips are only for the household waste recycling centres. Sorry. Are only for members of the public and if you charge to take waste away from someone's house then you are a business and therefore don't have access to a household waste recycling centre.
Bex Rae-Evans: I didn't know any of this.
Tom Passmore: Yeah.
Bex Rae-Evans: Because I do that like when I need to get rid of a big piece of furniture. So all this time either he's been giving it to the waste recycling centre illegally or he's been fly tipping.
Tom Passmore: Yes cuz actually if if a license if a waste management company takes it off you and they're illegal they can't legally get it into anywhere because there's no way to prove where it's come from. So actually you always have to give it to a licensed waste management company.
Bex Rae-Evans: And AO are.
Tom Passmore: And AO recycling are a licensed waste management company and that's what they do they have and they've taken it on them set onto themselves to do this. They could have just been a retailer, they could have just been a logistics company but they've actually taken this responsibility. Which kind of touches back with the idea of no zero burden.
Bex Rae-Evans: Why are they doing this? Are they doing it for for good reasons or do they get is there a business benefit?
Tom Passmore: Good question. This is what Anthony had to say about that.
Anthony Sant: So as soon as we've got hold of that fridge we've now taken responsibility of that item. So we can't afford that fridge to end up anywhere other than being recycled properly. Yeah. And you know we've we've all seen programs you only have to go on iPlayer and see the the the program that was done by Reggie Yates, The Insider, A Week In The Life Of A Toxic Waste Dump. Where you see electrical appliances that have left in UK and ended up in Nigeria. I mean it's horrific story. Seeing people setting fire to electrical items. Burning plastics and these pollutants escaping to the environment. You know would AO really we want to be associated with that. And I think what's really important as well. I think our customers wouldn't expect that of us because of the way that we position our business and our attitude to way that we do things. And therefore you know we really do care and we really do go about business in this way. And therefore recycling actually was pretty much a given we have to do it because it's the way we do business.
Tom Passmore: That's the whole thing about being in the circular economy it's that second word again like so actually this fits within the circular economy method message and and I was talking again I was talking to Amir from Bradford about this about the kind of. Is the Circular Economy just about being green?
Amir Sharif: This is less about environmentalism I think. And some sometimes Circular Economy is confused with ideas like sustainability and environmentalism. Now those are important facets and important important philosophies and ideas and approaches to take. But Circular Economy is much more than that and it really is about trying to make trying to make sure that when we are looking at products and services are we really designing them, using them in the best way possible. And you can make we can make a circle into a line very very simply by cutting the circle in half and just bending that circle into it into a straight line.
Tom Passmore: So yeah I mean we touched on about this in the first episode as well about sustainable businesses having to be sustainable. And i think that's what that's what AO are doing. So they've they've created their business model around having a warehouse full of stuff and then them selling the stuff, and now they've actually gone actually we can create other business models as well. Around taking that stuff back and then that just that feels a lot neater and then it kinda of like Anthony was saying about that responsibility. So yeah I continued talking to Anthony about this about this kind of how this fits within AO.
Anthony Sant: Look you know I'm not gonna lie to you. Okay. There was no question about it was that we got into the business to protect AO. You know. We got into the business of recycling to make sure that that we could deal with these fridges. But I think that that if you take AO's attitude you know we talked about our purpose in having the happiest because customers by constantly striving for a better way. And and that's really what we're all about so so AO Recycling I think is in the first step of a journey and I think that if you think about the Circular Economy. What better way could you have all better this position could a business be in? The fact that we're a retailer, we talk to suppliers and we sell their goods. We're logistics provider. I mean this is the thing that most people don't realise. Yeah. We have the best two-man white goods delivery fleet in the country. Yet again it's used by other retailers. Okay and other people. It's a brilliant service so we control the journey of the product from the warehouse, to the customer's home which then enables us to control the product from the customer's home to AO recycling. Now are we going on from here? Well of course we are. We're always gonna look at better ways. You know we've got a big advertising campaign about a better tomorrow at the moment.
Tom Passmore: Yeah.
Anthony Sant: But no this wasn't just didn't come about okay what happened was when the guys started looking at AO and thinking about how we position ourselves. They realised that actually you know we are about delivering a better tomorrow. And if you think about a Circular Economy the next steps are looking at how we can deal with the products in the out streams that come from recycling. And maybe look at putting these back into making fridges again. Yeah. It's something we looked at looking at it of course we'd be crazy not to. The point about it is is that you know it's baby steps. We've got a lot going on in the next you know in the future. We're talking about that we talked about the fact that that retailers are absolutely the best position in position to collect appliances from home okay. It gives us more opportunity for reuse. It prevents waste crime and fly-tipping. Then it takes up takes the pressure off a local authority. So we're campaigning about. To try and make that done properly. There's, there's lots of ways where we could we've got really we can build this business. We've already announced that we're building a second fridge plant. In the southeast. Can't tell you exactly where yet. But why? Well I've just said that our fridge plant is currently full and AO's collections they're continuing to grow.
Tom Passmore: Yeah.
Anthony Sant: So so we are moving in the right direction. But you know. There is only so many people in the business and we've only got so many hours in the day to achieve these things. But our attitude to business and our purpose will always remain true to the people in it and therefore we will continue and yes Circular Economy just fit. It is the right thing to do. It's what the consumer wants, it's what the environment needs and therefore it's something that we're in a great position to work on.
Bex Rae-Evans: Well that sounded nice everything everything's going well there.
Tom Passmore: Yeah everything's seems to be going well for AO Recycling.
Bex Rae-Evans: But didn't you talk about No Zero Burden and being more something that the manufacturer does and this is obviously the retailer. So that changes that a little bit.
Tom Passmore: Yes yeah so I think a couple of things that he said in there that was really interesting was this idea of baby steps. And again in the first episode talking to Ken like you can't just bolt it on and I think this is an example where it's been bolted on and it seems to be working. But yes like you say it is missing out that first step which is about design. You have to design it well to be taken apart and at the moment they're not part of that. I asked Anthony about that if that was something they were looking into.
Anthony Sant: No no absolutely. And it's something that yes we do start we are starting to talk about. And I think that you know, I think that the one thing that's really significant. A retailer becoming a recycler, okay, just means that we look at things with a fresh pair of eyes. You know? We have asked questions just why people do things the way that they do things. We've talked to government you know you've seen the fact the response we've had from government. We had to Therese Coffey, Undersecretary of the Environment opened our plant. We've had many ministerial visitors come to the plant and visit us and hear of our ideas and ways. And you know we are looking at all different ways of making you know a better tomorrow. It is what we're about. So so yes we are you know recycle you're making appliances easier to recycle. Absolutely that's on the agenda. Why wouldn't we? Okay not only because it's the right thing to do our consumers, our customers actually want that as well. Yeah. So it fits but the great thing about it is we're so well positioned to understand where the problems in recycling these items and we can pass on.
Bex Rae-Evans: It sounds like to me that it's actually gonna be beneficial to them to not for their products to last longer. Because obviously it's coming back to them and they've got like a full recycling plant now. So that kind of goes against what I was saying in the previous episode. About everything it seems to degrade after a couple years.
Tom Passmore: Yes yeah this is built in obsolescence I think I think it's called. And yes see see that's what's really exciting and talking to Anthony about this as well like. So if they're talking to manufacturers and they are responsible for getting appliances into people's homes and then yes if they're then having to pick them up. Makes so much more sense that that appliance stays in the home for 10 years, 20 years.
Bex Rae-Evans: How do they make their money though? If because obviously they'll make more money if if that fridge breaks down they then make money selling a new fridge so if it's staying in the consumers home.
Tom Passmore: But then this is that as-a-service model isn't it? So like as in when Amanda was saying it about Michelin tyres, Michelin tyres actually that durability if you're paying every month for it and if you're paying to like the more individual transactions you can get off a person. Before then you have to intervene to A) fix it or B) take it away for disposal. Then that's win so it's durability. Improving that durability and life of the product is really important. But then also with that you get buy-in from your customer base as well. Because 20 years time if you've like had this fridge had this fridge for 20 years it's broken down once and then then came and take took it away gonna buy off them again because it was just no hassle. So that's like buying all that in together and Anthony saying they have like their two-man white goods fleet which is used by other people so they've got this like freight vehicles they've got this recycling company. Then talking to Amanda about Michelin tyres they do exactly the same they will take tyres to a place. Once they're done. They will take them away, re-purpose them or dispose of them. Like where's the waste industry?
Bex Rae-Evans: I was gonna say so you convinced me so a sceptical last time. It all sounded like a theoretical something that sounds great on paper but now you show me some examples. People are doing it. Big manufacturers are buying into this. But there has to be a downside and yeah what about the waste industry? Are they've gonna become obsolete because of this?
Tom Passmore: Yeah I mean it is a worry. So there's a hundred thousand people in the waste industry and if it goes, their jobs go. So find out next time.
Bex Rae-Evans: Next time on Tech For Good Live and The Circular Economy we consider Space Age thinking. Which is great because I love space. We hear that a Blade Runner-esque future might be on the horizon. And that might not be too bad. Also and more importantly we explore the unintended consequences of the Circular Economy.
Bex Rae-Evans: This podcast wouldn't exist without Tom Passmore and Sophie Walker from Dsposal. Music has been graciously provided by George Fell. Podcast.co make all of this possible thanks to the shiny podcast studio they provide. Thanks to the Disruptive Innovation Festival. I've been and will continue to be Rebecca Rae-Evans. Thanks also to Paul Jakubowski and Johnny Rae-Evans from the Tech For Good Live Team.