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How do we make the sectors circular?
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Circular Economy

How to deal with residual flows?

An underlying principle of the circular economy is that waste products are converted into value. In order to achieve this, it is important to first make an inventory of the residual flows, to eliminate them where possible and then to value them. For this it is important to create mono flows and to work together with chain partners.

Valuing residual flows

As most companies have deep-rooted waste management practices, changing practices is complex, costly and time-consuming. Waste management follows a generally recognised hierarchy, with a preference for reducing the source: solutions that eliminate the generation of waste. Where the generation of waste cannot be avoided, recycling or composting is the second best strategy, followed by energy recovery. Disposal is the least preferred option for waste treatment, as it is impossible to reuse materials in another stream.

This framework is important for minimising environmental damage, but Romero-Hernández & Romero’s research (2018) has shown that the best business waste management initiatives not only embrace this framework, but also use it to create value for the organisation. This is the underlying principle of the circular economy – converting waste products into value. There are three main themes in the best business waste management initiatives: (a) inventory, (b) eliminate and (c) sell. As the texts and examples below illustrate, this often requires the creation of mono flows – pure material flows – and cooperation with chain partners.

Inventory

One of the important elements in the production process is making a life cycle analysis (LCA) of a product. The results of the LCA can then influence the design process. A good example of a company that has used LCAs to reduce environmental impact and costs is Unilever. By making an LCA of their purchased tomatoes, Unilever was able to map out the variability of CO2 emissions and production, allowing them to purchase more effectively (Clavreul, Butnar, Rubio & King, 2017).

Eliminate

By applying the principles of the circular economy, companies can streamline their processes and minimize the volume of raw materials used, resulting in profit-maximizing opportunities. An example is the reuse of shoeboxes by Walmart. Boxes and product packaging are ubiquitous in consumer goods and are often used only once or twice in their lives before they are thrown away. These items often have a temporary function and generate large amounts of waste. For example, WalMart does not sell part of its footwear in individual boxes, but as individual items. In the past, these shoes were transported from the distribution centres to the shops in large cardboard boxes to replenish the stock. Walmart has redesigned the boxes to make them stronger and is now reusing the new boxes for multiple shipments. These simple adjustments have reduced Walmart’s paper consumption by 43% and costs by 28% (Walmart, 2017).

Sales

As natural resources become scarcer and the demand for raw materials increases, companies find buyers who convert their waste into new revenue streams. An example is the unsold flowers at the Royal FloraHolland auctions. Each year, 12 billion flowers and plants are traded at the auction. Such an operation also generates large waste streams, such as cardboard, plastics, foils and green waste, including flowers and plants that have not been sold. Previously, the waste was collected and incinerated in an unsorted way. Currently, cardboard, plastics, foils, plants and flowers are processed separately as mono streams. Now that the unsold flowers are processed separately, natural pigments (dyes) can be extracted from the unsold flowers. From different markets, such as the cosmetics industry, there is an increasing demand for natural rather than synthetic dyes. In this way, a cost item becomes a revenue model (Milgro, 2019).