Why waste management needs to square the circular economy



The circular economy. It’s a phrase that doesn’t trip off everyone’s tongue but it’s one that we’re going to have to get used to talking about.


It’s set to loom ever larger as, under stick and carrot, the waste management industry increasingly shifts focus to the concept of recycling and recovery, rather than old fashioned disposal and landfill.


Essentially, the circular economy is one where a linear A to B process of waste management has been unhooked. The two ends are plugged together to create a loop that sends material round and round to be reused repeatedly with as little material as possible leaking out as unused waste.


It’s about minimising the use of “virgin resources” by extracting maximum value from substances already in circulation; prolonging their lifecycle through repeated reinvention into new materials, uses and treatments.


The recent report from the Chartered Institution of Waste Management shone some light on the situation. Nearly all the respondents to its survey agreed the circular economy would affect them in some way, yet only 27 per cent said they were doing any even modest level of planning for it.


The cost of landfill


But the hardening attitude from regulators, corporate customers and even the consumer shows this head-in-the-sand approach won’t work for long. The demand is there for higher grade recyclates, reduced contamination, and lower tonnages going to landfill.


An observer only needs to look at the huge increase in UK landfill tax from £2.50 to £82.60 per tonne – a rise of 3,304 per cent – to see the unchanging direction that the wind is blowing.


One of the challenges for the waste management sector is responding with a change in attitude and updated practices. It also requires an ongoing evolution of equipment, vehicles and plant – and that comes at a cost.


Some companies might view this change as a threat, but the most forward-looking spy sees the future opportunities and the chance to be ahead of the pack - chasing the customers looking for those contractors who are the best-prepared as the circular economy becomes more deeply embedded.


This applies to smaller enterprises in particular, who have the nimbleness to adapt faster than the slower moving waste management giants. Getting ahead of the pack to grab the opportunities is the key to survival.


For example, operators with plant that removes the weight of water from waste – with all the cost-saving implications – is an example of how new technology can attract cash-conscious new clients, whilst reducing costly overheads.


A partnership with AIB (GB)


Understandably, the cost of limbering up like this will be a concern to directors. So how do we square adapting to the profitable openings of the circular economy without putting a strain on the books?


One option is a package of asset finance. It’s a way of securing the funds to invest in new plant, vehicles or technology without diverting crucial cashflow away from vital operations.


Because the asset stands as the security, it’s a less risky way of accessing investment of more than £25,000. Terms can flex between three and five years, usually, and the asset can be sold at any time. It also has the advantage of being cost-effective, tax-efficient and tailored to each business.


With Allied Irish Bank (GB), that financial support also comes with support from specialists who know the industry and can take the time to understand their customer’s business. Instead of being a lender, the connection is more of a partnership; both teams bring their strengths together to gain from the profitable opportunities being created by the circular economy.


Mark Lockwood

Head of GB Asset Finance

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