Beyond Recycling – a climate adapted business landscape

A circular business presents opportunities for entrepreneurs and ESG impact investors

It is clear that we need to jump ship. It no longer makes sense to sit by the sidelines hoping that global leaders will act on targets to reduce greenhouse gas (GHG) emissions and deliver us a low-carbon future. By giving up on the 1.5C goal, the COP 27 leaders have effectively handed the baton of responsibility to the wider global community of citizens, businesses and impact investors.

The need is great. Taking the example of South Africa, which is recorded as the 30th driest country in the world and warming at twice the global average, the country faces an uncertain future. Climate change is creating huge disruption and uncertainty to that water cycle3, which means that we cannot continue with the same disregard for those resources through over extraction and pollution.

Water stress will displace up to 700 million people in Africa by 2030, and with South Africa the most populated nation south of the equator, how will the inevitable migration trends impact the country?

Water is critical. It is required at all stages of food production, with agriculture accounting for 70% of the water used throughout the world. Alongside this, food productivity is being significantly impacted by climate change and has already decreased by 21%. Yet despite this, high amounts of food are discarded throughout the supply chain at rates that are unsustainable.

Wherever there is a problem there is a business opportunity. There is increasing evidence of effective solutions which design out waste and can transition our world to a new, circular, low carbon economy.

Circularity also addresses the other critical societal factors in the South African landscape, namely unemployment and poverty, making these solutions of special interest for Government, corporates and ESG investors alike. In addition, roughly 122 million tonnes of waste are produced by South Africans each year. Of this, only an estimated 10% is recycled or recovered for other use, with 90% being thrown away.

Yet, by designing out waste through the creation of a continuous lifecycle of material use and reuse, we change the narrative from one of waste being worthless to a huge business opportunity. The circularity model achieves this by rethinking existing models which generate waste and introducing concepts such as rental, repair and life extension which make business and environmental sense.

The cooperative Southern Basadi, led by Delores Mackenzie, is one such company who has redesigned thinking around waste. In a collaboration with Netcare Adcock Ingrams, they take used IV bags, an item previously considered worthless, and turn them into durable, waterproof and cost effective school shoes. Once the learners have outgrown the shoes, these can be returned to the factory, re-crumbed and re-made into new shoes ensuring that the reclaimed plastic never has to end up in landfill.

Farming is a huge contributor to the climate change challenge yet there are immediate solutions that can be adopted to mitigate this. One solution is regenerative agriculture with its holistic concept that treats the soil and the network of fungal mycorrhizae as integral to the food production process. In this system inputs of synthetic nitrogen-based fertilizers, a major source of GHG emissions (their use having increased an alarming 800% in the last six decades), can be replaced by organic fertilizers that are more cost-effective, replenish the land and capture carbon in the soil.

A collaborative effort between municipalities, who were battling with a toxic mountain of sewage sludge, and an innovative agri-preneur who saw value in this waste, has resulted in a profitable business with multiple benefits. Whilst Agriman processes a small portion of the 700,000 tonnes of sewerage sludge that otherwise goes to SA landfills each year, their efforts limit GHG emissions, benefit regenerative agriculture, increase employment, and are replicable.

A key component of circularity is product life extension. Dilex, is one such small business that extends the life of engine oil – collecting and cleaning 600,000 kilolitres of used car oil and selling it back to users. By eliminating oil waste, they save 500 billion litres of water annually from contamination. This South African company has successfully shifted a typical cradle-to-grave (take, make, waste) business model into a cradle-to-cradle model where the oil is seen as an eternal resource, eliminating wasteful practices harmful to future generations. The cleaned oil is cheaper than crude and can be repurposed again and again, resulting in both cost savings and a lower environmental impact.

The time has long passed for citizens to simply accept wasteful, polluting business models. Circularity is a logical concept that can be incorporated either by tweaking elements of the production chain, or through full immersion into a low-carbon, high sustainability, circular model.  These practices often result in improved profitability, alongside environmental and social benefits.

Sustainability is gaining acceptance across the world, yet in South Africa there is still resistance towards uptake. Two of the arguments against it being that it is either an expensive luxury or an unnecessary distraction. This points firstly to a lack of awareness of circular models that are profitable and marketable. It also highlights the lack of access to finance in this sector, with only 3% of green funds invested in Africa.

The second issue indicates a lack of understanding regarding the relevance of sustainability. This highlights a need for circularity ambassadors to be profiled in communities and in mainstream media as influencers and role-models. It emphasises the importance of messaging that is relatable, easy to understand and translated into local languages, with effective communication around circularity incorporated into the learning “storyboard” as early as the pre-entrepreneur stage at schools and for it to be the foundation of business school training.

One such pilot initiative in South Africa is Fetola’s 6-month programme, the Circular Economy Accelerator Boost, a template which onboarded 46 businesses, of which 11 had no circularity on commencement of the intake (4 were not even aware that circularity existed). The pillars of the accelerator were mentorship, business skills development, networking and education on circularity models. The initiative delivered positive revenue growth of 23%, illustrating that whilst the circular business model makes sense from an ecological footprint, it is also clearly a savvy economic strategy.

There is tremendous interest within the business community for programmes such as this. Yet the mechanics of multiplying this model so that there can be broad-scale uptake across the business ecosystem requires collaboration, investment, support from government municipalities and legislation that is enabling. It presents a far brighter future and is a model that should be embedded as the norm.

About the Author:

Catherine Wijnberg is the CEO of Fetola, a leading provider of scalable, world-class entrepreneurial support programmes for African entrepreneurs. Helping people build businesses that last through scalable solutions that deliver social, environmental and economic impact. Fetola means “change” in Sesotho – and they aim to empower people by supporting the growth and development of sustainable, empowered and thriving small and medium enterprises (SMEs) at scale.

Thank you for reading this article. Catherine regularly writes about small business development, sustainability and circularity, and has a passion for effecting scalable impact at the ecosystem level. To receive updates, please sign up here.