“Early adopters might appear as today’s revolutionaries, but the onboarding of circular business models will rapidly become imperative economics and a societal obligation “
By Catherine Wijnberg and Bridget Wijnberg
Given the number of extreme weather events in 2022, few can dispute the reality that climate change is here. The KZN floods of April 2022 were a devastating example of that, initiating a state of disaster with over 450 lives lost and an estimated cost of R25 billion1. Globally, the price tag of climate-related disasters this year alone was R500 billion2. Whilst the cost of material damage is easy to quantify, how does one assess the cost in human misery and irreparable damage to future generations?
As António Guterres announced with his opening statement at the Cop27 UN climate summit: “We are in the fight of our lives and we are losing … We are on a highway to climate hell with our foot on the accelerator.”
Yet despite these loud warning signs, we clearly have an action deficit problem.
Its Cop number 27 and global leaders have gathered 27 times to discuss this same issue. Tipping points are being passed again, and again, country pledges are being tabled, and ignored. If the realities of 2022 – with widespread floods too in Pakistan and Nigeria, 16,000 deaths from heatwaves in Europe and food insecurity from drought in the Horn of Africa are our warning signs, we no longer have the privilege of time to wait for these global platforms to reach meaningful mutual agreements on reducing greenhouse gas (GHG) emissions to a low-carbon future. The baton urgently needs to be taken into the hands of the wider grassroots community.
South Africa is recorded as the 30th driest country in the world and warming at twice the global average. Climate change is creating huge disruption and uncertainty to that water cycle, which means that we cannot continue with the same disregard for those water 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 required at all stages of food production with agriculture accounting for 70% of the water used throughout the world as well as a major contributor to GHG emissions caused by human activities. Alongside this, food productivity is being significantly impacted by climate change and has already decreased by 21%.
The stage is set for radical transformation. We have shifted from a need to simply try to mitigate the problem by reducing our GHG emissions to a need for us to also develop ways to survive the effects of it, through climate adaptation. This is now both an economic and a social imperative. Fortunately, there are solutions at hand and the prospect of transitioning to a new, circular economy that designs out waste is a real opportunity. It is one that also addresses the other critical societal factors in the South African landscape, namely unemployment and poverty, both of which cannot be ignored. A telling study on the personal economic situation of individuals reporting that 87% describe their situation as stretched.
Yet, despite this backdrop, we are an extremely wasteful society, and roughly 122 million tonnes of waste are produced by South Africans each year. Of this, an estimated 10% is recycled or recovered for other uses, with 90% being thrown away. This waste is an important part of the value chain yet there remains the mentality that waste is both worthless and inevitable – however by changing this to a narrative where waste has value opens the potential to build a virtuous cycle of use and reuse. The circularity model achieves this by rethinking existing models which create waste to incorporate concepts such as rental, repair and life extension which make clear business and environmental sense.
Collaboration across the value chain is also a key component in future solutions and The Cooperative Southern Basadi led by Delores Mackenzie, is one such company that has created a partnership with Netcare Adcock Ingrams to take used IV bags, an item previously considered worthless, and turn them into durable, waterproof and incredibly cost-effective school shoes. Once outgrown these again can be re-crumbed and re-made into new shoes in an endless circle, meaning that the reclaimed plastic never has to end up in landfill.
Whilst farming is a huge contributor to the climate change challenge there are immediate solutions that can be adopted. Synthetic nitrogen-based fertilizers which are a major source of GHG emissions (their use having increased 800% in the last six decades), can be replaced by climate-friendly organic fertilisers that replenish the land, capture carbon in the soil and limit methane emissions.
One collaborative effort between municipalities that were battling with a toxic mountain of sewage sludge and a creative agri-preneur who saw value in this waste is doing just that. This innovative circular business Agriman currently processes a small portion of the 700,000 tonnes of sewerage sludge that goes to SA landfills each year, with the aim to expand further to capture this huge opportunity, thereby significantly scaling the benefits of regenerative agriculture, reducing waste to landfill and increasing employment where it is needed most.
Similarly, Dilex, who initially received short shrift from oil refineries concerned that his model would affect their profit, is now a business cleaning 600,000 kilolitres of used car oil, which saves 500 billion litres of water annually from contamination. This South African company has successfully shifted a typically cradle-to-grave (take, make, waste) business model into a cradle-to-cradle model where the oil is an eternal resource and considerate of 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 simply accepting wasteful, polluting business models. Circularity can be incorporated either by tweaking elements of the production chain or full immersion into a low-carbon, high-sustainability, circular model, often resulting in improved profitability alongside environmental and social benefits. The circular economy is also an ideal entry point for startups in informal settlements. The mindset of repair and reuse is already entrenched in many of these communities, the basic starting point for circular transformation.
Circular business models have been proven to be profitable, people-friendly and environmentally beneficial. They are accessible in many forms to all, from the smallest SME to corporations and government. Agriman, Dilex and Southern Basadi are businesses on Fetola’s Circular Economy Accelerator, which measured an average 23% increase in revenue growth after just 6 months on the programme for participants, many of whom began with no circularity at all, demonstrating that often all that is needed is a little guidance and support.
In the race against time, we need to ask ourselves not if, but how do we unlock change fast enough? For this our response to the rapidly accelerating and very real effects of climate change needs to be decisive, immediate and at three levels – supportive policies from Governments, a step-change from investors and awareness and action from businesses. By supporting each other in this journey we can build a sustainable future that works.
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. Bridget Wijnberg is the Fetola Digital Content Manager.
Thank you for reading this article. The authors regularly write about small business development, sustainability and circularity, and have a passion for effecting scalable impact at the ecosystem level. To receive updates, please sign up here.