Coming clean and green

Australia has an ambitious circular economy target to 2030. The pressure is on and these innovative pioneers are among those leading the charge. 

A circular economy is defined as “an economic system based on the reuse and regeneration of materials or products, especially as a means of continuing production in a sustainable or environmentally friendly way”.

In February, the federal government and a taskforce headed by Monash Sustainable Development Institute and Climateworks Centre chair Professor John Thwaites AM FAICD met to consider the systemic changes required for the nation to achieve circularity. New policies and legislative changes, incentives to meet the stretch goal and rapid changes to operations and behaviours within organisations, across industries and whole sectors, are in the mix.

Definition and deeper understanding of what it means to be “circular” is now on agendas — along with finding better ways to recycle, reuse and eliminate waste.

Company Director magazine explores the performance of several local circular economy pioneers that are ahead of the game.

BioPak

The myth of the recyclable takeaway coffee cup continues to burn bright for Gary Smith, CEO of BioPak, a business that’s been striving for 15-plus years to eliminate fossil fuel use and make food packaging circular. In that time, the nationally- recognised early mover, based in Sydney’s Bondi Junction, has produced and sold millions of planet-friendly cups, along with an ever-growing, 500-strong product range of takeaway food containers and accoutrements from straws to cutlery, designed to close the loop.

Its coffee cups are compostable, but no recycler will take them, reports Smith. Composting infrastructure is lacking in Australia, a long-standing industry-wide mess that BioPak has long been pushing to solve. Smith believes it will happen in the next three to four years, as Australia accelerates towards a circular economy.

While some competitors shred coffee cups to transform them into roadfill and park benches, Smith insists that’s not a truly circular outcome. “The world is now waking up to the fact that saying ‘we recycle it’ means one further use — they can’t get away with that anymore.”

It’s a moot point that highlights the need for better definitions of the circular economy and clearer understanding of the systemic change now underway — areas that Smith and BioPak founder Richard Fine, formerly a plastics manufacturer, have been keenly interrogating since they teamed up before the global financial crisis.

When their first endeavour to convince Australian manufacturers to replace plastic with plant-based polymers in goods almost sank with the demise of the local manufacturing industry, the pair switched their sights to food-based packaging. International Paper in the US was trialling compostable cups with Coca-Cola in 2008.

“We found a manufacturing partner and brought in a pallet of 20 cartons... It took us three months to sell,” recalls Smith.

The pair spent years travelling the country to inspire demand. “Where we saw plastic used, we started making products from plant-based solutions,” says Smith. They spent a decade talking to government, working with the Australian Packaging Covenant Organisation, becoming a founding member of the Australasian Bioplastics Association, winning awards and trying to get the waste industry on board with composting.

These days, BioPak’s customer list features big names including Woolworths, Aldi, 7-Eleven, McDonalds, major distributors, caterers, along with coffee roasters and smaller hospitality venues.

BioPak’s products and brand spread quickly throughout Europe, the UK and to Singapore after Stockholm-based Duni Group bought 75 per cent of the business in 2018. Late last year, local private equity group Five V Capital, a like- minded B Corporation, came on board to provide strategic advice and help the company drive its expansion through the US.

By all measures, BioPak is a resounding success, but attaining that holy grail of true circularity remains elusive. On product stewardship, it’s still working on taking responsibility for goods at end of life. Four years ago, BioPak introduced Compost Connect, a not-for-profit that connects food businesses to compost pick-up services, to collect methane- producing organic waste from food businesses, some of which goes out in the company’s containers. A lot needs to happen to attain full circularity. “There’s composting infrastructure to be built, and EPA approvals to accept packaging with organic waste,” says Smith.

BlockTexx

The circular challenge facing the fashion and textiles industry is massive. Globally, an estimated 92 million tons of textile waste is generated annually. By 2030, that figure is predicted to hit some 134 million tons. Australians are significant contributors, tossing away an average 93 per cent of the textiles they buy each year, notes a recent Australian Fashion Council report.

Reducing textiles sent to landfill is a priority for the Australian government’s National Clothing Product Stewardship team. It is also top of mind for BlockTexx co-founders — former apparel industry CEO Adrian Jones and one-time media executive Graham Ross — for the past five years. They targeted the ubiquitous and highly problematic polyester/cotton blend prevalent in clothing and bed sheets and, with the help of experts at Queensland University of Technology, found a commercially viable way to separate, process and reuse the fibres.

Last year, the first fully operational facility of their startup began in Loganholme, Queensland. It produces Celltex, a thick clay- like substance from cotton or cellulose that’s used as hydromulch to reclaim land at mine and construction sites, including Badgery’s Creek Airport in Sydney; and Polytex, recycled polyester pellets for the injection moulding industry. Polyester pellets could be spun back into fibre, says Jones, but Australia has no spinning industry.

Speed to market has given the company first-mover advantage in turning the enormous waste of the poly/cotton blend into resources for other industries. There’s canny thinking in their business model. On the supply side, they’ve signed up multi-year commercial contracts with B2B partners, including WorkWear Group and the Star Entertainment Group. “Our clients pay a gate fee and transport charge, just as they would to the waste industry for landfill,” says Jones.

Referenced in the 2022 budget submission from the Australian Fashion Council as an example of why circular economy efforts should be funded, BlockTexx works with disability sector operators Endeavour Group and Help Enterprises, to remove buttons and zips. Partnership with document destruction business Shred-X takes care of the collection and shredding of the textiles prior to delivery to the facility for recycling.

“People get very excited about solving a problem using circular economy approaches, but don’t have an outtake market,” says Jones.

Blockchain technology is incorporated in the process to track the materials, the company claiming it gives full visibility to the recycling process through to the end source. “People can see the provenance and that we are doing what we say,” he says. “Textiles are not being stashed in a warehouse or sent to Western Africa.”

Their rapid progress has been supported by seed funding in 2019. A $5.5m series A capital round in 2021, plus funding from the Queensland and federal governments and Logan City Council, helped to build the first plant, which it is hoped will produce 5000 tonnes in output this year and an estimated 10,000 tonnes in 2024. “Even with a 50,000-tonne capacity, we’d still probably only be dealing with five to 10 per cent of Australia’s textile waste,” says Jones.

According to a Queensland Department of State Development report, a textile recycling facility will deliver an estimated $47m total output, including all direct, supply chain and consumption effects, employing 40 full-time staff.

Goulburn Valley Water

Water corporations across Australia are already ahead on circular economy initiatives. “We’ve just never branded them that way,” says Sarah Thomson GAICD, general manager of strategy, governance and finance at Goulburn Valley Water — an authority that spans 20,000sq km, from the outskirts of Melbourne to the Murray River in the north. “We turn wastewater back into clean water and put it on our farms. We turn some waste into energy, but it’s been a bit of a side gig until now.”

In coming years, Thomson believes circular innovation and the systemic nature of the economic change can be turbocharged by water authorities uniquely positioned to play a pivotal role in the transition, by bringing together communities, industry and government. Water, wastewater, resource recovery and renewable energy production are in discussion.

In immediate view is green hydrogen as a renewable energy source from H2O. Down the track is further value in urea for fertiliser, produced from hydrogen. Goulburn Valley Water has been scoping potential energy demand with major industrials across the region. Names like Bega Group, SPC Ardmona, Noumi and Pental are located around the regional hub of Shepparton, where about 25 per cent of Victoria’s heavy vehicles are registered, research shows. The local industrials’ reliance on gas points the way to the potential for biomethane, while significant organic waste may also fuel economic transformation as biochar.

“We are working hard to understand our role in the circular economy and to identify opportunities,” says Thomson. Companies are keen, but have been working on an individual basis rather than collaborating. “We’re taking a different approach by bringing them together.”

A former Big Four accountant, who moved on to work for a series of NGOs including WaterAid, Thomson was inspired by the low-carbon circular future outlined in Ross Garnaut’s book, Superpower, after joining the water authority in 2017. Garnaut subsequently collaborated on a community thought-leadership group, and a circular economy working group was then established.

“The secret sauce is where you get community, government and private companies working really well together,” she says. “It’s more complicated and might take more time, and there’s a tension in that.”

Hydrogen, for instance, will need a significant shift in infrastructure and is not financially feasible at the moment, without substantial subsidy from an agency such as the Australian Renewable Energy Agency. While local industrials are supportive, “as a CFO, I know they have to make it commercial,” says Thomson.

Indeed, the water authority is subject to the type of competing pressures many organisations face as they move towards the 2030 circular economy deadline. Shepparton Council declared a state of emergency following widespread flooding in the region in October 2022. (Thomson and her partner are living in a caravan while waiting to rebuild their house.) Meanwhile, Goulburn Valley Water has a pricing submission currently before the Essential Services Commission, which must consider economic headwinds and cost of living pressures.

A new strategy factoring future circularity for Goulburn Valley Water is pending board approval. Regional resilience is closely tied to lower emissions and circular outcomes, Thomson believes, and circularity needs investment.

“It’s a tricky time,” she says, noting that the challenge is in entering uncharted territory. “I’d love to have absolute certainty on the financials, but we’re still at the beginning of the transition, and that’s inherently uncertain.”

Aurecon

Engineering and infrastructure advisory group Aurecon saw the seismic shift looming for corporations across Australia and the globe when it brought together a specialised circular economy team to work with clients across sectors in 2022. Formation of its now 17-strong team followed the appointment last June of its leader, Jodie Bricout, whose circularity expertise covers 20 years in Europe and Australia, and coincided with the announcement of the nation’s 2030 circular economy goal.

The trigger was many deep conversations with Aurecon clients, who recognised “that what makes our world tick was about to change and wanted to understand what that means for them — the kind of infrastructure that will be built, how it’s designed, what it will be made from, how long it will last... They could see it was really important, brave new world stuff — and kind of scary,” says Bricout.

Demand is high. Her eclectic team — which has experience in government, industry, NFPs, procurement, lifecycle assessment, reverse logistics, regenerative farming, packaging and waste management — is working on 25 projects across every market the firm tackles in Australia and New Zealand, and has barely scratched the surface. “We’re looking forward to scaling that across Aurecon’s 7000 employees,” she says.

Bricout, a non-executive director of Circular Australia and an adjunct senior lecturer at Adelaide University, notes that Australia’s circular endeavours so far have been very product-focused. “Broad awareness has grown around emotive products that everyone touches and are familiar with, like packaging, coffee cups and straws,” she says. “Niches exist in fast-moving consumer goods and major brands like Kathmandu. But the greatest impact will come from reimagining buildings and infrastructure, responsible for 30 to 40 per cent of the world’s climate emissions, waste generation and resource use.”

Common client questions concern the high level of investment in renewable energy infrastructure towards net zero. “What’s going to happen to it and how can it be future-proofed?”

Bricout and her team have been rolling out masterclasses, leadership learning, strategic thinking and co-creation exercises for decision- makers — including directors — on the whole systems change. New buzz phrases such as “industrial symbiosis” are entering the lexicon and circular economy precincts are forming. Aurecon is currently working on three of them across Sydney, Melbourne and Auckland, where companies are seeking high-value land use by linking together different industrial production systems with energy, reuse and recycling.

Challenges in the lead-up to 2030 will be particularly across supply chains, and while many organisational leaders think they have already “got it” when in comes to circular requirements, most are looking at just one part of the picture — and for the majority, that means waste.

“What about the procurement of materials throughout the business?” asks Bricout. “Some offer products-as-a-service, so they’re thinking more about the business model.”

Directors have been diligently wrapping their heads around decarbonisation, the energy switch and net zero goals, but 45 per cent of emissions in our economy are linked to materials and products. Wherever they start, they need to be pulled into the big picture, and fast, Bricout believes. There can be no excuses, because data and metrics to understand how materials flow through our economy are not there yet.

Aurecon is working with Rio Tinto, Sydney Water and the City of Adelaide, but details of the firm’s circular work are substantially under wraps.

For Bricout, the all-electric redesign of the 36-storey Melbourne CBD office tower, 500 Bourke Street, for ISPT, is a standout. The building was slated for demolition prior to an environmental lifecycle assessment that showed massive carbon emissions, energy and water benefits could be delivered by refurbishment.

Europe may have stolen the march on circular activities, but Australia has leadership potential. Bricout sees strong sparks of circular activity emerging in regional Australia and the water sector. “Gutsy” is the word she chooses to describe both the much-needed targets from government and the collaborative efforts from businesses on the path to 2030.