Earlier this month I received a notice from our manufacturer that our second product development was on hold because they couldn’t get their hands on vital raw materials. Of course, the reason is clear. The impact of COVID-19 on supply chains, coupled with a spike in consumer demand in our industry, again triggered by COVID-19.
It got me thinking about what happens when COVID-19 (or some other short-term explanation, hopefully) isn’t the cause and the reason is just that there isn’t enough of raw materials to meet demand. In other words, we’ve used what the world has to offer to make what we want.
As we get closer to that position, I believe we will see a number of things.
1) Market forces will increase the cost of materials and trigger changes in behavior.
2) There will be an acceleration of production innovation, creation of new materials and production in new ways.
3) Reuse business models will become more common.
4) Acceptance of recommerce (aka second hand) in many other industries, shaking off stigma.
5) New legislation will be enacted to force the hand of businesses and consumers.
6) Materials officially considered as waste will be reclassified as assets.
7) Getting started with landfill digging?
This is the basic principle of supply and demand, as things get scarcer, the price goes up. We have all seen the reports of the past decade on the theft of copper as it became rarer and therefore more valuable; people strip metal from railroad tracks and buildings to sell it, causing major disruption.
Companies are already working hard to create new materials and produce in new ways. Whether it’s replacing finite resources with renewable resources to make things, manufacturing with new materials, or producing products from 100% recycled materials. How about a seaweed t-shirt that you can bury in your garden when you’re done? Or a long lasting bag of Herd bags made from 100% recycled materials that you can return to them when you don’t want them anymore?
We will see more innovative business models take hold that will allow us to always get our solution on the products and services we ask for, but in a new way. Rental rather than ownership is on the rise in new areas. In the fashion industry, companies like For rent (women’s fashion) and Clothing (menswear) allow you to rent and return clothes rather than buying them and leaving most of the clothes dusting deep in your closet. Companies like thelittleloop and Bundle n Joy apply the same business model to the parenting sector with children’s clothing and maternity clothing respectively. And the business model goes beyond clothing and fashion, with Big llama allow you to rent just about anything!
(Business models that include rental are a key pillar of the circular economy. However, it should be noted that at present, startups using this business model are at a serious disadvantage as they cannot use the circular economy program. Startup Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS). These programs help startups access angel investment. Legislation that was not intended to catch them is doing it inadvertently, as these models commercials did not exist at the time of their adoption.)
The charging revolution will continue to be propelled. From home products to beauty to food, we’ll get more of the products we need (or want) without the plastic. Charrli and Drop recharge deliver ecological products to your doorstep and collect the voids (like the slag of yesteryear) and Spruce has developed its own line of refillable, non-toxic cleaning products.
Recommerce has always been accepted and even cool when shopping for vintage or antique clothing, but we’ll see it hit new and unexpected areas. For example, in the high end, where it has historically been seen as damaging to the brand – Burberry has admitted to destroying around 30 million inventory in one year to protect its brand. In this sector, as well as in new companies such as Sign of the times, we are now seeing established brands like Gucci dive into the world of recommerce, I hope to pave the way for others in this industry and others.
I hope the government will step up its support for the companies leading the charge. On the consumer side, we know price and convenience are key, and we’ve seen the success of the 5p (soon to be 10p) penalty charge for carry bags. But instead of penalization, what about inciting do consumers buy from these companies that invest heavily to do things right? For now, businesses operating just above the law will always win on price and for consumers who buy by price (41% of the population according to a 2020 research report report IBM), that will always be the dividing factor. But are the rules of the game level?
The UK is moving forward with environmental legislation; earlier this month, a decade was shaved from the deadline for manufacturers to stop selling new gasoline and diesel cars (now 2030). Last month, the ban on single-use plastic straws went into effect and next spring, the plastic tax will penalize manufacturers of plastics with less than 30% recycled content. These types of laws stimulate innovation and in keeping with new plastic laws in particular, they help propel the refill revolution.
As raw materials become scarce, it is likely that we will see a new value of waste and some categories of waste will be reclassified as assets. Waste technology is already established as an investable sector, with VCs providing significant support to companies operating in this area, especially Oil and Winnowing. As the old saying goes, one man’s waste is another man’s treasure.
During the last decade, Elvis and Kresse saved 200 tonnes of fire hoses from London firefighters, turning them into luxury lifestyle accessories – and donating 50% of the profits to charities. Otherwise, this waste would have ended up in landfill. Or swimwear manufactures swimsuits that protect children. It is gender neutral, so it can be passed between siblings and is made from ghost nets, collected from the ocean. In the USA, Slash objects uses recycled rubber from old tires to make furniture and accessories and Rare form make bags and accessories from used vinyl from billboards.
When it comes to wasting food, Toast made a business using surplus fresh bread to make beer and Feathers etc. use waste carrot, apple and ginger pulp to make new food products, such as granola. There is also a wave of fashion companies making garments out of waste and using them as USP – Rapa Nui and tbfuk both show that traditional waste has value.
We may soon be entering an era where landfills begin to be seen as the new coal face, with significant value being kept underfoot. We’ve all seen the gruesome images of garbage pickers scouring huge landfills around the world. Perhaps we will see the emergence of a more sophisticated and efficient version of this that achieves the same result? We know robots will be recycling us soon and it’s not that big a leap forward.
Instead of looking at future results, what to do now? I think one answer lies in companies, at the point of production, thinking about what happens to the products they make when the person who bought them doesn’t want them anymore. Do they biodegrade quickly? Can they be easily dismantled and recycled? Can they be refurbished or reused and resold? This is known as cradle-to-cradle thinking and is another key pillar of the circular economy. But of course, we go back to resources and stay competitive; there is a commercial cost to operating this way. It is very exciting to see companies like Trade design products for circularity, so that materials can be easily reused. One challenge for reuse is how to undo the process of combining one material with another material. Niaga focuses on simple designs, clean materials, and reversible connections to overcome this.
Transparency is another challenge. The person who has the product at the end of its life needs to know what to do with it. You may have heard of product passports that can convey the materials the product is made from, how it can be recycled, or the existence of take-back programs from manufacturers.
I’ll end with a quote that rings true at this point. It’s quite astonishing that our society has reached a point where the effort required to extract the oil from the ground, ship it to a refinery, turn it into plastic, shape it appropriately, transport it to a store, buy it. and bring it home – is considered less effort than it takes to just wash the spoon when you’re done.
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