Sustainable business ecosystem as a differential value, by Dr. Jordi Oliver (Inèdit)

JORDI OLIVER INTERVIEW

Jordi Oliver Solà, Doctor in Environmental Sciences with an extraordinary doctorate award from the Autonomous University of Barcelona (UAB), is currently a founding partner and executive director of Inèdit, which today is Catalonia’s leading circular economy consultancy.

After devoting his life to the study of sustainability, eco-innovation and their possible applications in the company, he has become a true benchmark in circular economy for any sector. Could you explain, by way of introduction, why the circular economy is the best (or a good) way to achieve a sustainable industry? What is its differential value?

In waste management hierarchy, the first priority is prevention: avoiding environmental impact before it is generated. Along these lines, concepts such as industrial ecology, life cycle, eco-design, etc. were born, and it was not until about 10 years ago that there was an administrative consensus, at European Commission level, as well as a business one. The circular economy is defined as a generic term for everything related to the intelligent use of resources and their successive uses in the economy, as opposed to the linear ‘use and throw away’ model, a model that still applies to more than 90% of the resources we use.

In my case, I started out in the field of prevention in my PhD, and from there carried it on in my professional career, and similar to what happened in industry, it  has been marked by a concept that has grown: the circular economy.

I guess that, as it is a growing trend, more and more companies are designing their products and their strategies to minimise their environmental and social impacts. However, this has not always been the case. What has been the biggest challenge you have faced as a circular economy expert?

Each company and each sector have its own circumstances, and therefore the challenges change and evolve.

– One of the biggest challenges is the lack of demand for sustainable attributes. Although in some sectors, such as cosmetics, agro-food, or textiles, it is already being resolved, it remains a major barrier in many cases. Yes, it is true that there is greater consumer awareness, but what about companies that are very far from the final consumer in the supply chain, such as producers of materials, machinery, etc.? Well, given that sustainability is not yet a requirement, and if nobody is going to value the effort, it is a real challenge for the producer to champion the circular economy without having the certainty of a return on investment.

– There is also the issue of internalisation of costs, since, if a company assumes the cost of certain actions, but the competition is not doing the same, the company cannot therefore assign client value to it, and it can generate a competitive disadvantage, and consequently aggravate the economic barrier and thus challenge the ambition of a company to implement certain actions.

– There are also technological or infrastructure challenges that, most of the time, are contextual. A clear example is the electric car, which despite having an effective technology for decades, has proved very difficult to implement while a network of electric recharging points was lacking. An infrastructure that is beyond the possibilities of an individual company and requires public-private cooperation. The same applies to compostable plastics, which granted, are biodegradable, but it relies on individuals placing the waste in the appropriate bin so that it ends up in an industrial composting plant. In both cases, the sustainability of the product requires actions outside the scope of the company.

– And last but not least, is the cultural barrier. Organisations with an open mind, that do not punish mistakes and that have an ingrained culture of innovation, of which there are increasing numbers, but in some cases, the modus operandi is still very difficult to change. This cultural challenge is often the common denominator in many organisations, creating a greater barrier than the technological or economic one, preventing progress towards an innovative culture based on cooperation.

And to what would you attribute the positive change in the demand for sustainability attributes in these sectors?

Clearly, the power of the consumer or client is very great. I have seen SMEs completely change their strategy in 15 days in order to adapt to the requirements of their main client. And of course, if you sell 70% of your production to a manufacturer that, due to changes in its sustainability policies, is no longer interested in your product … you have to adapt like it or not.

There is also a super important factor in the change in mentality of the final consumer – which, after all, is the one that will move demand ‘upstream’ for the rest of the chain – and that is awareness. The disclosure of environmental issues has been going on for years, and the younger generations (and also the not so young) who are becoming consumers already have other values, seeking coherence between the brands they consume and their personal values. It is true that they are not 100% of consumers, because price is still one of the biggest drivers in buying behaviour but, even if they are 10-30% of conscious consumers, they are already enough of them to generate a market and start trading. From there, changes in the supply chain can move much faster. We are seeing giants of the food and cosmetic industries well positioned in this regard, generating demand, and they could almost be seen as compulsory, for suppliers of all kinds. This has promoted cooperation between the different points of the value chain, necessary to achieve certain objectives. Examples of this cooperation could be the creation of certifications, supplier associations with a common reputational objective, implementation of good environmental practices, etc.

It is for this reason that this type of conscious consumer, and all the repercussions that it generates throughout the value chain, are the impulse that gives hope in the context of climatic urgency that can sometimes be exasperating.

Roughly speaking, what would you say are the key factors involved in achieving a circular economy, regardless of the industrial sector to which it is applied?

Each sector has its priorities. In more industrial sectors, such as the automotive industry, for example, above all, the key lies in the circularity of the materials. And on the other hand, in other consumable sectors (such as food or cosmetics), the priority is packaging, logistics, the origin of the consumables (ingredients), transparency and the sustainability of the entire value chain. Specifically, packaging, and in particular short-lived plastic packaging, is currently a ‘hot topic’. The change in the demand of the end client is, at present, what creates a background trend that may lead to changes towards returnable or refillable packaging systems, for example.

And what should suppliers do to optimise the value chain in terms of reusing packaging, which is an increasingly important factor?

The best option for a company is always to anticipate, propose progressive changes for years to come, and integrate visions. This last point is especially important. Collaboration between different departments is key to generating feasible solutions. Although to verify the effectiveness of such solutions, it is necessary to test them first in an easier environment, on a smaller scale, or with certain pilot clients with whom there is more fluidity and ease of communication, and then extend them to the business in its entirety, having learned from the process.

Most of the time, the changes will not be at an individual level, but at a sectoral level. Cooperation is key in the circular economy. It is through shared actions that we achieve a viable economy of scale for all, and to achieve this, we should not depend solely on regulations, but sometimes it is better to dialogue and find solutions before regulations arrive, since the solutions will surely be more suited to everyone’s needs. 

Specifically for the cosmetic industry, and taking into account the moment of transition in which we find ourselves, how can a company remain competitive in a future in which sustainability is going to be virtually mandatory?

When sustainability standards in an industry are raised, this is cause for celebration. However, this also implies that there will be certain parameters that will cease to provide differential value.

But no company is perfect in all its operational aspects, and therefore the objective of a company will always be to advance and improve. This does not mean that by not having one of the aspects such as competition, the company must surrender to sustainable communication. That would generate blockages and is what must be avoided. The line of action in the future will be linked to transparency; to corporate honesty (perfection is no longer credible). Therefore, if a company is in the process of change, it must see it as something positive, and always communicate intentions and actions of change from a reality and transparency perspective.

We are entering an era in which the client-supplier relationship based on demand is lagging behind, giving way to co-created innovations designed for the entire chain, thus creating an increasingly collaborative value chain.

In that sense, the agri-food sector should serve as inspiration for cosmetics. They are years ahead, not only in terms of certification, regulation and market establishment, but also in the valorisation of the natural/ecological authentic attributes by the consumer. It is the sector where more consumers are willing to pay more for a product with sustainable attributes, and where brands capitalise on it by communicating in a transparent way, highlighting the authenticity and traceability of the supplier, the veracity of its storytelling, and the values ​​of the rural environment from which the raw materials come.

Once an action/strategy plan has been established, what elements would we have to measure to evaluate the impact on the environment of a company in the cosmetic sector?

Measurement is essential to be able to manage any change. And although there are many parameters to measure sustainability, the one that is perhaps most acceptable today is the carbon footprint, that is, the contribution to global warming of a product or organisation. Having metrics allows the company to set objectives to reduce its carbon footprint, and identify the main sources of emission (which can be direct, from its own processes or indirect, from its suppliers), in order to focus its actions on making improvements in the most relevant areas. Likewise, other types of circularity metrics related to the value chain can be established: certifications, number of certified suppliers, traceability, etc., as well as metrics on packaging systems: percentage of recycled material, recyclability, reuse, etc. or flow metrics that define the linearity or circularity of the production processes.

At Provital our developments are focused on an ethical and sustainable production and supply chain, based on the 17 United Nations Sustainable Development Goals.

With active ingredients such as Hydrafence™, we have also started to promote upcycling initiatives, with the aim of giving new uses to food waste through the use of rice by-products to produce this active moisturiser. We understand that upcycling is the recycling process closest to the concept of waste and zero input, and for this reason we are increasingly moving in that direction, developing new active ingredients from other by-products of the food industry.

In your opinion, what would be the next step? Can the total elimination of the environmental footprint ever be achieved?

When we talk about the use of agri-food resources, we are also talking about the bioeconomy. In this framework, the cosmetic sector can play a central and catalytic role in this bioeconomy, since it is capable of taking advantage of waste and giving it a higher added value (upcycling), which can generate a benefit for the primary sector (which is going through a difficult time, abandonment, lack of vocation for the rural world, lack of profitability of farms, etc.) which generates a positive social impact, and if it also helps the company to reduce its carbon footprint, it is a win-win. Although this symbiosis is sometimes complex, given it can be difficult to find a permanent flow of disposable material, on which you can depend without the risk of running out of supplies, it is worth considering this option.

On the other hand, zero environmental impact is perhaps a utopian horizon. Any existence generates minimal impact. But there are ambitious but feasible climate neutrality goals, where actions favourable to the use of renewable energy, circularity in production and consumption, or innovation throughout the entire value chain can play a central role in achieving this and other objectives such as the conservation of biodiversity and the ecosystems that supply the cosmetic industry itself.

The next step? Break with the idea of ​​an individual company, and embrace the idea of ​​a business ecosystem, in which the actions of the entire value chain are based on the same objectives, with cooperation as an indispensable means for progress.