Liz Goodwin's speech from WRAP's Resources Limited conference - 18 November 2014

Liz Goodwin's speech at WRAP's Resources Limited conference, 18 November 2014 at 15 Hatfields (London).

Welcome

Good morning. And welcome to this special conference.

Today, we will explore the pressures faced by business in an increasingly resource-constrained world, and the value-creating ways in which some of them are addressing this. 

A very special welcome to our guests who will be sharing their experiences with you, under some fierce interrogation by our M.C. James Murray, and of course from yourselves. We will do a proper introduction later. 

I am determined that we make the focus of our discussions actions, not words.

Before I go on with our business, I would like to welcome and introduce Julie Hill who is joining us as our new Chair. I know Julie will be familiar to many of you, not least for the great insights she has brought to these debates over many years. Julie, we are delighted to have you with us. 

Intro

Today’s debate - about the pressures being created within businesses by resource issues - is not hypothetical or conceptual. You know it is real and pressing.

Imagine a world in which householder product returns cost UK businesses at least £400m per year, 500kg of gold are lost each year in UK WEEE recycling processes, the value of products in UK households that could be traded-in and re-used is over £3bn, trade-in business models, if taken up on a large scale, could contribute £5.25bn to UK GDP.

Not very good for business or the future for resources is it?

You don’t have to imagine that world. That is our world NOW. 

Those are facts - that is the cost. And that is the prize if we sort it.  

Business is increasingly concerned with security of resource supply and price volatility. 

A projected 3 billion new middle class consumers by 2030 will exacerbate demand on resources, and will affect the price and accessibility of those resources. 

In the UK, our lifestyles, including our infrastructure, mean that per head we use around 30 tonnes of material a year.

Other than during the recession, this figure hasn’t changed since 1970.  

On the one hand this is a strong positive message for the economy. 

GDP per capita is now 17 times higher than in 1970. 

Our lifestyles – including the range of choice, innovation, product developments on offer have changed considerably. This has brought many benefits to quality of life. 

However the types of material we use, and the issues associated with them, have changed too.

We need to keep improving the way in which we use materials.

And with increased pressures we need to do this even faster than before.  

We’ve been running to keep standing still – but that’s not enough.  

This is a business opportunity. 

A recent business tracker by investment analysts VIS Essential Investments and Trucost, demonstrated vividly that resource-efficient companies are likely to grow more.

They are likely to face fewer risks and deliver better investment returns than less efficient companies.  

Our current level of material consumption cannot be sustained, and yet, globally, resource use per capita is increasing.  

We have to believe that it doesn’t need to – that sustainable lifestyles are achievable.

But to make them a reality, we are going to have to make them desirable.

Over the next few minutes I want to set the scene for today’s discussion with my perspective on this as CEO of WRAP.

Highlighting some pressures, some opportunities, and some of the ways we at WRAP are aiding that move towards more sustainable lifestyles.  

We can then debate together how some of these pressures can be managed in a way which adds value to businesses – and how we build more momentum for change.

The pressures created by resource constraints create very real financial and operating issues for any organisation:

Where am I going to source the materials I need? 

At what price? 

Have we got the right business models to minimise our own resource needs? 

Are there market opportunities to develop more sustainable products and services? 

How much of my R & D budget should we commit to this area? 

The list goes on….  

Today 

Today is about the action we can take in these areas.  

WRAP is known for many things.

Often the greatest and most public recognition comes for our leading edge research and consumer campaigns Love Food Hate Waste and Recycle Now.  

However, in my view the most important part of our USP is our reputation for being able to turn words and ideas into action that drives change. 

Those who fund and partner with us share this view.

We are delivery-focussed, committed to achieving results at best value. 

No different from you. 

We know that words and “calls to action” are not enough to drive real change. 

What we also know from experience, indeed from all the work we do with partners, is that there are many businesses who ARE taking the steps to drive action.

You will hear from some of those people taking action today. 

You will hear about the drivers and reasons for action – and there are many of them.

Vision, leadership, excitement, concern, increasing shareholder customer pressure, and customer feedback.

So, it’s not all about negatives, being too difficult, not important enough, no time. 

But we need to increase the drivers and reduce the barriers.

In October I was at the Green Growth Forum in Copenhagen.

I was struck by something that the Director General of the IPCC Rajendra Pachauri said in his keynote address.  

“An example”, he said, “is a bell calling many to church.

I like that. 

Today is a day for real examples. 

So, while promising not to give you a sermon, I do promise that today will give you examples of businesses and initiatives where change is happening.

It is your chance to hear from some of those business leaders – and also to question them, to challenge, and to add your own experiences.

Your own examples.

We should all leave today with the examples ringing in our ears and a clearer sense of how we can translate some of the ‘new system thinking’ into our own operations. 

That applies to WRAP too.

I will have more to say about what we are doing to add to our own business resilience later. 

The businesses represented both on our panel and in some video presentations are all partners we are working with at WRAP, on various initiatives.

Their double challenge – the agenda we are debating today is:

How do we make our own businesses more resilient in the face of insecure resource supplies? 

And how we can develop products and services which use fewer resources.

Part of this is about recognising that the current production and consumption model – make, use, dispose, make another – is broken.  

In some cases, this will be meeting growing shareholder and customer awareness and demand.

But in many cases, that level of awareness just doesn’t exist.

I’m a scientist and WRAP is an evidence-based organisation, so what I’m about to say won’t come as a shock.

I believe it is absolutely essential that the way we move our businesses forward to meet these environmental and economic challenges MUST be based on good science, evidence and a business case.

Not fads, fashions or something someone half remembers reading on a train. 

It is easy to promote a new product or service as more sustainable than the old model because it looks as if it must be. 

However the science is sometimes counter-intuitive and if that happens, you risk undermining confidence in what you are trying to do. 

Let me give you an example.

A downloaded video game must have a lower carbon footprint than buying a physical copy, mustn’t it? 

Not true. 

Physical copies of games actually have a lower carbon footprint than downloading online.  

The bigger the file, the more preferable physical copies are. 

This could change in the future, but I thought this was an interesting counterpoint to the prevailing idea that if we download it, it has a lower impact than a physical purchase.

Around the world we are seeing examples of businesses which are genuinely creating new ways of thinking about the way we consume products and services.

Some of these are real game changers. 

Just look at what eBay has done to revolutionise the market for used goods over the past decade.  

In deciding where WRAP can intervene to make the biggest difference, we have gone to the science.

And that led us to identify four core areas to focus on:

Food and drink, electricals and electronics, textiles and the built environment. 

These are our business areas. 

We have called them resource loops for a good reason.

In an ideal world, resources in those loops would just go round and round. 

But so much is needlessly lost for ever at the moment. 

Identifying the points at which decisions are made which influence overall resource use - and the points at which losses occur - allows us to identify the greatest opportunities for more efficient resource use through targeted action.

Textiles

Textiles are an excellent example of how a good understanding of how resources move around a sector can help focus our work. 

With global fibre consumption expected to reach 96 million tonnes by 2020, it has become apparent that a linear model is just not sustainable.

WRAP’s Report ‘Valuing Our Clothes’ changed the way many thought about textiles and in particular cotton. 

The research shows not just how resource intensive textile production is, but how sensitive it is to environmental pressures.

43% of EU clothing fibre is cotton. 

Cotton has one of the largest water footprints of any crop.

For example, over 10,000 litres of water consumed for one pair of jeans. 

At the same time, climate change poses a very real threat to textile supply.

Cotton is vulnerable to extreme weather conditions, pests and water scarcity, which in turn affects the price and availability of the cotton. 

But despite the intense resource use and vulnerability to climate, many of the items we buy aren’t used. 

Our research showed more than half of the items we dispose of, have more than half their useful life left in them. 

That might be fine if they go for re-use but it’s crazy if those things end up in landfill.

Our wardrobes hold clothing worth a staggering £30bn that hasn’t been used for more than a year. 

Younger people tend to replace their clothes more often as they attach greater importance to changing fashions than older consumers. 

In the UK, 58% of people aged 16–24 reported owning unworn items that are 'no longer my style or taste', compared to 36 % overall.

There are a lot of clothes still wearable if we can encourage the current owners to make them available, say through alteration, donation or sale.

Collaborative Action

Businesses are, I know, often wary of acting alone: first mover advantage could – in a risk-averse world – be seen as first mover disadvantage. 

To overcome that, WRAP has pioneered collaborative action which drives change across entire business sectors - and WRAP now works extensively in that way. 

One of our great achievements is the Courtauld Commitment in its various stages in the grocery sector.

That has seen huge progress over the years in packaging reductions, food waste reductions and supply chain waste reductions.

All with associated economic benefits to consumers, businesses and the UK economy.

In just the second phase of Courtauld, the grocery sector delivered a 1.7 million tonne reduction in waste.

This saved the sector £3.1 billion.

In the area of textiles, we have developed the Sustainable Clothing Action Plan, known as SCAP. 

To date, the SCAP 2020 Commitment has 61 signatories and supporters.

This includes UK retailers responsible for putting 45% of clothing onto the market, by volume and value.

In February we launched the following SCAP targets:

A 15% reduction in carbon footprint, water footprint and waste to landfill.

And a 3.5% reduction in waste arising over the whole product life-cycle. 

Electricals

Let me move to the electricals sector. This is important. You will remember those statistics I opened with.

Well, they all come from the electrical sector. 

Building on SCAP, I said we were building support for a similar agreement in the electrical sector. 

It’s a sustainable action plan for the sector now widely known as esap. 

I would like to take some time to update you on this work today because the prize is great and the model is powerful. 

It’s easy to think that most of the impact of electrical products is in their use, but this is not true. 

Many products require more energy to make than to use, and this is directly related to the material complexity or product mass. 

This is something that is totally invisible to many people.  

For example, we estimate that a mobile phone would have to be used for 30 years for its in-use energy requirement to exceed the extraction and manufacturing energy requirement. 

The more complicated we make products, the greater the proportion of their impact in manufacture.  

The more complicated a product, the more materials…

And the more materials whose supply raises economic, environmental, social and political issues. 

We need to make better use of the products we have, and to make them better.

Today I can announce that we have 50 major players in that sector signed up to an agreement which will lead to testing targets. 

This is not just about reaping environmental benefits. It is about safeguarding businesses, making better use of resources. 

There are 5 themes to the work.

Extending product durability building on WRAP’s better appliance guidance

Minimising product returns

Understanding and influencing consumer behaviour on product durability and reparability

Implementing profitable, resilient and resource efficient business models 

Gaining greater value from re-use and recycling.

Food

Our work on tackling food waste is important and world leading. Food is critical to our farming sector, to manufacturing, to health.

The UN Food and Agriculture Organisation estimates that in 2011 roughly one-third of all food produced in the world ended up as waste.

This is food to the value of 750 billion US dollars.

By 2050, demand for food will have increased by around 60%, creating a challenge for food security.  

Looking at our UK assessment, there is potential to reduce food waste levels in the UK by two million tonnes by 2025.

This could offset around 60-70% of the additional food needed in the UK for our growing population.

We know from feedback that the UK is leading the way in understanding food waste and finding ways of tackling it.

Whilst at the Green Growth Forum in Copenhagen last month, the Deputy Director General of the UN Environment Programme Ibrahim Thiaw praised WRAP’s work on food waste.

He asked if there was anyone in the room from WRAP and when I stepped forward he said “You must be very proud of what you have achieved.” 

I am – but that work has much further to go.  

We know that around one in four calories – a staggering 24% - is wasted. 

We also know that healthy foods in 2012 were three times more expensive per calorie than less healthy foods. 

We live in a world where 800,000 people wake up hungry each day and we are facing severe pressures from the health impacts of obesity.

I am absolutely convinced that work to value food more and reduce waste will inevitably lead into closer links with the health agenda. 

To build on our success we are talking with industry, governments and other stakeholders about a new framework for collaborative action in the UK.

It will tackle food waste across the whole life-cycle, and also for the first time taking a whole system view to address other areas of resource efficiency.

Building on our Coutauld achievements we plan to help industry take action on through a proposed new collaborative framework for action.

It will be called “Courtauld 2025” and is due to start in 2016.

We aim to agree overarching goals for carbon, water and waste reduction.

So, this is a potential ten year agreement which we are discussing with industry and Government.

Because this really does need sustained action to deliver lasting benefits.

Particularly if we are to move beyond changes at individual stages of the food life-cycle and focus on optimising system-wide outcomes.  

We are looking at changing what we supply, how we supply, how we consume and what we do with wastes and by-products throughout the life cycle.

We know there are win-wins out there.  

For example our work with Co-operative Food and its supply chain to take a whole chain view on potatoes identified opportunities for this supply chain alone to save up to £600k per year.

And we can replicate this across the UK, working with many of you in the room.  

WRAP’s insights are helping, making, – in some cases forcing - business leaders to think about ways to re-design their processes.

To cut waste, to make supplies more secure, to develop new business models which are both attractive for customers, and also future proof business. 

To change the way we produce, sell or lease, utilise and dispose of products and services. 

This is not just about reaping environmental benefits. It is about safeguarding businesses. 

WRAP

WRAP itself faces some of these same resource challenges – needing to become more resilient in a changing world of constrained resources.

Many of you will know a key part of that is our plan to achieve the status of a registered charity. 

Our application is currently before the Charity Commission and we look forward to the outcome of that process. 

Yes, a key part of our thinking is that it will give us access to new sources of funding through foundations and trusts, for example.

But this is not the only or indeed main reason.

I have always described WRAP as sitting at the heart of a complex web. 

Bringing different groups together, to drive change. I believe we are better able to play that role as a charity.

We will have more freedom to develop new ideas and new ways of working. 

Earlier this month we announced a good example of how this will take us in new directions.

We are delighted to be joining forces with the London Waste and Recycling Board - LWARB - in a new way. 

Together, with common goals and pooled resources, we’ll be developing a London Waste Authority Support Programme that will focus on delivering the Mayor of London’s target of 50% recycling in the capital by 2020. 

That of course will also contribute to the national 50% recycling targets by the same date.  

I hope the way WRAP continues to develop will bury once and for all the urban myth that WRAP is a part of Government.  

We very much value our work for Government, but we are not part of it. 

In fact, that distinction is one of the reasons we can work with businesses in the way we do. 

We will continue to operate very much in the way we do now. You are not going to lose any of the elements – the value adding characteristics – that you value. 

Our focus for the future will definitely be the issues which I know are on your minds and which we will debate today.

The challenge I pose to my staff is, how we can support those that want to drive fundamental change to their businesses. 

How can we – WRAP - focus our resources on the areas where we can make the most difference? 

I believe our work on understanding the most highly pressured resource loops has already helped with that.

I want WRAP to use this position of strength to deepen our global impact.

You may for example have heard about our new partnership with Metro Vancouver?

Helping the city authority to use Love Food Hate Waste to deliver reductions in household food waste over the next three years.  

This will be a valuable test of the transferability of this internationally renowned brand and our expertise, as a step towards having global impact. 

And of course it is further evidence of us diversifying our income streams. 

Conclusion

So, in conclusion, I would argue that the facts speak for themselves.

They show that as a society – as a business community – it is simply unsustainable to plan for the future as we operated in the past.  

How can we ignore those facts in light of recent work by Cambridge University.

It indicated that if we fed the global population of over 9 billion in 2050 using the same carbon intensity that is being used currently, that alone would produce enough green houses gases to lead to a 2 degree increase in climate temperature.

A level that many scientists think is the maximum increase that could be tolerated before very serious consequences are seen. 

How can we ignore the fact when there are estimates that by 2030 80% of the world’s middle class will be living in emerging economies accounting for 70% of global consumption spend. 

The case for action is clear and stark. 

I want WRAP to work with you all to deliver changes that mean we can turn these challenges to commercial opportunities, and hand on the planet and economy in good shape.