Waste, recycling and misaligned incentives

Interview with Philip Mossop from IWMS on embracing a whole new business model for recycling.

BusinessGreen.com: How well do you feel businesses are being served by the waste management industry?

Philip Mossop: There is a massive gap between what is needed by companies and what is provided by most waste collection companies. It is not their fault, but the business model has become outdated. When a company is looking for a waste collection service they now tend to say they want to be greener, but waste management companies typically charge by the amount of waste they take - they charge per bin - so the incentives are not aligned for them to deliver cuts in waste levels. Their customers want to cut waste, but the waste collection companies still need to make money.

How does Intelligent Waste Management Solutions (IWMS) plan to tackle that issue?

We define ourselves as an environmental management company, as we aim to go beyond waste management. We go in with a blank canvas because we do not have any collection trucks ourselves as assets. If you have trucks you tend to offer people trucks regardless of what they actually need.

So what services does IWMS offer?

We undertake a full waste audit for a customer and then do a waste stream analysis, which basically means putting gloves on and digging through the bins to find out what goes in them. From there, we come back with a bespoke environmental solution, which they can either act on themselves or we can implement for them. We'll put in the right waste contractors for their needs and a call centre service so we can respond to any issues.

Who are you working with at the moment?

We're working with a raft of top retailers, including Allied Carpets, H and M, Goldsmiths the jewellers, Cafe Nero and Body Shop. Companies like Cafe Nero spend hundreds of thousands of pounds a year on waste, while Allied Carpets was spending 2million, so these are big costs for an organisation. Moreover, they are getting bigger all the time. The landfill levy keeps going up and in April it went up by another 8GBP a tonne that led to a 20 per cent hike in most companies' waste bills. If you are an Allied Carpets with a 2 million pound waste bill, that would have gone up by 400k overnight. Add in the fact that they are also under pressure to improve their environmental record and there is strong demand for this type of service.

How do you go about putting the right waste contractors in place for a firm?

We have a network of 300 suppliers and we do all the due diligence on them to check their environmental credentials. With a network of that size we have access to everything from light bulb recycling to safe computer data disposal. In effect, the customer is outsourcing the environmental and waste function to us. For example, if a collection is missed we will know immediately and we deal with it for them.

What is the net environmental impact of this approach?

Our customers have an average increase in recycling levels of 30 per cent. We have no assets so we are incentivised to divert as much waste as possible away from landfill - we look at the waste and try to pull it out of the waste stream. For example, Allied Carpets was recycling bits and pieces, but it did not have a coherent approach. We implemented a reverse logistics model to send waste paper, cardboard and plastic back from the stores to the distribution centre in lorries that would otherwise be empty. There it can be bundled up and sent for recycling, creating an extra revenue stream because there is a market for that material. The other big waste stream for the company was carpet, so we found a recycler in France for them that will recycle it. We're running a trial at the moment to send the plastic contained in the carpet into granules.

What was the net result?

Allied Carpets will divert more than 35 per cent of the waste that was going to landfill. That is a straight 35 per cent cost saving in addition to an extra revenue stream from recycling.

Recycling is only one part of the picture with waste. How do you stop it being created in the first place?
We also work with procurement departments to reduce packaging levels at the start, and, where they can't be reduced, align materials so they are easier to recycle. For example, we worked with one retailer that was buying just one product that came in glass bottles. Well, if you change just that one product you get rid of a whole waste stream.

These all seem like relatively simple recommendations. Why aren't businesses embracing these practices already?
If you go into a medium sized business you'll find a health and safety officer and a personnel manager, but if you ask for the environmental manager in nine out of ten cases you'll be greeted by blank looks. It's crazy when you think about it, because there are a huge number of regulations covering this area - in waste alone you have the landfill directive, the WEEE directive and countless others. That is the reason we are growing - companies do not have these managers themselves. We will see them emerge, but at the moment there is a lack of knowledge in this field.

How big is the company now?

We turned two years old in July and we expect to have annual revenues of 8 million pound by the end of the year. We have 15 people employed across two offices, manage 3,000 sites and are profitable. We've also launched a new service called wastecollection.com that is an ecommerce site for waste and recycling aimed at SMEs. The goal is to help smaller businesses find the best waste contractors and waste management services for them. We're also involved in tenders with some of the top 10 retailers in the UK. Business are moving away from seeing waste as a separate area and are beginning to see it as an important part of their businesses. They realise that it needs to be managed as a coherent package - it can't just be hived off to waste collection firms.

Article Source: http://www.cursebustersound.com/article

James Murray is a journalist for online business environment website Business Green. The interview with Philip Mossop from Intellegent Waste Management Solutions was released on the 7th Ocober 2008.

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