Future of Waste Part 2: Best ways to reduce waste

Explore how mainstream and innovator companies are tackling waste

02 Mar 2020

Future of waste series

The Future of Waste publication outlines effective waste reduction solutions that can increase businesses’ financial returns. In the first part of the series, we analyze the main sources of waste and its impact. In part two, summarized below, we highlight mainstream and innovative companies that have cut fuel costs by billions of dollars, slashed landfill waste by up to 90%, or reduced food spoilage to less than 1%. And in the final part, we present best practices to address waste that can prove profitable for businesses and investors. We also use data from UBS Evidence Lab to highlight regional, country and sector insights on waste.

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At a glance

The Future of Waste Part 2 explores how mainstream and innovator companies are tackling solid and energy waste, with a look at the top three waste contributing sectors for each category. It also examines how dedicated waste management companies are dealing with waste, as they can provide examples for others.

Reducing solid waste

Waste management companies operate across a three-part value chain: upstream, midstream, and downstream. The upstream business involves transport and collection—competition is fiercest and margins lowest. The midstream part includes waste treatment, sorting, and recycling, with potentially attractive margins depending on the region. However, certain parts (such as industrial waste) can be volatile given high gearing to the economic cycle. Last, downstream businesses include landfills and incineration facilities.

Waste treatment has historically followed a waste hierarchy first mentioned in the 1970s, the so-called four R’s: recover, recycle, reuse, and reduce. The hierarchy encourages minimizing greenhouse gas (GHG) emissions. The most sustainable form of “treatment” is outright waste reduction, although other methods, including recycling, also mitigate environmental damage.

Food waste reduction examples

Food and green waste account for 44% of the world’s solid waste. While food waste and its impacts present major environmental, economic, and social challenges, reducing food waste also offers numerous potential opportunities for mainstream and innovator companies.

Paper reduction examples

Paper and cardboard account for 17% of the world’s solid waste. We noted in Part 1 that there remained considerable scope to reduce wastage, especially in the fine paper segment. A number of companies are embracing new technologies (such as a shift to digital bank documents) to limit paper and cardboard waste. Newer more cardboard intensive industries (such as e-commerce) are also finding innovative ways to design less wasteful products, delivering measurable commercial and environmental benefits.

Plastic reduction examples

In Future of Waste Part 1 we noted that plastic and plastic packaging accounts for 12% of the world’s solid waste and highlighted that the societal costs of plastic may exceed the industry’s total profit pool. So corporate examples of how to reduce plastic waste or how to find new circular-economy uses for it could generate commercial and positive societal returns.

Reducing energy waste

Industrial energy waste reduction examples

One way mainstream companies can reduce energy waste is by increasing their adoption of cloud computing. IT infrastructure-related investments are typically about 20% of total business capital expenditure. Studies by companies such as Amazon and IBM highlight that enterprises can reduce their carbon emissions by more than 50% if they migrate their data storage operations to the cloud from in-house data centers—25% of whose costs typically come from electricity and 20% from renting physical premises which may waste heat and lighting energy.

Construction and buildings energy waste examples

There are general opportunities to reduce waste and emissions from the steel, plastic, aluminum, and cement used in buildings at the design and construction stages. By one estimate, emissions could fall by up to 1.2 billion metric tons of CO2 per year by 2050. If the world also used circular economy techniques like sharing, reusing, and recycling (especially cement recycling), annual emissions could fall by around 40% (2 billion metric tons of CO2 per year) from a 2050 baseline estimate of the Ellen MacArthur Foundation.

Transport energy waste examples

Increased use of video conferencing and telecommuting could help reduce transport energy waste and emissions, as well as cut down on the time previously spent commuting. A US federal study found the average American spends 264 hours every year commuting to work.

The ubiquitous use of smartphones, equipped with Global Positioning System (GPS) technology and other apps, provides mainstream companies (and consumers) greater opportunities to optimize routes, significantly reduce travel times, and cut fuel consumption. Emerging markets may offer the greatest potential given lower penetration rates.

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