Compelling proposition

Compelling proposition

A shift in business practices would support a significant increase in procurement of recyclables, writes Matt Genever, Director Resource Recovery at Sustainability Victoria.

A lot more thought goes into the art of buying stuff than it used to. In the old days, you’d pretty much choose whatever could get the job done for the cheapest price. Thankfully, over the past decade most organisations (government and private sector) have moved toward a “value for money” measure, which encourages procurers to think about things other than cost, such as quality, knowledge transfer and product longevity.

More recently we’ve seen a whole raft of new terms coming into play, like sustainable procurement, ethical procurement and social procurement. These concepts take the thinking further still and are starting to permeate across the procurement fraternity.

I was fortunate enough to hear procurement expert Matthew Taylor speak at a recent forum and was immediately taken by his description of sustainable procurement as “reimaging value”. This is not about charity, this is about using the power of procurement dollars to deliver social and environmental outcomes. 

THE $600 BILLION QUESTION
Talking about the “power of procurement” can be a bit nebulous at times, right up until the point that you put some numbers around it. Procurement in Australia is worth around $600 billion per annum, which equates to about a third of our total gross domestic product. A third! That means that more than 30 cents in every dollar moving through our economy is attached to some form of procurement. 

So how do we leverage all of this spending to drive change? Well, its actually not that hard and just requires a slight change in the way organisations think. Most organisations have some sort of corporate social responsibility (CSR) goal – something they want to achieve above and beyond just ‘business as usual’. These same organisations will likely invest money into programs or activities to try to achieve those goals. What if, rather than having a separate CSR program that costs money, organisations used their own procurement power to leverage those same outcomes? 

Take the Federal Government. The Commonwealth has a significant focus on stimulating Indigenous economic development and growing the Indigenous business sector and decided to link these objectives directly into its procurement goals. The Indigenous Procurement Policy was introduced in 2015 and has thus far awarded some $594 million in contracts to Indigenous-owned businesses, delivering on both procurement outcomes and social objectives.

PROCUREMENT FOR CIRCULARITY
All levels of government have supported the waste and recycling sector in developing “end-of-pipe” solutions like recycling infrastructure and kerbside collections, but the critical gap in our current resource recovery sector is now on the demand side. There just simply aren’t enough viable, local markets for the amount of material the recycling sector generates.

The sheer value of Australian procurement suggests that if government and business could take the required steps, we could generate end markets for every piece of material in the current system, from plastics and paper to e-waste and tyres. 

An exponential shift using the procurement lever would not only benefit the recycling sector but likely build a much-needed bridge between recycling and remanufacturing. 

The former has traditionally been driven by the materials being collected and the need to find something to do with them. The latter on the other hand is driven inversely, by customer needs and then redesigning the recycling sector to ensure that those materials can be provided as raw inputs. 

Depending on the size of the shift, procurement has the potential to close the loop even further. As local and international markets search for the inputs required to meet demand, behaviours upstream will inevitably change. Take our wide range of packaging plastics as an example. If the demand for recycled PET and HDPE blossoms, there would likely be a natural “pull” of more PET and HDPE into the packaging stream, ultimately displacing those polymers less likely to be recovered. 

REMOVING BARRIERS
It’s not enough just to talk about sustainable procurement for recycled materials, it needs to be supported by actions on both the supply and the demand side. Procurement will absolutely catalyse change but government and industry need to work closely together to remove the key barriers that currently exist. 

On the supply side, the industry needs to ramp up to ensure that recycled products and materials can be manufactured at scale and to the required quality and performance standards. Equally, government needs to ensure that specifications support recycled materials and are backed by the required testing and approvals to ensure they can compete on an even playing field.  

On the demand side, government at all levels need to support internal change, ensuring that procurement practices, goals and objectives are enablers and not barriers. This will take some doing. Our experience at Sustainability Victoria tells us that this needs genuine planning, ensuring that each department, agency and even major project is clear on the opportunities for procuring recycled products and materials and how to realise these.  

Personally, I couldn’t be more excited by this prospect. A shift of just one per cent of Australia’s likely infrastructure spend over the next four years into the recycling and remanufacturing sector would see an additional $1.5 billion in revenue. Now that’s what I call value for money!

This article was published in the December issue of Waste Management Review.