Published 2020-11-19

This post is also available in Swedish

Use of recovered raw materials calls for sweeping change

Giving specific examples of companies successfully engaged in using recovered and recycled raw materials, in circular material flows, is a key element in support for businesses on their transformation journey. This is the view of Pia Irell, Impact Partner at Trill Impact, who is attending the webinar held by Mistra and Swesif on 24 November, when Investor Brief: Recycled Materials for Sustainable Investments is to be launched.

The report, based on the Mistra Closing the Loop research programme (2012–19), describes key aspects of using recovered raw materials on a larger scale with the purpose of supporting sustainable investments. Pia Irell, one of the panel members at the webinar, tells us that Trill Impact invests in companies with both profitable operations and a measurable effect in terms of one of the Sustainable Development Goals (SDGs). Such companies, for example, can use statistics to show how their products help customers achieve energy savings.

According to Irell, most of these companies have long been applying resource efficiency as part of their drive to increase profits. But when it comes to recovered and recycled raw materials, the work is harder going.

‘Less wastage in production and sales boosts profitability, and a production process — including related equipment and logistics — that is better thought-out and planned means that investments in production equipment can be kept down despite company expansion. And that’s resource-efficient. Unfortunately, where using recovered and recycled raw materials is concerned, the equation isn’t that simple and development is still in its infancy.’

Irell explains that it is important for companies to be able to plan and forecast. What is the cost impact of switching materials on purchasing and production? What rules apply? Do we have the skills to redesign the products? What are the effects on wear and tear, and on sustainability? What guarantee terms and conditions can we offer? Can we, by raising prices, make the customer fund part of the development? By doing so, would we able to alter the price situation and market positioning?

‘Adaptation calls for a thoroughgoing transformation that affects several central functions and processes in a company. A comprehensive commitment is required from every part of the business, and this may be a challenge to some parts. More practical problems, too, may be the supply of recovered raw materials and their quality.

Sluggishness

For investors involved in recovered and recycled raw materials and circular material flows, it is a matter of looking at companies’ and sectors’ entire life cycles, including subcontractors, and understanding technological development. Pia Irell emphasises that, from a financial point of view, the investors must be tenacious.

‘Although the technology is available, companies aren’t always ready to apply it for various reasons. There’s a certain sluggishness.’

What needs to happen for companies working with raw-material recycling to become more profitable and attractive, and how are more companies to follow suit?

‘If we’re talking about companies that are going to use the recovered raw materials, it’s easier if supply, quality and price, including taxes and subsidies, can be as constant and transparent as possible. For some aspects, regulations and reporting requirements can make things easier.’

You’ve already read Investor Brief: Recycled Materials for Sustainable Investments. What do you find most interesting about it?

‘Since Trill Impact works close to its client companies, inspiring and supporting them in their pursuit of change in the short and long term, I appreciate the sections containing specific examples. Emphasising what others have done and showing examples of success, as in the section entitled “Transformation from value chain to value circle”, is a part of the report that I’d very much like to include in the portfolio companies’ long-term strategic work.’