Transcript 0:02 The main message here is that we are at a point where every industry will have to reinvent themselves to become more circular, and the sooner we do it, the better we'll be. However, the way they do it will be different. 0:17 And in continuing this conversation, I would like to focus on food waste simply because of the quantities that we produce currently and the value that food usually have for our culture and society. 0:30 [upbeat music] Welcome back to The Peggy Smedley Show, the podcasting voice of IoT and digital transformation. Hello, listeners, and welcome back to The Peggy Smedley Show. I'm your host, Peggy Smedley. 0:45 My next guest uses operational and organizational lenses and empirical methods in his research to study how social and environmental sustainability can be integrated into supply chains and the implications for competitiveness. 1:01 In addition to his current teaching role, he also serves as the associate director of the Building Sustainable Value Center, a global network of more than thirty-five thousand individuals that aim to mobilize sustainable business practices worldwide. 1:18 He has been successful in acquiring essential Canadian funding from both Industry and Research Council for his research, and currently collaborates with leaders such as HP Canada, federal agencies such as Environment and Climate Change Canada, Agriculture and Agri-Food Canada, and with innovation platforms like Cole. 1:41 Please welcome Yuri Golandris, associate professor of Ivey School of Business. Yuri, welcome to the show. Thank you, Peggy. Thank you for having me here. 1:52 So, Yuri, I have to tell you, I am so excited for us to talk because when I talk to folks about circularity and climate change, everybody's all over the spectrum when they have opinions in whether we want to talk about science or whether we want to talk about just their personal views. 2:10 I would love for you to start us off on what is your... 2:14 Looking at all the research, because you talk with a lot of folks who do research, and you, you have thirty-five members just in your organization, thirty-five thousand members in your organization who are research professionals who understand this. 2:26 So let's really talk about what, how you see from your views right now when we talk about waste contributing it or just in general. Let's-- Why don't you tell us what your 2:39 insights on all of this means when we're looking at, because it's, it's a lot to unpack, as I always tell people, when we start to having these types of conversation. Thank you, Peggy. 2:48 So I would like to start by mainly trying to clarify from a, from a scientific standpoint, based on evidence, what waste means for the climate crisis that we see. Why is it important on both negatives and positive sides? 3:04 So let's start with the negatives, so we can try to understand the, the causation between producing waste and the climate crisis. So waste is among the top fifteen sources of green-greenhouse gas emissions worldwide. 3:19 So it's comparable in scale to the f-- GHG footprint of oil and gas industries, just to give an example. Uh, almost everything we produce, consume, and throw away results in some greenhouse gas emissions. But how? 3:37 How does it happen? So currently, the l-- the vast majority of what we produce and consume end up in landfill. That's the sink. 3:47 And landfill sites produce greenhouse gas emissions because rotting organic waste, like food waste, for example, emits methane, which warms the atmos-atmosphere unless it's properly captured. 4:01 Uh, just to clarify, methane is a powerful green-greenhouse gas with a hundred years global warming potential, which is about thirty times larger than CO2. 4:14 So now we can clearly see that waste is something we produce at each step of a supply chain, from extraction to processing to consumption, and everything tends to end up in landfill. 4:26 And when it ends up in landfill, it produces CO2 and methane, which creates, uh, sort of, uh, the, um, the greenhouse, uh, effect that we all know about. 4:37 So in Canada, just to give an example of how much organic waste is mixed up with technical waste and ends up in landfill producing, uh, methane, sixty percent of the total food production in Canada is currently wasted at different stages. 4:51 Sixty percent. This is equal to about thirty-five million tons of waste per year. And, uh, interestingly, we all think that our industrial systems are efficient, but, uh, not so much. 5:05 So about sixty percent, sixty-eight percent of this total amount of waste happens upstream at farming, processing, and, and distribution levels. 5:16 And only about thirty-two percent of this amount of waste happens downstream at retailing and, and consumption levels. So there is a lot of work to do for, for supply chain professionals, uh, in a way. 5:29 So these are all the negatives. Let me just give one positive. So waste represents a big, both environmental and economic opportunities because of the virgin materials that it can displace. 5:44 So we think that waste is something we cannot use. Well, that's wrong. Waste is simply something that is in the wrong place at the wrong time. Has a lot of value. 5:56 We just need to think about how to find higher order value applications so to divert waste from landfill. And in so doing, we have two gains. 6:07 One is we avoid methane production through landfill, but the other, we also avoid CO2 production in traditional production processes because we are displacing virgin when we use waste.So that's the, that's the positive, uh, stance that I wanna leave you with. 6:24 When we're talking about this, we, we've talked about... I mean, you, you've described the numbers, um, just in Canada. And we know in the United States, we've been... 6:33 I mean, the amounts of waste in landfill is, is, is exceeding the number that we have. We, we... Our landfills are, are just overpowering. We, we've talked about these numbers on, on this show over and over again. 6:44 But I guess the question that I have to ask is, you're talking about are we at this point that our landfills, whe- whether it's in Canada, whether it's in the United States, whether it's in UK, are we at this point that we're saying, look, whether we can find a good use for it or a bad use for it, are we trying to get to the point that we have to say we should be more circular, or are we just at this point of saying, look, we just have too much stuff. 7:09 We're just, you know, wasting too much food. We're just putting too much, you know, greenhouse gases in the air. 7:14 Are we just at this point that we say, look, we have to do better and be more circular, or is it like, you know what, most people say, "I don't wanna be bothered with it"? 7:24 W- at what point do we have to be more aware of what we're doing as a society to be better to the environment and, and, and understand what's happening? 7:37 So I would say that we certainly need to become more mindful about our consumption expectations. 7:44 It is clear, clear nowadays that if we were to continuously grow our consumption targets, we will not be able to sustain ourself in the future, and that's kind of logical. 7:56 In a finite world with finite resources, we cannot grow consumption indefinitely. So we are at a point where we need to recognize the limits that are just imposed on us 8:10 and, and find a way to continue to perhaps thrive as a, as a society in a world where, where the resources are finite. 8:21 I think that people struggle a lot with the, with circularity because it is such a big and complex and multifaceted umbrella. So there are so many things that are circular. Uh, so let me mention just a few. 8:36 We started with a three R... We, when I say we, I mean the world, started to frame the circularity around three Rs, reducing, reusing, recycling. Now, the most recent framework that I've seen, uh, contains nine Rs. 8:54 So there are many more practices that are emerging over time. But let's start from these three Rs. So reducing, which is essentially waste prevention at the source. 9:04 Then you have reusing, which is mainly about making products more durable so we can use them m- longer and avoid waste. 9:12 And then repurposing or recycling, upcycling, there are many labels for it, essentially the logic to look at the resources that we produce, perhaps byproducts, surplus waste, and, and think creatively about it. 9:28 What can we do with it that hasn't been done already? So what products, what, uh, markets we can access and, and, and win based on, on these new products? So the, our research really focuses on this R, the repurposing R. 9:46 So we are looking at how the material that exists out there, we have a ton of m- of waste that has been produced over the years. As you said, our landfills are full. 9:56 Now, we have to recognize that ma- that material exists, so what do we do with it? 10:01 How can we find higher order value opportunities that create new markets, create new products, sustain the society, but in a way that is environmentally sustainable? 10:13 Let's talk about something that emits a lot of carbon into the air. Let's say something like cement, that we're always talking about, and we wanna reuse that. You know, we're breaking up roads. 10:25 We're, we're talking about infrastructure. 10:28 When we start having these conversations or, or other things like that, we have to rebuild roads, bridges, highways, things like that, that we, we, we talk about this in any place in the world. 10:40 Are we at that point of saying, we have to have the right goals to have the right discussion, or should we be saying things about all the waste in the food that we have? 10:49 I mean, because there's people in the world who are starving, and we waste so much food, and food is, is... 10:55 goes in our refrigerators and spoils or, or things like that, or we don't distribute food properly in a supply chain. We all saw a failing supply chain, like in the, the toilet paper conversation. 11:07 Was it really we didn't have enough toilet paper, or we didn't know how to distribute it properly in supply chains? Those are the kind of conversations that need to be had. 11:16 Is that the kind of thing, or are we really just saying we need to learn how to take, you know, the thread and materials, the wool out of our, our old s- shirts, our s- you know, our sweaters and reuse them in a way that can be... 11:31 not all end up in landfills, that can be made something new out of it? Okay. So I think you raise a great point. Lots, lots of points, right? So- Lots of points. Yeah. 11:42 So circularity, I think, will take different shapes in different industries. Uh, currently with my research, I'm mostly focusing on, uh, on food waste and, and, uh, and loss, but just... I wanna be clear. 11:59 It's not that I just focus on food and agri-food industries. 12:02 I focus on food waste as a type of material, and that waste can go everywhere, can go into cosmetics, can go into food production, can go into construction, can grow, for example, insulation. 12:15 You can grow mushroom now that can be used for, as a natural insulator for houses. Uh, so there are many destinations of food waste that cut across industries. And, uh, when it comes to food waste, I can 12:31 certainly provide some evidence of the fact that the circular economy will be mostly local.You'll not be able to, to do international, large international exchanges of food waste to substitute virgin materials. 12:47 It will, uh, it will be a highly densely connected network of cross-industrial organizations that will exchange food waste and loss to create value. 13:00 I also study plastics, and I work with HP on their global supply chain for recycling plastic. And, and there, for example, I can say that recycling plastic has a much larger scope, geographically speaking. 13:14 So the big volumes will, will be flying around the world. 13:20 Again, we have to do a proper life cycle assessment to understand when shipping waste across the ocean is ec- economically and environmentally, um, sustainable, so there is that part of the map. 13:33 But I would say that recycling, because of the economies of scope with plastics and other materials such as minerals, it will have a much larger scope. 13:43 So the main message here is that we are at a point where every industry will have to reinvent themself to become more circular, and the sooner we do it, the better we'll be. However, the way they do it will be different. 14:00 And in continuing this conversation, I would like to focus on waste becau-- on food waste simply because of the quantities that we produce currently and the value that food usually have for our culture and society. 14:14 Is that a great way of saying when we think about this conversation, it's like act locally, think globally? Because in order for that very conversation, we have to serve the community first to be able to do the things. 14:28 And when we talk about climate change or we talk about these things, we have to ta- uh, be able to educate our local communities on how they can change to be able to do the kind of things we're talking about climate change is going to be able to respond to or circularity or sustainability, those very things that you're just saying in the food agricultural way, the ag environment, what those kind of needs are going to be in a local region. 14:58 Yeah. I think the food waste revolution will start locally. 15:02 So for example, for those interested, you can search up Our Food Future, which is a large initiative that has just started a couple of years ago in, in the Guelph region in, in the Ontario province in Canada, where they won a large, um, federal grant to become the first circular agrifood hub in North America. 15:24 And I'm working with them in actually mapping out how their circular system is developing, so we are actually tracking all waste transactions. 15:33 And actually, by the way, a map of those transactions will be made available on my website in a couple of weeks where we, where you can use it for free. 15:41 You can zoom in and filter out the type of transactions that you wanna consider. So you can start to actually have a picture of what the circular economy look like- Right... 15:52 which is also difficult to imagine, and that I think is one barrier of developing it farther. Let me just speak to some of the dynamics and, and businesses that I've seen. So we... 16:05 You have a, a large national retailer that waste tons of fruits and vegetables every week because of compliance issues, aesthetics, or because they simply order too much. 16:17 And so what do they, what do you do with that waste? Uh, so one way is certainly to rely on local food rescue organizations, but they have to be able to process it immediately, otherwise it will go, uh, bad. 16:31 So other options that are developing for that food waste is actually to use a local juice producer to actually cold press that juice. So cold press the waste, sorry, uh, from the retailers to produce juices. 16:47 So that juice is not just as nutritious and delicious as the regular juice would be, but also have higher economic value for society because it avoids the CO2 emissions and the methane emissions that will produce the landfill. 17:00 Now, where that will, where that, where will that juice be sold to? 17:05 Currently, they have sort of this imposed policy that they are gonna sell it only locally on, on local chains in Canada, but there is great demand from the States. 17:14 So at that point, they will become a global business that tackle a local f- food waste problem. Uh, so you can see here again the local and the global coming together. 17:27 The question mark is that, is the circular economy growing through expanding the scale or replicating the system? 17:36 So this company that I'm talking about will probably sell juices somewhere else outside Canada, but how they tackle or experimented with becoming more global is actually to open up new initiatives in, in California and other states 17:54 where they sort of try to replicate what they are doing in wealth. 17:59 So engage with local retailers, open up a local, uh, production process, so to source locally and distribute locally, because the short supply chain is more in line with their principles. 18:12 So the, the, both the local and the global, uh, need to be considered and optimized. I don't think we can say everything will work locally. I... 18:21 That, that in, in my opinion and based on the evidence I've seen will be, um, will be difficult to sustain both economically and environmentally. 18:31 It's about balancing the options rather than going only for one or, or the other.Are there lessons, um, anywhere to be learned now where we're talking microbreweries or breweries that would have succeeded in, in different communities? 18:46 Are there any lessons over time that have been learned with things like that that have grown up? Are any of those kind of things ever to be able to share, learn, grow? 18:55 Because we, we've seen small mom and pops, you talk about small businesses in the past, that have been very successful in small communities and, and have, have developed, you know, big, you know, relationships with the, the town community. 19:12 Is, is there a way here to see that? You know, they source their food from, you know, things that, you know, the lettuce and things that have grown, and that's how they've been successful over a year. 19:21 Are there lessons in that supply chain relationship to be learned to do other things now that we say I know you're talking a little differently, but are there advice? 19:30 I mean, are there other things that you say, other examples like this that can be shared? I mean, sometimes we share our experiences, and that's how we can do things better, faster, quicker, easier. Yeah. I, 19:43 I-- There are many cases that are being developed, uh, and documented around the world with, uh, small and medium enterprises coming up with new ideas or new solutions on how to repurpose waste, uh, in a way that is economically, you know, um, valuable and, and environmentally sustainable. 20:04 But unfortunately, uh... 20:06 And there is also a lot of research on, on the circular economy, but I would like to mention a, a, a, a knowledge gap that we have currently, uh, is around, um, the systematicity of how things should happen. 20:20 Which means, well, we know of different cases, but what's the, the common denominator of the success of those cases? We don't know yet those key success factors. We don't know yet what's driving it. 20:33 But I would like to mention that our research is trying to fill this gap. 20:38 We are focusing on three questions, and I would like to both mention the questions and, and sort of illustrate the work that we have been doing, and also share some, some lessons that we, we are learning. 20:50 So the first, uh, question that we ask is how our cognition as managers and entrepreneur can constrain our ability to pursue circularity. 21:04 Just when we label something as waste, we are already filtering out a number of options because we assume that material to be value-- uh, we-- having no residual value. 21:17 So the way we think, the way we assess, it's, it's important in how we-- in the opportunities that we perceive. Let me give you a simple statistics. 21:27 In Canada, there are, uh, three, I would say, uh, well-performing organizations, boots on the ground, that help businesses to connect the dots. 21:39 So they-- What these organizations do, they, um, survey, uh, a region, they look for the waste that is produced in that region, and then they try to do matches. 21:51 This waste here produced by this company could potentially be used by this other waste-- by, by this other company to produce X. 21:59 And so they are doing this matching, and they preliminary assess the economic viability and the technical feasibility of these exchanges. And then they reach out to companies and said, "We did some preliminary analysis. 22:11 There is this opportunity for you. Would you like to pursue it?" And they have done, they have done it thousands of times. How many would you think engage with the opportunity? 22:25 Peggy, would you like to throw their a number? I would say probably just a couple, not even near the- Yeah. 22:33 Forty percent, just forty percent say yes, and the other sixty percent say no, even if the economic opportunity is potentially there, it's been proven. 22:44 So they-- their cognition push them to filter out this opportunity, and maybe their cognition is just about being extremely focused on their core business and seeing everything else as a distraction. Anyway, why? 22:59 Why forty percent say yes and the other sixty say no immediately without, without even trying? We are trying to study that. 23:06 How do managers that belong to tho- to, to those that said yes think relative to those that say no? 23:14 Because these are comparable companies, same size, uh, same industry, same countries, so you have many confounders that are equal, so you still-- and still you, you have this variety. What does explain that variety? 23:29 Maybe some of them went through business school, and they think in economic terms in a very specific way based on, you know, return, uh, NPV, net present value, and if they assess based on net present value, there are a hundred thousand other opportunities that are maybe better than re-repurposing waste. 23:46 So I'm just saying we are exploring that. And so then I have another question for you, Peggy. 23:51 So of the forty percent that say yes, how many, in your opinion, are able to complete the, the repurposing initiative to make it happen? Twenty percent. Fifteen percent. Not far. Not far. 24:09 So only fifteen percent of those that say yes then are able to pursue it and execute it. 24:16 And unfortunately, I don't still have the numbers of how many are able to sustain the opportunity over time, which I expect even less. 24:25 So the second question that our research, uh, team is exploring is what, from an operational and organizational standpoint, 24:34 what is it required in-- from these companies in terms of adjusting and adapting their processes so that they are able to execute and sustain this opportunity? 24:44 So the first question is really about cognition and how we assess opportunity. The second one is, okay, you have assessed an opportunity to be green light. Let's go with it.What does it take to implement it? 24:55 That's the second question that we are, uh, addressing. And then the third one is if you start, uh, mapping, as my map will show, all these exchanges, they're actually organized as a network. They are all intertwined. 25:10 And so the network is expanding over time into what I call a number of loosely connected circular clusters of organizations that work together to exchange this, these waste streams. 25:22 And, and the question for me is, this is great, absolutely great, but how do they compete? How do they compete against the linear system? 25:32 What makes them able to take waste, make something environmentally, um, robust with it, and still being able to be more efficient and effective than linear system? 25:46 So do they work based on economies of scope? Do they work based on economies of scale? Do they compete with each other? How do they coordinate with each other? So this question. 25:58 So let me give you, um, some answers if, if, if you want me to, about what I've been seeing is a common denominator of why firms succeed. So first of all, some firms just adjust their pro- their processes. 26:15 They don't need to significantly alter their business to be able to pursue a, a, a circularity opportunity. I've written about this in a short blog on my website. 26:26 I will give you the, the link later, and the title of the blog is, Is the Circular Economy Closer Than We Think? Because some firms, 26:37 in order to compete in their space, had to develop a level of agility in their operations in terms of adjusting internal processing, sourcing different materials, coming up with different products, and adjusting their products over time to remain competitive. 26:52 And those degrees of freedom, agility, that they built over time is just what they need to pursue circularity. How they see it is, let me just try an alternative material for my products. Does it work? Does it not? 27:08 They have already the processes within their organization to try it out, to pilot tested it, to experiment with it. And so for them, it's just, just another type of material that they can try to exploit. 27:21 And, and I have examples for this, uh, so let me, let me look at my notes here. 27:28 Here, I would say there is a, as I said before, a juice producers, juice producer that sources surplus fruits and vegetable from local retailers and farmers and is able to s- to sell that, uh, to local consumers. 27:42 But then what do you do with the residues of the juice that you produce? The residues, they have experimented seven alternative repurposing options for that residues. One of them goes into g- uh, soap 27:59 because you flavor it with, with oranges, orange flavor, or with clementine flavor or whatever juice is produced that week. And that... 28:07 So you, you move from food industry to cosmetics and, uh, and a completely different industry. Another one is more simply, uh, feeding animals. 28:19 Uh, another one is though combining it with spent grains that come from local brewers into upcycled cookies. 28:29 So you take the spent grain, which is a waste from local brewers, and you combine it with the re- fruits residues of the juice production, and you make new cookies that are 100% upcycled. 28:41 So they haven't used one gram of virgin material to be produced, and they are as delicious as the one that we, we try. 28:49 So these organizations over time had to be creative enough that they built processes in turn within their operations to continuously adjust their, their products as well as their operations. 29:02 Some firms, however, won't have this capability, and so they will have to think more critically about, uh, potential sources of or constraints within their organizations. 29:15 I have to tell you, Yuri Golodursky, this is so exciting. Associate professor of Ivey Business School. 29:21 You're gonna have to come back and share more of this because you've probably intrigued all these young innovators thinking about what new business opportunities when we think about circularity and sustainability and resiliency can come out of this. 29:34 What's your URL so our listeners can go and follow up and learn more about what you're doing? Um, certainly. 29:41 So, uh, you can google for Center for Building Sustainable Value Circular Economy, uh, Initiative, and the URL is ivey, I-V-E-Y.uwo.ca/sustainability/priorities/circulareconomy. 30:05 Uh, in a couple of weeks at that website, you will also have this dynamic map of exchanges that you can filter, zoom in and zoom out by filtering in terms of type of, uh, materials, type of products, uh, size of the exchange, and whatnot. 30:20 And we aim to continuously grow this database of exchanges. So if you know of someone that is currently exploring repurposing options within and across industries, please reach out. 30:32 Uh, our team will be happy to hear from you and perhaps help you out with, with connections and, uh, and other initiatives that I know are available in a number of cities, both in Canada and the United States. 30:45 I love this, Yuri. It's really exciting. All right, Yuri, that's all the time we have for today. 30:49 Listeners, check out our website at connectedworld.com, our show website at thepeggySmedleyShow.com, but most importantly, tweet at us at ConnectedWMag. All right. 30:58 This is The Peggy Smedley Show, the podcasting voice of IoT and digital transformation. And remember, with great technology comes great responsibility. We'll be right back after this commercial break. [upbeat music]
