Waste for good…

As the start of a new year peers over the horizon, many business leaders will be looking back on how much has changed over the year. The pandemic has transformed everything, AI and automation have begun to take hold, Brexit talks continue – there’s been a lot to reflect on.

In 2020, the focus has been on sustainability. One fundamental shift was the transformation of supply chains to become “circular,” under pressure from ethically-minded consumers. We have seen deals struck where consumers take old bottles back to be refilled, to cut plastic waste and reduce carbon emissions.

But circularity is not just about returns, companies have to take more responsibility, with residual resources, such as food processing surplus streams — now often categorised as ‘waste’ — can be reused at their highest potential value if fair pricing can be ensured, finds the latest report of the Coalition Circular Accounting (CCA).

The Valorising Residual Resources report elaborates on the financial, accounting and legal aspects of valorising food waste and the organisational challenges of being circular. 

Minimising food waste is a must, resulting in higher food security and a reduced industry footprint. 

The CCA says the current go-to solution for many food manufacturers is to downcycle and sell waste streams as animal feed. But when these resources are of premium quality and fit for human consumption, this is a massive loss.

To ensure efficient resource use, the circular economy aims to maintain the highest possible value of resources for as long as possible. But producers need a stronger incentive to valorise all their waste streams — an incentive the linear economic system does not provide.

The CCA, led by the Royal Netherlands Institute of Chartered Accountants (NBA) and Circle Economy, has identified opportunities to salvage and valorise residual resource streams before they are turned into input for the production of animal feed or waste.

Using biscuit dough as an example, the coalition teamed up with cooperative IntelligentFood to explore the challenges they are facing and identify promising pathways for circular ways of working that can be applied to a multitude of other types of residual streams. 

IntelligentFood is organised as a cooperative that receives residual biscuit dough from Europastry — a leader in the frozen bakery dough sector — and joins forces with value chain partners to add value and create new products. 

The cooperative’s primary role is to develop new food concepts that use residual food streams and connect different external parties — from resource input to final product sales — on its platform. It takes on the role of a Circular Value Chain Director, connecting and redirecting resources between stakeholders, processes and industries to ensure their highest potential and value. 

‍The CCA once again confirmed that what gets valued, gets managed. The business case proved that residual resources should also have financial value. However, determining a fair price for these resources has sparked a debate about valuation theory versus market value. Moreover, the report provides potential options for accounting for the residual resources, based on a situation where profit margins after sales of the final product constitute the value of the resources used.  

Transforming food waste into products could become standard practice as the world’s population grows.

And now all that’s left to say is, Merry Christmas! We’ll be taking some time off over the festive period however our newsletter will be sent out as normal. We hope you enjoy the festive period and let’s hope the New Year brings better things for all.

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