A Post to MatterMore from the The Fowler Center for Sustainable Value
Note: What follows is a post from the Fowler Center for Sustainable Value at Case Western University on TerraCycle’s business model. “Closed loop” recycling is the Holy Grail on materials. Does Terracycle get there? We’d love your thoughts.
TerraCycle has been widely recognized for an innovative business model that is based on the idea of eliminating waste. Does TerraCycle actually accomplish this claim? What are the lessons for us all in the TerraCycle story?
TerraCycle has been heralded as a shining example of a new style of capitalism, which focuses on blending business opportunity with environmental responsibility. As with any business case it is important to examine the whole context before assigning too much praise.
There is no doubt that TerraCycle is pioneering by recycling and reusing materials, but we argue these are just the first steps in the journey it takes to become truly sustainable. A good place to start this investigation is with Janine Benyus’s proposed Nine Laws of Nature, which include “Nature recycles everything” and “Nature rewards cooperation.” Through the lens of these two design parameters, TerraCycle is indeed ahead of many other businesses, but has far to go to become fully sustainable and recognize true sustainable value.
A company that literally turns trash into treasures, TerraCycle has grown consistently in its ten year history from selling liquefied worm poop to a portfolio of hundreds of different consumer goods made from recycled and upcycled materials. Through a network of local brigades that focus on the collection of specific types of materials (SOLO cups, granola bar wrappers, juice pouches, etc.), TerraCycle uses its consumers to also provide its raw materials, often making donations to charity for items collected. To date, they claim to have collected a commendable 2 billion units of waste.
While TerraCycle touts upcycling post-consumer waste practices, the company also takes initiative in recycling pre-consumer packaging as well. This pre-consumer packaging, or pre-consumer waste, is material from the production process that never reaches the intended customer or consumer and includes, scraps, excess and misprinted material. It is usually either recycled or discarded, but in this case, donated and shipped to TerraCycle to be broken down and manipulated into new products.
TerraCycle is also able to take advantage of many companies’ surplus. Examples include extra spray tops that become the caps for the fertilizer bottles and misprinted cardboard boxes, which are used for all shipping. Extra packaging materials (especially seasonal candy wrappers) are then used and molded in a way to create new products for TerraCycle to sell.
TerraCycle has recognized successes at the intersection of environmentalism and business opportunity, but is this sustainable value? We must ask ourselves, and TerraCycle, if and how sustainability is embedded into all aspects of the company’s core business.
One opportunity for TerraCycle to recognize more sustainable value can be found in addressing their products’ full life cycles. A product’s life cycle involves the original extraction of resources, fabrication, product use, and the product’s disposal, or end of life. TerraCycle is able to prolong this cycle by re-fabricating and reusing products, but once these re-fabricated products reach the hands of the consumers, there is no determining whether or how products are eventually disposed of.
It can be argued that TerraCycle is simply a middle man between the factories, which originally created the plastic wrappers, boxes, etc., and the consumer, who ultimately has the final choice in the product’s disposal.
The question becomes whether or not this waste reduction is really just a delay of the materials inevitably ending up in a landfill. This issue of the products end life cannot be ignored. Disposal isn’t the only issue. TerraCycle supply chain relies heavily on transportation of materials. Is sustainable value going to be achieved when everything gets shipped to New Jersey to be reprocessed? Does the energy that goes into that transportation negate the energy savings from not recycling the materials?
Even with these skepticisms, it is encouraging to see a new wave of creativity from young business leaders that are engaging consumers in an active and critical manner. Hopefully more and more companies will take this kind of initiative and embed their businesses with sustainable practices that coincide with the Nine Laws of Nature. Only then will recycling become universal and disposal a thing of the past.