Maximizing the value of waste: From waste management to the circular economy

• Published date: 01 September 2018
• Date: 01 September 2018
• Author: Omar Romero‐Hernández,Sergio Romero
• DOI: http://doi.org/10.1002/tie.21968

COMPANIES IN THE CIRCULAR ECONOMY

Maximizing the value of waste: From waste management

to the circular economy

Omar Romero-Hernández

1

| Sergio Romero

2

1

Hult International Business School,

Cambridge, Massachusetts, University of

California, Berkeley, California

2

Instituto Tecnológico Autónomo de México

(ITAM), Mexico City, Mexico

Correspondence

Omar Romero-Hernández, Hult International

Business School, 1 Education St, Cambridge,

MA 02141.

Email: omar.hernandez@faculty.hult.edu

Over 90% of Fortune 75 companies publish corporate social responsibility (CSR) reports to

highlight their efforts to tackle sustainability challenges, and while a vast majority of these

reports cite improved waste management initiatives, less than a quarter of these firms derive

profit from good solid waste management practices or circular economy strategies. Unfortu-

nately, many firms instead implement waste management purely to enhance a corporate

image. This article both outlines a framework to guide companies on their journey from a lin-

ear consumption pattern to a holistic, circular approach and illustrates that waste manage-

ment practices can be cost-saving and revenue-generating opportunities. Collectively defined

as circular economy initiatives, these opportunities create new value streams from materials

previously discarded. Circular economy principles extend beyond traditional waste manage-

ment enhancement practices. These principles emphasize improved design and production

practices to eliminate the traditional concept of waste and repurposing resources from prod-

ucts at the end of their life cycle back as raw material inputs to create new products. Though

there are surface challenges to adopting circular economy principles, this article presents a

framework for all companies to start on a path to maximizing the value of corporate waste

streams.

KEYWORDS

business opportunities, circular economy, waste management

1|INTRODUCTION

Each year, the global economy produces more than one billion tons

of solid waste, composed primarily of paper, plastics, metals, organics,

and many other by-products. Today, we generate more annual waste

than ever before. By 2025, global waste generation is expected to

grow by an additional 70%, driven in large part by growing popula-

tions, rising median incomes, and the accelerating pace of urbaniza-

tion (World Bank, 2012). See Figure 1.

The world’s growing middle class will drive a significant increase

in consumption and, ultimately, the disposal of consumer goods. The

corresponding increased demand for natural resources is highly prob-

lematic: According to Forum for the Future, we currently consume

resources 50% faster than they can be replenished. Our consumption

patterns will necessitate more than two Earths’worth of natural

resources by 2030 and three planets’worth by 2050 (Esposito,

Tse, & Soufani, 2017).

Though waste management efforts have significantly improved

over the past 40 years, there are still many opportunities for improve-

ment. Traditionally, waste management has followed a linear economy

approach, where consumers purchase, use, and then dispose of their

products (Hockerts & Weaver, 2002). Recent efforts to improve waste

management practices are often limited to better treatment of waste

through prominent principles like the 3Rs (Reduce, Reuse, and Recy-

cle). These efforts do not maximize the potential value of solid waste.

In contrast to improved waste management or treatment practices

that still send resources to landfills, circular economy principles seek

to maximize the use value of materials through the creation of a

closed-loop economy (Geisendorf & Pietrulla, 2017).

Through literature review and semistructured interviews with

decision makers working in waste management and corporate social

responsibility (CSR), this study overviews major waste-related regula-

tions and consumer trends on corporate waste; provides an in-depth

analysis of the most common current waste management practices,

DOI: 10.1002/tie.21968

Thunderbird In Bus Rev. 2018;60:757–764. wileyonlinelibrary.com/journal/tie © 2018 Wiley Periodicals, Inc. 757