Manufacturing towards a green economy

Consumer preference, regulation, emerging valuation models, organisational change agility and the simple pragmatics of closing the product loop influence the development of the ‘green economy’ in the manufacturing sector. This thought piece unpacks some of those drivers as we begin the conversation to better understand what the challenges and opportunities of the green economy mean for Australia.

Today’s consumers, corporations and government agencies broadly acknowledge that they share responsibility for minimising their impact on the environment, however action has been slow and there is still debate whether the ‘carrot’ or ‘stick’ is the more effective change lever. Sustainable consumption has the potential to influence change at every step of the value chain, but experience has shown that it needs to be accompanied by appropriate regulation for corporations to act. 

While the increasingly hot topic of the ‘green economy’ holds great promise for sustainability challenges like e-waste to become new market opportunities, the change agility of large organisations is a critical factor in whether and how that promise will bear fruit. A key question is whether innovation will remain on the fringes of the traditional manufacturing sector or whether existing players will embrace innovation within their current structures.

The vexed question of capitalist valuation systems underpins all this. Our most pressing sustainability challenges stem from a flawed market system. The true costs of ‘externalities’ such as waste, pollution and greenhouse gas emissions are rarely borne by the organisation that generates them, let alone properly priced and reflected in financial reporting. While experiments in environmental profit and loss accounting and developments such as integrated reporting hold promise for the valuation and equity of different forms of capital, we should not lose sight of the role regulation can play in ensuring producers address questions of social equity and accept their ‘extended responsibility’ for externalities.

Where the market fails to financially motivate industry to implement sustainable practices, regulatory frameworks such as the Product Stewardship Act 2011 ensure that manufacturers take ownership for the responsible recovery of used devices through re-use or recycling. As part of an industry-wide collaboration, Fuji Xerox Australia played a key role in responding to the requirements of this Act, which has broad compliance ramifications for almost every manufacturer in Australia. We are working with the Australia and New Zealand Recycling Platform (ANZRP) to build the reverse logistics and improve the recycling systems required to achieve industry compliance with this Act. However, business needs to look beyond compliance to find the opportunity in its shifting socio-political environment. Meeting stakeholder expectations can be a source of innovation and leadership can also provide a first-mover advantage for the brave. Fuji Xerox is one company that has found business benefit in taking product ‘waste’, what many consider ‘an externality’, and closing the product life cycle so that waste is profitably remanufactured and re-used in new products.

Having embraced a zero-waste-to-landfill commitment since 1993, Fuji Xerox has some practical experience to share in navigating the complexity of end-of-life product stewardship. Australia faces unique geographical challenges in terms of facilitating materials processing and recycling. Compared with the US and Europe, the volumes of used materials in Australia are relatively small, yet the distances to transport materials for processing are significantly greater. In addition, sought-after materials - such as those used for electronic components and often found in today’s e-waste - are often extremely difficult to filter or break down for re-use. Australian industries often struggle to achieve economies of scale or develop cost-effective recovery programs without shipping material offshore, and onshore programs can be impacted by currency fluctuations which create competition with cheaper new product imports. These are just some of the issues that need to be addressed if the green economy opportunities in e-waste are to be realised. Government has a key role in not just enforcing end-of-life product take back and creating additional bottom-line costs, but providing the fiscal incentives for products that can contain re-used or recycled components to be more cost effective.

The challenges are not small but we should not lose sight of the opportunity. Clearly there is work to be done. Valuation models will help us price the true cost to our economies from externalities, which will drive more holistic fiscal policies. Carrot and stick approaches are needed for corporations to have an effective change platform, and consumers, NGOs and regulators all play a key role in that. There is some encouraging evidence that these pieces of the puzzle are coming into alignment. We need to start a conversation about the green economy we want if Australia is to remain resilient into the future, and perhaps even consider the society we want as non-financial indicators become more meaningful measures of success.

*Amanda Keogh is the Head of Sustainability for Fuji Xerox in the Asia-Pacific region and Australia. Her areas of expertise include sustainability reporting, responsible paper procurement, end-of-life product stewardship and consulting with customers to make print more sustainable. Keogh has chaired the board of Forest Stewardship Council in Australia and worked with the Australian Information Industry Association and federal government on new e-waste regulation.