The Circular Economy Takes on Food Waste

2015 might have been the watershed year for food waste. For starters, the Sustainable Development Goals set a target of cutting retail and consumer food waste on a global level in half by 2030. The US Department of Agriculture and Environmental Protection Agency also set the first national food waste reduction goal, matching the UN’s global goal. France voted to make it illegal for supermarkets to throw out unsold food, requiring instead that they donate it to charities, or animal feed and composting companies. A few weeks later, Italy followed suit, banning food waste and obliging supermarkets to donate unused food to charities. Last month, Denmark opened first food waste supermarket selling surplus products.

All of these resolutions tend to reinforce the momentum of the circular economy—a pillar of the UN conference on climate change, COP21. In a circular economy, the production of goods and services doesn’t depend exclusively on the extraction of natural resources, as is the case in most industrial models; instead, resources are re-integrated, re-generated, re-utilized in a circular way. The practices around the circular economy are beneficial to companies, and are in fact becoming a competitive necessity for both corporations and governments.

Raising Awareness

Growing awareness of and discontentment with the fact that modern conveniences negatively affect our food supply and unnecessarily drain limited natural resources is also driving momentum. In the United States, for example, food waste per capita has increased by 50 percent since 1974, and globally, we currently throw out three billion tons of food each year. Meanwhile, according to the Food and Agriculture Organization, one billion people go hungry every year, and another billion are undernourished. Fortunately, innovative thinking by both entrepreneurs and executives in the circular economy is starting to catalyze business-oriented solutions—and on a hyper-local scale.

Retail spoilage is a major category of food waste. In the linear economy, food that is still good but needs to be removed from shelves—often due to inventory or overstock reasons—typically heads to the landfill. With circular thinking, however, nonprofits and companies like SpoilerAlert, WasteNoFood, Gocopia, and Zero Percent have created online marketplaces to connect retailers with charities and food recovery groups, and to divert fresh fruits and vegetables away from the junk heap. Food Cowboy takes this same model and focuses on truckers along the supply chain, who collect food that is still fresh but turned away by retailers, and drive it to food banks or charities that bid to receive the stock through a smartphone application.

Developers are also using technology to impact food waste from the operational perspective. For example, LeanPath created software that allows restaurants and food service industries to keep track of the amount of food they discard and the associated cost. Greater awareness of the value of food has led some companies to cut their food waste by as much as 80 percent.

Making Use of Imperfect Foods and Byproducts

“Imperfect” foods—misshapen or slightly blemished fruits and vegetables that don't meet the strict cosmetic requirements of supermarkets—are a big part of the food waste problem, but they can play an important role in circular economics. Retailers typically accept only about 60-80 percent of farmers’ produce due to cosmetic reasons. Sometimes farmers will leave perfectly good, yet imperfect crops to rot in the fields or distributors will toss them. But companies like Misfit Juicery are making use of these products. As cold-pressed juices became mainstream health food, the founders recognized a fundamental business opportunity: They could sell their juices at premium prices, while buying their fruits and vegetables at a discount.

Manufacturing waste and byproducts in the food industry also present opportunity in the circular economy. For example, a coffee shop in a city the size of London throws out an average of 200,000 tons of coffee grounds per year. In London, a startup called Bio-bean extracts oils from the grounds for biofuel and processes the remaining solids into biomass pellets for heating. And California-based company Back to the Roots has taken the demonstrated method of growing mushrooms out of coffee grounds to market. The company now diversifies its revenue sources by charging local cafes a waste removal fee to collect coffee grounds and then sells the grounds as premium soil amendments.

Meanwhile, the French food company Danone realized the value of leftover acid whey generated from straining its Greek yogurt products. Rather than sending this protein-rich byproduct to the landfill, the company found a way to repurpose it and use it in its baby-food lines. And Starbucks teamed up with a contact-lens manufacturer to make milk from used coffee grounds.

Engaging Consumers

The access to and affordability of cheap food in many developed countries makes practicing circular economy principles on the consumer level challenging. But new tools such as Green Egg Shopper and Love Food Hate Waste,—which help people keep track of what they buy and when, and offer recipe suggestions to make use of every ingredient—may help drive new consumer demand for reducing food waste. Products like BluApple help too; the small blue containers filled with sodium permanganate absorb the natural ripening agent given off by fruits and vegetables (ethylene gas) and keep produce from spoiling.

All of these examples go to show that eliminating food waste is economically plausible and can unleash new opportunities for businesses. Now we need more companies to:

1. Realize that food waste is a lost economic opportunity and detect where food waste may be occurring. For example, how does your company’s cafeteria or catering service handle food waste?
2. Recognize companies and stakeholders ready to engage into new business models and rationales. Are there companies like the ones we’ve mentioned in this article in your area? How might they help your organization identify opportunities or work as a partner?
3. Help redesign the supply chain so that it accommodates the re-integration of waste into the productive cycle. Food distributors, supermarkets, and vendors may be incurring excessive costs from food waste. Can you run an in-depth analysis of your value and supply chains, and find ways to minimize that waste?
4. Engage consumers to actively shape the demand for sustainable products. Involving consumers as active partners of a re-designed strategy for the reduction of food waste is paramount for the success of any initiative of this kind. Can you effectively communicate your new strategy by involving consumers as active agents of change?

Reaching the Sustainable Development Goals is a monumental challenge ahead of us, but understanding where to start is an important first step. Given its inherent relevance to many aspects of livelihood, as well as its simplicity and universality, we believe food waste represents—dare we say—the “low-hanging fruit” in pursuit of this goal. Companies are well-poised to take advantage of the current momentum and lead the way in the circular economy.

Read more stories by Khaled Soufani, Mark Esposito & Terence Tse.