NEWSLETTER by Alessia Falsarone. The author acknowledges the team at The University of Chicago Circular Economy and Sustainable Business Management Program and all participants of the innovation knowledge hub for their insights and collaboration.
The Global Center for Circular Economy in Coffee (C4CEC) officially launched last week and is now calling for membership. The center aims to advance the coffee sector’s transition to a circular economy through a pre-competitive, transparent, and science-based approach. With the support of a renowned scientific board and prominent global market participants, C4CEC is well-positioned to address the challenges facing the circular value chains of agricultural commodities like coffee. These challenges include environmental concerns such as deforestation, a lack of operational knowledge about circular economy practices, and insufficient investment in public-private partnerships that have not been able to shield the coffee value chain from steep inflationary pressures.
While the roadblocks are real, the vision set by initiatives such as C4CEC is a compelling one. A circular economy approach can deliver sustainable and profitable, inclusive solutions through collaborative research and innovation efforts. The time to pursue it is now.
| The Science of Impact
According to a new report from the International Trade Centre‘s Multi-Stakeholder Working Group on the Circular Economy in Coffee, close to 40 million tons of biological material — outside of green coffee itself — is generated globally each year in coffee production (1).
The report also includes the results of a global survey conducted by the ITC Coffee Guide network which highlights the lack of practical-operational knowledge, inadequate regulatory frameworks and low levels of investment and public-private collaboration as main challenges to circularity implementation at scale in the coffee sector. This global survey included responses from 64 countries, split nearly evenly among coffee farmers, coffee traders and mills, coffee support organizations, and roasters.
Opportunities for impact abound as participants indicated broad consensus that circular economy is a model capable of improving environmental, social, and economic sustainability in the coffee sector, from seed to cup!
In fact, regenerative agriculture will play a key role in the implementation of a circular economy. Above all, because they work hand in hand, amplifying each other’s opportunities and impact.
Note (1): Those interested are invited to participate in the 5-part webinar series starting May 22nd 2024 titled “RE(GE)nerating Value through Circular Economy in Coffee”. Working group members, and coffee businesses throughout the coffee ‘value circle’ will showcase practical examples of circular economy processes.
| Circularity Roadmaps Explained
But there is another environmental consideration we can’t ignore.
Coffee is increasingly known as one of the Big Six commodities that relate to deforestation, specifically wood, cattle beef, soy, palm oil, cocoa and coffee. The ‘Big Six’ represent the largest share of EU-driven deforestation targeted by the EU’s Deforestation Regulation (EUDR). Coffee’s contribution to deforestation is roughly 7% of all commodities. Coming December 30, 2024, the EUDR will require companies strict due diligence obligations to prove that ‘their products are deforestation-free and legal – meaning they were produced on land that was not subject to deforestation after December 31, 2020, and comply with all relevant laws in force in the country of production’.
The immediate effect for coffee growers and distributors has been a focus on regulatory compliance, increasingly focusing on ways to improve their social and environmental impact, and that this ranges from using more sustainable processing methods on farms to using recyclable and compostable packaging.
Mark Zhou, founder of sustainable packaging company MTPak Coffee points to the value of circularity in bridging the operational gap in his interview with Procurement Magazine:
A lesser-known but critical issue facing the coffee industry is the threat of extinction posed by climate change. Arabica, the higher-quality species that dominates the market, is particularly vulnerable to the impacts of a warming planet. Incentivizing coffee growers financially to follow regenerative, circular practice is one of the alternatives that MTPak has experimented with through their Coffee Circular Economy Grant. The program acknowledges and incentivizes small, independent roasters and coffee distributors that are leveraging their businesses to promote sustainability within the specialty coffee industry.
While some coffee distributors and roasters may have been practicing circular economy principles for years, financial incentives can still play a powerful role in raising awareness and encouraging wider adoption of these practices. Importantly, the private sector can deploy such incentives independently of government sponsorship. The MTPak grant is a grassroots example of this approach in action, aimed at driving clear and measurable positive impact.
| Investing in the Circular Economy
Even businesses focused on circular economy principles are not immune to broader economic challenges.
A prime example is Bio-bean, a London-based company that gained significant media and investor attention starting in 2013 for its innovative plan to collect used coffee grounds from the City’s cafes and convert them into biofuels. The company’s facility was designed to process 55,000 tons of used coffee grounds annually, producing biomass pellets, biodiesel, and BBQ coals. Bio-bean even explored the possibility of selling pellets back to retail coffee distributors to use as energy for roasting coffee or heating water, creating a truly circular system where waste powered the production of the product that generated it.
Despite this promising start, after a decade of operation Bio-bean collapsed in March 2023 due to high inflation and a factory fire. Fortunately, its assets were acquired by Envar Composting Limited, a leading UK bioenergy firm, in the summer of 2023, resolving the operational and financial hurdles that had threatened the company’s viability.
The case of Bio-bean offers us a reminder that to build lasting impact, innovators must not only generate positive environmental outcomes but also cultivate resilience and rigorously test the viability of their value proposition across a range of potential scenarios, considering the implications for both the business and the communities they serve.
| You don’t want to miss this month
From Paris (France) to Ascot (Australia), the second half of May offers new opportunities to connect with fellow circularity practitioners, and stir our world towards a more sustainable economic transition.
Discover, grow and leave your mark!
May 22nd – 23rd: OECD Forum on Responsible Mineral Supply Chains (Paris, France). The 17th edition of the Forum will focus on longstanding and emerging priorities in creating responsible mineral supply chains. It will cover overlooked conflict risks, the role of development minerals, regional sessions on gold supply chains, policy cohesion in a changing regulatory landscape, and the importance of responsible business conduct in government-to-government agreements on transition minerals.
May 29th: Circular Economy Western Australia: Igniting the Circular Revolution (Ascot, Australia). During the inaugural event hosted by Circular Economy Western Australia (CEWA) the focus will be on the remarkable developments occurring at national and state levels in the field of circularity in the region, including the state of circular economy thinking within the Australian business community.
May 31st: Dialogue Meeting on Plastic and the Circular Economy (virtual, with audio and video recording). The ACR+ | Association of Cities and Regions for sustainable Resource management, in co-operation between three projects BRINC (Brokering Cross-border Innovation through Clusters), Circular Ocean-bound Plastic (COP) and Retail Relooped has organized this webinar with focus on the role of plastic in product life cycle analyses (LCA) and the impact of consumer behaviors towards plastics. Registration is available through this link (*)
(*) Note: The BRINC project is co-funded by the EU programme for the Competitiveness of Enterprises and Small and Medium-sized Enterprises (COSME), while the COP and Retail ReLooped projects are co-funded by the European Union’s Interreg South Baltic Programme .
Off to another impactful week!
| All opinions expressed are those of the author and/or quoted sources. investESG.eu is an independent and neutral platform dedicated to generating debate around ESG investing topics.
