AS sustainability becomes an increasingly important business imperative, there is a growing body of evidence indicating that it’s also an enormous opportunity for businesses.
The most valuable brands derive as much as 7% of their total value from sustainability, according to data and insights company, Kantar. Its research also indicates that brands lacking in sustainability metrics are less resilient to challenging economic conditions.
Interestingly, it’s not only larger organisations which are positively impacting their bottom line through a more focused approach to sustainability but also smaller entrepreneurial businesses.
Fetola, an enterprise development organisation that helps South African businesses grow, create jobs, and contribute to social and environmental change, has long been focused on growing more sustainable businesses.
Catherine Wijnberg, CEO of Fetola, says the organisation pre-empted the shift towards sustainability more than a decade ago by building small businesses that are both profitable and more circular in their models.
Wijnberg is a passionate advocate of the benefits of circular economies to address some of South Africa’s most pressing challenges, including poverty, inequality, unemployment, energy insecurity and environmental degradation. “In a circular economy, materials never become waste. Instead, resources are kept in use through reuse, refurbishment, maintenance and regenerating recovered materials through recycling, re-manufacturing or composting,” she explains.
In addition to positively impacting waste, pollution, biodiversity loss and climate change, Wijnberg points out that circular economies have the potential to deliver more inclusive growth and reduce unemployment through the creation of new jobs and income opportunities in an array of areas such as waste management, recycling, repair and re-manufacturing repurposed materials. Added benefits are more stable supply chains, the diversification of the economy and reducing the country’s dependence on imports.
Although the notion of circular economies is a relatively new concept both locally and globally, their benefits have been highlighted by the UN’s Sustainable Development Goals (SDGs) with circular economy activities positively impacting many of the 17 SDGs. In South Africa, however, there remains a lack of awareness around the benefits of circular economies – and how to implement them.
Fetola is tackling this challenge head-on. It recently established the first local Circular Economy Accelerator (CEA) to help small business entrepreneurs implement circularity into their business models. Funded by J.P. Morgan, the Embassy of Finland and Nedbank, the three-part programme includes a six-month business boost phase to help companies strengthen and recover after the pandemic; an 18-month accelerator aimed at building the success of early-stage enterprises using the impact of circular economy activities; and a green tech-exchange, called Hloolo by Fetola, which provides access to green finance, markets and innovative technologies.
Fetola’s CEA has been a significant success across a wide range of performance metrics. The cohort of 46 small businesses that participated in the 18-month accelerator (of which more than half were led by women and /or youth and included 11 industry sectors) saw impressive growth, doubling their profitability, introducing a range of planet-friendly circularity principles and creating 249 new jobs.
Amongst the businesses that improved their financial performance was Vivacious Eco Vixen, a Cape Town-based zero-waste business which transforms discarded materials into unique homeware and gifting. The business has seen its revenue grow 1365% since completing the programme and won the owner, Natasha Pearce, the Nedbank’s Green Indaba Best Women Empowerment Award and The CEA2023 Award.
Another business to have benefitted from Fetola’s CEA is Electronic Cemetery E-Waste Management, a company that is pioneering responsible e-waste disposal, which grew its revenue by 54% and grew its labour force from two to 22 employees.
Wijnberg says that Fetola’s data clearly indicates that when small businesses implement circularity into their business models there is a beneficial impact on revenue growth. The benefits to the environment are also impressive: businesses on Fetola’s programme reported a 20% increase in the use of non-virgin materials in their production processes, a 16% reduction in waste to landfill and an increase in products designed to be reused, composted and recycled.
But, if the South African economy is to realise the full benefit of circular economies, government needs to get on board with supportive policies, regulations and incentives to encourage business take-up. This, says Wijnberg, needs to be combined with growing awareness of exactly what circularity is, providing education around how to implement circular activities and making finance available to companies to develop and scale circular models.
“Circular models have the potential to significantly boost South Africa’s economy while at the same time addressing many of our social and environmental challenges. It’s a low-hanging opportunity that would be a mistake to ignore,” concludes Wijnberg.
