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The circular economy: beyond lip service to sustainability

Author: ICAEW Insights

Published: 11 Oct 2021

Companies looking to control their costs and embrace a circular economy business model would do well to follow the example of sugar producer AB Sugar, which has transformed its business by turning waste products from its manufacturing process into a significant revenue stream.

Gary Punter, former CTO of AB Sugar will tell delegates at a forthcoming ICAEW event about the company’s radical transformation from a sugar producer under pressure to take on growing competition with South America to the largest grower of tomatoes and medicinal cannabis in the UK, as well as powering more than 20,000 homes and making animal foods – all done by establishing downstream revenue streams from sugar waste products. 

Punter, who led the business team tasked with exploring AB Sugar’s new business opportunities and is now a Visiting Fellow at Cambridge University’s Institute for Manufacturing, told ICAEW Insights: “When you’re in a commodity industry like sugar, you have to look after your costs. And when you’re based in Western Europe that’s quite difficult in a large-scale manufacturing unit.” 

`In hindsight, it wasn’t about saving the planet; it was about saving the business’

Pressure from cheaper economies prompted the company’s journey into diversification. “Our approach was about making our business more resilient and cost-efficient,” Punter explains. “Our initial objective wasn’t really to become a zero-waste business – in hindsight, it wasn’t about saving the planet; it was about saving the business.”

AB Sugar’s Norfolk sugar plant processes three to four million tonnes of sugar beet a year. However, with sugar representing just 15% of the raw material, the business has successfully transformed manufacturing waste into a diverse range of revenue streams that take the business way beyond its original food manufacturing roots. “Now the only waste that goes off the site is canteen waste!”

The company’s initial foray into the circular economy led it to produce animal feed – it is one of the UK’s largest producers, churning out around 150,000 tonnes a year - and sell topsoil and Norfolk flint as byproducts of the manufacturing process. “That was the start of the journey,” Punter explains.

Since then, the company has built an onsite power station that generates power from the steam resulting from the manufacturing process, that not only generates the power and heat needed by the factory but generates enough surplus electricity to power more than 20,000 homes, exporting around 50Mw back to the grid. 

The combined heat and water and power (CHP) plant also pipes waste heat and carbon dioxide to an adjacent horticulture business, which until 2016 provided the perfect growing conditions for tomatoes under 11ha of glass. “Quite soon, we became the biggest tomato supplier in the UK.” More recently it has swapped tomatoes for medicinal cannabis, devoting its greenhouses – all 23 football pitches worth – to growing the plants used to produce epilepsy treatment for children.

That’s not all. AB Sugar is also the world’s largest producer of betaine, a biochemical extracted from molasses and commonly used as a frothing agent in shampoo and as an osmotic regulator in fish farming. It also produces biofuel now available on petrol station forecourts, a business opportunity that required lobbying for industry-wide acceptance.

‘Every step of the way had to be financially justified’

The financial discipline underpinning the broad diversity of revenue streams is key to their success, Punter says. “Every step of the way had to be financially justified. We had investment rules and they all paid off and as a result this is now the lowest-cost producer of sugar in the world.” 

But the benefits have the potential to go much further than reduced costs, he adds. “You can invest in sustainability and make money and become more resilient as a business, but you’ve got to think three dimensionally about your business because you have to partner with people from other sectors to make it happen. You’ve got to invest in understanding the risks – but that’s the nature of business. If you’re not going to do it, your competitors are probably going to do it.”

Punter’s advice for those looking to emulate AB Sugar’s success is simple: “Look at the resources you’re not making the most of. Your business shape changes.” And partnering is key: “You’ve got to make it safe so you have to look to people in the sectors you’re looking to move into to tell you what the pitfalls and opportunities are,” Punter adds. 

But as the AB Sugar example illustrates, it is possible to go beyond lip service to sustainability and turbocharge your business. “As long as you align sustainability to your core values you can make money out of it,” Punter says.

Gary Punter will be speaking at an ICAEW webinar aimed at members in the manufacturing community on putting the sustainability rhetoric into practice and making money out of manufacturing waste. To find out more and to book your place, click here.

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