In a special feature for create digital, Richard Kirkman, CEO and Managing Director of Veolia ANZ, shares how the company is embracing ecological transformation to do better for the environment.
There has long been a business myth that corporate profit and the needs of the environment are mutually exclusive.
Business is supposedly the domain of pragmatists focused on revenue growth, whereas anyone who focuses on the environment is seen as an idealistic dreamer.
Yet I lead the Australia and New Zealand region of Veolia – a 170-year-old global conglomerate that works in the waste, water and energy sectors, employing more than 6,500 people in Australia alone – that completely upends that belief.
Although Veolia made a global profit of more than AUD $10 billion last year, front and centre of its work is the ideal of ecological transformation. That phrase is shorthand for our desire to adapt, improve and prioritise sustainable patterns of production and consumption, and to re-balance the needs of human progress against the protection and replenishment of the environment.
Business transformation
The company’s income has always derived from working in areas of vital but finite resources – of limited water, limited space for waste, and limited energy opportunities. While we are a different business now compared to our origins 170 years ago, our mission to provide fair access to natural resources has never changed.
For example, Veolia has saved the University of the Sunshine Coast $100 million in energy bills, 100,000 t of carbon emissions and 802 ML of potable water over 25 years, all while improving key elements of its infrastructure. It was a win-win for the university and the environment.
Many other entities are also moving to sustainable alternatives. The recognition of the dangers of climate change, and the realisation that the world only has limited resources, has percolated into public conversation. It has become a key election issue, and flowed onto business as ambitious government targets, legislation and costs for inaction have been put in place.
Today, the old idealism of environmentalists comes with a pragmatic business sting in the tail. You need to look no further than ASX climate reporting, greenwashing prosecutions, strong emissions targets, and the growing consumer expectation to see that the good ol’ “greed is good” days are a relic of the past.
This commercial impetus is beneficial for businesses working to make our communities, economies and environments more sustainable. However, there is also an expectation that the private sector alone must carry the investment load and any risks to innovation that such a shift entails.
This suggests businesses such as ours will have to invest in newer and increasingly risky technologies without the appropriate policy levers in place to facilitate that kind of change. Industry needs certainty and policy consistency to invest. Currently, that isn’t the case.
New targets
Australia is already behind the game in terms of investing in proven assets, particularly in the waste sector. Right now, to meet circular economy waste targets, we will need more alternative treatment and recovery facilities – such as soil washing facilities – and more recycling facilities.
If we don’t make these investments, despite our best intentions we will be stuck with less recycling and treatment, and more landfill. That is not where we want to be.
The capacity to make such investments is limited by available capital. In every business investment there are three key points to consider: revenue generated, the return on investment hurdle rate, and the time to pay back. So, logically, the majority of capital, like any business in the private sector, will go to investments with low hurdles, and tried and tested returns. This is particularly true where Veolia can increase the scale of existing solutions that are already showing a return.
How quickly Veolia grows into the circular economy will depend on government policy and how it affects business. Policy, profit and a sustainable environment must reach an accord.
We must acknowledge that Australia has been slow to start along the sustainability trail compared to many other nations – but this also gives us an advantage. Today, there is a wide range of proven technology operating at a commercial scale in other countries that we can implement here.
Energy from waste (EfW) technology, which has been used for decades in Europe, is a prime example of this. Veolia operates more than 65 EfW facilities in Europe, and these will be vital to meet the circular economy targets proposed by governments across Australia.
This year, Veolia will see two plants open in Western Australia; another has been approved in Victoria and a fourth is in the planning stages in NSW. However, this promising start also exposes the hurdles to overcome.
Australia has shortages in its skilled workforce to operate these facilities, and each state has different regulatory hurdles that could slow or potentially halt the development of EfW. Regulatory inconsistency across Australia is a very real obstacle for the rapid transition to a circular economy.
Walking the line
At the same time, innovation to bring new sustainable technologies to an industrial scale continues apace. At Veolia, we have run trials on black soldier fly larvae converting food waste into compost and high protein animal feed; developed new ways to shred and recycle wind turbines; and much more. This year, we will begin a global campaign, Green-Up, which has as one of its key pillars higher investment in research and development.
If we are to succeed with these innovations and build the necessary infrastructure to create a circular economy, we need a whole-of-economy approach; no business can do this alone. We require legislative certainty to know where to invest, and government support to reduce the risk of investment.
And we need this support today, because the delays of past decades have come home to roost. Where we once had time, now we have very little.
Veolia has always tried to walk the line of sustainability and profit. Corporate profit and a sustainable future now live on the same spreadsheet. The ecological transformation to come is an economic one too.