Groundbreaking ReFED study systematically evaluated the food supply and consumption chain to identify scalable solutions to reduce food waste by 20 percent within a decade.
Nora Goldstein
BioCycle May 2016
Sarah Vared, Interim Director of ReFED and Principal at MissionPoint Partners, shares her key takeaways from the Roadmap development process and final report. Photo by Kenny Schick, ReFED 2016
MissionPoint Partners, an impact investment firm specializing in environmental sustainability, served as the project lead. Deloitte Consulting LLP and Resource Recycling Systems led the economic analysis and core technical drafting of the Roadmap. The ReFED Roadmap (refed.com) presents an achievable path to 20 percent reduction within a decade through 27 scalable solutions that would divert 13 million tons of food waste from landfills and on-farm losses. The solutions are divided into three general categories: Prevention, Recovery and Recycling. The Executive Summary of the Roadmap includes the three most scalable solutions for each category:
Prevention: Standardized date labeling; Consumer education campaigns; and Waste tracking and analytics
Recovery: Donation tax incentives; Standardized donation regulation; and Donation matching software
Recycling: Centralized composting; Centralized anaerobic digestion; and Water resource recovery facilities with anaerobic digestion
Shortly after the ReFED Roadmap was released, BioCycle asked Sarah Vared, Interim Director of ReFED and Principal at MissionPoint Partners, about some of her key takeaways from the Roadmap development process and final report. A more comprehensive article about the ReFED Roadmap findings and strategies will be in the next issue of BioCycle.
BioCycle: What were the one or two most shocking statistics uncovered during the ReFED Roadmap research?
Vared: The Roadmap estimates that it will cost $18 billion over a decade, or roughly $2 billion annually, to reduce food waste by 20 percent. If you consider that the economic value of all the food we waste is equivalent to $218 billion annually, we only need to invest one percent of that – or $2 billion annually — to drive a 20 percent reduction in food waste. And this will ultimately unlock $100 billion in savings over a decade — over a 5x return of the investment.
BioCycle: The report uses the phrase “unlock capital” to discuss how to fund business innovation and organics recycling infrastructure outlined in the ReFED Roadmap. What has to be brought to the table to unlock capital to fund solutions on the Roadmap?
Vared: Food waste encompasses a diverse set of investment opportunities that have been on the fringe of the sector. A number of venture capital and project finance investments have funded opportunities in the composting, anaerobic digestion and food packaging sectors. More recently, innovators in waste tracking and analytics, donation matching software, and distributed recycling have also attracted risk capital.
But to date, these investments have been categorized as one-off or niche, and not combined under a broader food waste umbrella.
BioCycle: What are key strategies for unlocking additional investment dollars?
Vared: Here are three:
- Educating food businesses and cities on the benefits of adopting food waste solutions will result in a customer market pull for new products and services that will attract new private and corporate investors to invest in bringing these innovations to market.
- By demonstrating the massive social and environmental benefits of food waste solutions, we expect a major increase in funding from foundations.
- We have identified a $100 to $200 million per year gap of “catalytic capital,” or flexible investments that can de-risk new technologies and overcome key project bottlenecks. This catalytic capital is expected to prove that there are attractive risk-adjusted returns in this market, and entice a wave of additional investors.
BioCycle: What does de-risking look like for business opportunities identified in the Roadmap?
Vared: To unlock investment opportunities, capital needs to work together — impact and philanthropic capital is needed to support high-risk innovation investments, research and advocacy, consumer education, and to unlock critical system bottlenecks. These investments will enable market rate capital to enter the system more readily to scale infrastructure to recycle food waste and proven technologies to reduce food waste.
As an example, for recycling, generators need to separate out food scraps, haulers must be willing to pick up those scraps separately from traditional waste collection, and processors have to recycle those scraps into compost, energy or other products. The system won’t work if any one of those elements is missing or not operating at the same pace. Across the system there are a number of bottlenecks present, which include the high cost of capital for facilities, transportation and collection costs, roll-out of collection bins and education for businesses and consumers, and processing costs associated with contamination. Focusing capital on these bottlenecks — whether through low interest loans to reduce the cost of capital for a processor or to support high-risk innovation investments to increase the efficiency of collection and transportation — can de-risk other areas within the system for investment.
BioCycle: How technology-oriented do these companies and innovations need to be to attract capital?
Vared: Many different types of capital are available to innovators — ranging from venture capital to project finance to below-market capital available from foundations, impact investors and government incentive programs. The Roadmap estimated that of the $18 billion needed to fund food waste solutions, less than $1 billion is estimated to come from traditional private equity or venture capital funding. The largest sources are likely to be corporate investments and government tax subsidies.
BioCycle: A quote in the report states “almost $2 billion of potential profit is left on the table annually” by food businesses. How universally is that recognized by food businesses? Based on findings and solutions in the Roadmap, what strategies can be employed to make that universally recognized?
Vared: Several leading food businesses recognize that real profits are being left on the table, but there are just as many who today that do not. A first step strategy that can be employed is increasing measurement of food waste within companies. Following the adage, “what gets measured gets managed.” As food businesses start to separate out their food waste and quantify it, they see how much opportunity there is to reduce financial losses associated with it. Solutions like waste tracking and analytics and improved inventory management can be an important first step to take.
BioCycle: The Roadmap lays out four levers of action, listed below, to achieve 20 percent reduction in food waste in 10 years. Please sum up immediate action steps for each.
Vared: Immediate action steps include:
New financing to scale proven solutions: Focus on development of impact funds to further de-risk and unlock market-rate capital and further quantification of nonfinancial impacts to support more government funding.
Commonsense policy change: Develop recycling best practices for permitting, enforcement and incentives that can be implemented and maintained at the state and local level. Maintain and expand donation tax incentives to enable robust food recovery markets.
Adoption of emerging innovations: Focus on business model and technological innovations to develop new ways of sharing costs of implementation and benefits across the supply chain for food waste reduction.
Consumer and employee education: Expand consumer awareness campaigns to drive waste reductions in homes and give businesses a social license to reduce food waste. Drive employee education through new Food Waste Certifications and technical assistance. m
Phoenix’s Roadmap To Reduce Food Waste
We know how to throw out the trash. Many of us recycle. But most of us are still not using the right muscles to compost. It’s not difficult. But you have to do it right. Currently, the City of Phoenix sees 15 percent of its residential trash made up of food waste. ReFED’s recently launched “Roadmap to Reduce U.S. Food Waste” is just that: a roadmap we can all use to turn the tables on food waste. It can guide us all to create efficient ways to prevent wasted food, donate food and divert food waste to put us on track to achieve the nation’s 50 percent food waste reduction goal by 2030. And we’ve already been implementing some of the ReFED Roadmap’s suggested solutions here in Phoenix.
Food scraps and soiled paper are processed at the City of Phoenix’s pilot composting site. A full-scale facility is being constructed at one of the city’s transfer stations. Photo courtesy of City of Phoenix
Fast forward to today, and the second half of our two-year pilot program. Phoenix hosted the College Football Playoffs in January 2016 — another opportunity to demonstrate how our Roadmap can work. And it did. Almost 82 percent of event waste was kept out of our landfills, and we’re not slowing down. The city expanded the program to include two of our busiest city-run office buildings and one of our fire stations. There, we gather food scraps in lunch areas and send it for processing. One day soon, we hope to implement this program city-wide. To make that a reality, the city is building a massive composting facility at one of our transfer stations. When operational, staff will take the food they collect from our buildings and other businesses and residential areas to the city-owned facility so it can be repurposed for something greater.
So why are we doing this? As a city, we feel it is our obligation to lead the way in setting the right example. What is great about this endeavor is that it is very attainable if everyone does their small part. If, at the end of each meal, people think about what’s left on their plate, and dispose of it properly, then we will be successful. Imagine a world, where garbage bins are seldom seen — and mostly empty. Right now, these bins carry the heavy load of our waste. But slowly and surely, we can tip the scales so that our recycle bins and compost canisters are full of reusable waste — helping slow down the rate by which our landfills are filling up.
The city of Phoenix takes great pride in our Roadmap. Here in Phoenix, we are thinking big. Phoenix is on target to achieve a 40 percent waste diversion rate from landfills by 2020. I challenge other cities to do the same. We must treasure our trash. It is a valuable resource. Let’s think big, and make big changes. But we must do it together.
John Trujillo is Public Works Director for the city of Phoenix, Arizona. He serves on the ReFED Advisory Council. This write-up is based on a blog that appears at www.refed.com. — John Trujillo
Save The Food Campaign Unveiled
A snapshot from the powerful video created by SapientNitro as part of a new “Save The Food” campaign launched by The Ad Council and NRDC.
The campaign’s website, SaveTheFood.com, features interactive tools for consumers to learn about the consequences of wasted food and how to reduce their own food waste footprint.
Those small steps are featured at SaveTheFood.com, where consumers can learn more about the consequences of food waste and find resources on how to reduce the amount of food they waste themselves. This includes tips on making use of leftovers, properly storing different foods, and developing meal and shopping plans. “The new creative addresses a basic disconnect in our homes,” noted Gary Koepke, Chief Creative Officer for North America of SapientNitro. “No one likes to waste but the vast majority of Americans don’t think about food waste as a problem … Ultimately the campaign will help change our social norms and behaviors around food waste.”
