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Is it fair to blame Coca-Cola and big corporations for our waste crisis?

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Is it fair to blame Coca-Cola and big corporations for our waste crisis?

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When John Sauven, executive director at Greenpeace UK, heard a woman complain on the radio that supermarket croissants were cheaper to buy wrapped in plastic than paper, he was so startled he went straight to his local Co-op

"It was true," Sauven said at a recent Guardian roundtable discussion on the future of waste. "If I bought two croissants in a brown paper bag, it was 79p [each], and if I bought them in a big plastic container it was 63p [each]. And I just thought ... this is a complete failure of the system."

The failure, of course, goes far beyond croissants. From the 300,000 tonnes of clothing the UK sent to landfill last year to the 7m coffee cups we chuck out each day, the scale of our throwaway habits are startlingly clear.

So too are the impacts: images of bags and bottles washed up on beaches, or sea life tangled in plastic netting, give grim credence to the Ellen MacArthur Foundation's now familiar prediction that the oceans will contain more plastic than fish by 2050.

The role of business in addressing this crisis has become the subject of fierce debate in industry and policy circles. And that was clearly on show at a Guardian roundtable event, sponsored by recycling and resource management company Suez.

New business models needed

A key idea under discussion was the circular economy, a model that aims to keep resources in a perpetual, benign cycle, rather than send them to the dump after first use. While companies at the table, including Marks & Spencer and the Co-op, have publicly embraced the concept, Sauven argued that without greater ambition and more radical change from business, the circular economy risked becoming another buzzword.

"We need to make sure this doesn't just replace sustainability ... and that we keep creating words which don't actually mean very much in terms of substance," Sauven said. "What we're talking about is not just tinkering with the system, we're talking about a much more systemic shift."

A particular flashpoint for the roundtable was the release of a new packaging plan by Coca-Cola. The soft drinks giant has become emblematic of big business's contribution to the waste problem thanks in part to a high profile campaign by Greenpeace, which claims the company generates more than 100bn plastic bottles a year.

Coca-Cola has promised to up the recycled content of its bottles to 50% by 2020 and research the impact of deposit return schemes (DRS), where consumers are asked to pay a refundable deposit on cans or bottles. It has also launched a campaign "to encourage people to recycle and dissuade littering", said Nick Brown, head of sustainability at Coca-Cola European Partners.

"We know communication on recycling is really difficult, it tends to be quite factual ... there's a bit more we think can be done to change behaviour, around making more of an emotional connection and explaining the benefits of recycling."

For Carina Millstone, executive director at food waste campaign group Feedback, these pledges missed the true scope of the change needed to create a sustainable society. In fact, she argued, the resource-extractive, consumption-based business model of a global corporation such as Coca-Cola was fundamentally incompatible with the needs of the planet.

"The idea of driving public awareness, making it easier for people [to recycle], isn't going to cut it ... Coca-Cola will not exist if we achieve sustainability. That's the reality of it," she said.

New business models that promote longevity and durability of goods are needed instead, argued Millstone. Such a transformation would require a "re-regionalisation of economies", away from the low-cost globalised production model that has made it cheaper, for example, to buy a new pair of shoes than repair old ones, she said.

"Back in the day, we had cobblers all over the place. We don't any more ... because the big companies that dominate and create our way of life have figured out it's cheaper to manufacture shoes elsewhere, taking advantage of lax environmental regulation and poor resource use, and the relative cost of labour."

Local creativity

Millstone is not alone in seeing a "local, vibrant economy" as key to solving an integrated set of resource and social challenges. Already, the UK is dotted with repair cafes, which provide tools, materials and advice to locals wanting to fix anything from bicycles to crockery.

Sophie Unwin, founder of Remade in Edinburgh, a social enterprise that teaches repair skills and sells refurbished computers and furniture, is part of this movement. As well as keeping goods out of landfill, her business has created 10 jobs over the past three years, she said.

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The Library of Things lends goods to the community. It is one of a growing number of local schemes that promote a circular economy model. Photograph: Sebastian Wood

Meanwhile, Cat Fletcher, the Brighton-based director of online reuse network Freegle, has been working with artists and designers to turn hard-to-recycle goods such as office in-trays into new items like sunglasses and light fittings.

"There's a great opportunity with hyper-local creativity," said Fletcher. "It's happening all over the world. There's Precious Plastics who are making little machines, which you can literally have at home and reprocess your own plastic, and maybe turn it into fibre for a 3D printer, or mould it into pot plants.

"There's an entire mall in Sweden which only has second-hand, upcycled goods ... There is unlimited potential in what you can do. It's a matter of tapping into the existing people and helping them."

Calls for government action

But can this community approach drive change fast enough? David Palmer-Jones, chief executive of Suez UK, which processes around 9m tonnes of waste per year, was doubtful. "What we fail to recognise is the scale," he said. "Local initiatives are fantastic to show what can be done ... [But] to get scale and get speed of change we require government intervention."

While there were calls for the government to implement a compulsory, nationwide DRS, Iain Ferguson, environment manager at the Co-op, warned against clumsy, top-down solutions.

"Voluntary systems give you the opportunity to be flexible and innovative," he said. "Badly designed mandatory schemes shut that down". The correct approach would fuse the two and incorporate a system of rewards, he added.

For many around the table, better coordination at Westminster, where responsibility for waste falls between different departments, was essential. Phil Cumming, senior sustainability manager at M&S, pointed to Scotland - which has a dedicated agency, Zero Waste Scotland, to deliver the government's circular economy strategy - as a more effective example.

Rauno Raal, chief executive of the organisation that runs Estonia's hugely successful DRS, argued that his country also offered a useful lesson. Since 2005, Estonian customers have paid shops a deposit on a bottle of cola, for example, which they can reclaim as a discount on the next purchase if they return the empty bottle. Last year, 75% of cans and 87% of PET bottles were returned.

The scheme was only made possible, said Raal, by government action. "The discussion here is exactly the same as in Estonia 12 years ago. All the retailers were afraid, the producers were afraid ... everyone was fighting against the return scheme. The government asked all the producers and retailers to be at the table and said, very clearly, 'OK, you don't want a DRS, then we will do it as a governmental institution'."

But if the government is key, so too are citizens, added Raal, saying that personal values - inculcated by family and teachers - were vital to changing consumption patterns and conserving resources.

Adam Lusby, lecturer in circular economy implementation at the University of Exeter, disagreed. Consumers - and consumption - were the wrong target, he said. "We don't need to go on a big campaign to change people's behaviour, we just need to change how we design stuff."

That means better product design, but also a better designed economy, one which, as a first step, would tax non-renewable resources, such as the fossil fuels used to make plastic, rather than labour: "Instead of fighting over who does what, there are some good, healthy, macro economic decisions that can be made," Lusby said.

Roundtable attendees

Oliver Balch (chair), journalist and author

Piotr Barczak, policy officer on waste, European Environmental Bureau

Nick Brown, head of sustainability, Coca-Cola European Partners

Phil Cumming, senior sustainability manager, Marks & Spencer

Iain Ferguson, environment manager, the Co-op

Cat Fletcher, co-founder and media director, Freegle

Adam Lusby, lecturer in circular economy implementation, University of Exeter

Carina Millstone, executive director, Feedback

David Palmer-Jones, CEO, Suez recycling and recovery UK

Rauno Raal, CEO, Pandipakend (Estonia)

John Sauven, UK executive director, Greenpeace

Sophie Unwin, director, The Edinburgh Remakery

Ugo Vallauri, business development lead and co-founder, Re-start

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Is it fair to blame Coca-Cola and big corporations for our waste crisis?

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When John Sauven, executive director at Greenpeace UK, heard a woman complain on the radio that supermarket croissants were cheaper to buy wrapped in plastic than paper, he was so startled he went straight to his local Co-op "It was true," Sauven said at a recent Guardian roundtable discussion on the future of waste.

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As the economic spotlight shifts to developing markets, global companies need new ways to manage their strategies, people, costs, and risks

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As the economic spotlight shifts to developing markets, global companies need new ways to manage their strategies, people, costs, and risks

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As the economic spotlight shifts to developing markets, global companies need new ways to manage their strategies, people, costs, and risks.

Managing global organizations has been a business challenge for centuries. But the nature of the task is changing with the accelerating shift of economic activity from Europe and North America to markets in Africa, Asia, and Latin America. McKinsey Global Institute research suggests that 400 midsize emerging-market cities, many unfamiliar in the West, will generate nearly 40 percent of global growth over the next 15 years. The International Monetary Fund confirms that the ten fastest-growing economies during the years ahead will all be in emerging markets. Against this backdrop, continuing advances in information and communications technology have made possible new forms of international coordination within global companies and potential new ways for them to flourish in these fast-growing markets.

There are individual success stories. IBM expects to earn 30 percent of its revenues in emerging markets by 2015, up from 17 percent in 2009. At Unilever, emerging markets make up 56 percent of the business already. And Aditya Birla Group, a multinational conglomerate based in India, now has operations in 40 countries and earns more than half its revenue outside India.

But, overall, global organizations are struggling to adapt. A year ago, we uncovered a "globalization penalty": high-performing global companies consistently scored lower than more locally focused ones on several dimensions of organizational health. For example, the former were less effective at establishing a shared vision, encouraging innovation, executing "on the ground," and building relationships with governments and business partners. Equally arresting was evidence from colleagues in McKinsey's strategy practice showing that global companies headquartered in emerging markets have been growing faster than counterparts headquartered in developed ones, even when both are operating on "neutral turf": emerging markets where neither is based (see " Parsing the growth advantage of emerging-market companies ").

Over the past year, we've tried to understand more clearly the challenges facing global organizations, as well as approaches that are helping some to thrive. Our work has included surveys and structured interviews with more than 300 executives at 17 of the world's leading global organizations spanning a diverse range of sectors and geographies, a broader survey of more than 4,600 executives, and time spent working directly with the leaders of dozens of global organizations trying to address these issues.

Clearly, no single organizational model is best for all companies handling the realities of rapid growth in emerging markets and round-the-clock global communications. That's partly because the opportunities and challenges facing companies vary, depending on their business models. R&D-intensive companies, for example, are working to staff new research centers in the emerging world and to integrate them with existing operations. Firms focused on extracting natural resources are adapting to regulatory regimes that are evolving rapidly and sometimes becoming more interventionist. Consumer-oriented firms are facing sometimes-conflicting imperatives to tailor their businesses to local needs while maintaining consistent global processes.

Another reason no single model fits all global companies is that their individual histories are so different. Those that have grown organically often operate relatively consistently across countries but find it hard to adjust their products and services to local needs, given their fairly standardized business models. Companies that have mainly grown through M&A, in contrast, may find it easier to tailor operations to local markets but harder to integrate their various parts so they can achieve the potential of scale and scope and align a dispersed workforce behind a single set of strategies and values.

Although individual companies are necessarily responding differently to the new opportunities abroad, our work suggests that most face a common set of four tensions in managing strategy, people, costs, and risk on a global scale. The importance of each of these four tensions will vary from company to company, depending on its particular operating model, history, and global footprint. (For more on the implications of these uneven globalization efforts, see " Developing global leaders.") Taking stock of the status of all four tensions can be a useful starting point for a senior-management team aiming to boost an organization's global performance.

Strategic confidence and stretch

Being global brings clear strategic benefits: the ability to access new customer markets, new suppliers, and new partners. These immediate benefits can also create secondary ones. Building a customer base in a new market, for example, provides familiarity and relationships that may enable additional investments-say, in a research center.

But being global also brings strategic challenges. Many companies find it increasingly difficult to be locally flexible and adaptable as they broaden their global footprint. In particular, processes for developing strategy and allocating resources can struggle to cope with the increasing diversity of markets, customers, and channels. These issues were clear in our research: fewer than 40 percent of the 300 senior executives at global companies we interviewed and surveyed believed that their employers were better than local competitors at understanding the operating environment and customers' needs. And barely half of the respondents to our broader survey thought that their companies communicated strategy clearly to the workforce in all markets where they operate.

People as an asset and a challenge

Many of the executives we interviewed believed strongly that the vast reserves of skills, knowledge, and experience within the global workforce of their companies represented an invaluable asset. But making the most of that asset is difficult: for example, few surveyed executives felt that their companies were good at transferring lessons learned in one emerging market to another.

At the same time, many companies find deploying and developing talent in emerging markets to be a major challenge. Barely half the executives at the 17 global companies we studied in depth thought they were effective at tailoring recruiting, retention, training, and development processes for different geographies. An emerging-market leader in one global company told us that "our current process favors candidates who have been to a US school, understand the US culture, and can conduct themselves effectively on a call with head office in the middle of the night. The process is not designed to select for people who understand our market."

One of our recent surveys showed how hard it is to develop talent for emerging markets at a pace that matches their expected growth. Executives reported that just 2 percent of their top 200 employees were located in Asian emerging markets that would, in the years ahead, account for more than one-third of total sales. Complicating matters is the fact that local highfliers in some key markets increasingly prefer to work for local employers (see " How multinationals can attract the talent they need "). Global companies are conscious of this change. "Local competitors' brands are now stronger, and they can offer more senior roles in the home market," noted one multinational executive we interviewed.

Scale and scope benefits, complexity costs

Large global companies still enjoy economic leverage from being able to invest in shared infrastructure ranging from R&D centers to procurement functions. Economies of scale in shared services also are significant, though no longer uniquely available to global companies, as even very local ones can outsource business services and manufacturing and avail themselves of cloud-based computing.

But as global companies grow bigger and more diverse, complexity costs inevitably rise. Efforts to standardize the common elements of essential functions, such as sales or legal services, can clash with local needs. And emerging markets complicate matters, as operations located there sometimes chafe at the costs they must bear as part of a group centered in the developed world: their share of the expense of distant (and perhaps not visibly helpful) corporate and regional centers, the cost of complying with global standards and of coordinating managers across far-flung geographies, and the loss of market agility imposed by adhering to rigid global processes.

Risk diversification and the loss of familiarity

A global company benefits from a geographically diverse business portfolio that provides a natural hedge against the volatility of local growth, country risk, and currency risk. But pursuing so many emerging-market opportunities is taking global companies deep into areas with unfamiliar risks that many find difficult to evaluate. Less than half of the respondents to our 2011 survey thought these organizations had the right risk-management infrastructure and skills to support the global scale and diversity of their operations.

Furthermore, globally standard, exhaustive risk-management processes may not be the best way to deal with risk in markets where global organizations must move fast to lock in early opportunities. One executive in an emerging-market outpost of a global company told us "a mind-set that 'this is the way that we do things around here' is very strongly embedded in our risk process. When combined with the fact that the organization does not fully understand emerging markets, it means that our risk process might reject opportunities that [the global] CEO would approve."

Understanding these tensions is just a starting point. Capturing the benefits and mitigating the challenges associated with each will require global companies to explore new ways of organizing and operating.

About the author(s)

Martin Dewhurst is a director in McKinsey's London office, where Suzanne Heywood is a principal; Jon Harris is a director in the New York office.

The authors would like to acknowledge the contributions of Kate Aquila and Roni Katz to the development of this article.

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As the economic spotlight shifts to developing markets, global companies need new ways to manage their strategies, people, costs, and risks. Managing global organizations has been a business challenge for centuries. But the nature of the task is changing with the accelerating shift of economic activity from Europe and North America to markets in Africa, Asia, and Latin America.

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Millions around the globe may have taken to the streets in recent years to protest against the impact of globalisation on their jobs and communities - but this backlash is only likely to grow as globalisation itself becomes more disruptive.

The stark warning comes from Richard Baldwin, president of the Centre for Economic Policy Research think-tank, who has been studying global trade for the past 30 years.

Technological advances could now mean white-collar, office-based workers and professionals are at risk of losing their jobs, Prof Baldwin argues.

In the US, voter anger with globalisation may have led to Donald Trump's election victory, but those who voted for him could be disappointed as his aim of bringing back jobs is unlikely to work, says Prof Baldwin, who also worked as an economist under President George HW Bush.

Protectionist trade barriers won't work in the 21st Century, he says. "Knowledge crossing borders in massive amounts [is the] big new disruptive thing."

It's going to help people in Africa and Asia compete more effectively with people in the West, as communication advances mean workers in the developing world will be able to control robots to do jobs in Europe and the US at lower cost, he says.

Virtual migration

Developing world labour costs can be a tenth of what they are in the West, says Prof Baldwin.

"They can't get here to take the jobs but technology will soon allow virtual migration, thanks to telerobotics and telepresence."

Ever-faster internet speeds becoming globally more widely available, coupled with the rapidly falling prices of robots will allow workers, for example in the Philippines or China, to remotely provide services to a country like the UK - where the sector accounts for about 80% of the economy.

"What it will do is unbundle our jobs and change the nature of our occupation. Some of the things you do absolutely require your judgement - but parts of your job could be off-shored, just as some stages in a factory can be off-shored.

"All you need is more computing power, more transmitting power and cheaper robots - and all that is happening."

Security guards in US shopping malls could be replaced by robots controlled by security personnel based in Peru, and hotel cleaners in Europe could be replaced by robots driven by staff based in the Philippines, he argues in his book The Great Convergence.

Robots rise

The use of robots has grown exponentially since the mid-20th Century.

A typical industrial robot can cost about £4 an hour to operate, compared to average total European labour costs of about £40 an hour - or £9 an hour in China. And robots are getting cheaper to buy and are increasingly able to do more complex tasks.

This means the increased use of robots is also threatening millions of jobs in developing countries, says the United Nations Conference on Trade and Development (Unctad), as well as in developed economies.

And it's not just in factories; the worldwide number of domestic household robots will rise to 31 million between 2016 and 2019, says the International Federation of Robotics (IFR), with sales of robots for cleaning floors, mowing lawns, and cleaning swimming pools forecast to grow to about $13bn (£10.3bn) in this period.

In the 19th Century, the first wave of the industrial revolution triggered an upsurge in global trade. Steam power, the end of the Napoleonic wars and the subsequent era of peace cut the costs of moving goods internationally.

Global wealth became increasingly concentrated among just a few nations; the G7 group - the US, Germany, Japan, France, the UK, Canada and Italy - saw their share of the world's wealth rise significantly.

But from the 1990s a second wave of globalisation kicked in, with the rise of information and communications technology. There's been a dramatic change of gear, and "a century's worth of rich nations' rise has been reversed in just two decades," says Prof Baldwin.

Old-style globalisation "worked on a calendar that ticked year by year" whereas the current wave of globalisation is being driven by IT which is changing and disrupting economies and societies with increasing rapidity, he says.

Political backlash

All of this has created a backlash, especially in developed economies, as many voters say they are losing out or seeing little of the benefits that globalisation supposedly brings.

Prof Baldwin says protectionist policies, such as those of Donald Trump, are ultimately counterproductive. If firms become inefficient by being forced to move jobs back to the US, then ultimately they will lose their business to international competitors.

"People are so angry they are doing things that are not in their own interest.

"Cures are being sold which are not related to the problem."

He points out that the backlash is not the same in every single country. It often depends on how governments deal with workers who may be displaced by technology.

"For instance, in Japan they take care of their workers, and there really isn't an anti-globalisation feeling there," he says - unlike in the UK and the US.

As a consequence, even businesses that are benefiting from greater automation are increasingly sensitive about the potentially negative social and political consequences.

Similarly, in Europe the bosses of both Deutsche Telekom and Siemens have advocated paying a basic income to workers replaced by technology.

We may see a move to protectionism as countries try to preserve jobs within their economies, but this is unlikely to work in the long term, says Prof Baldwin.

Balancing act

The trick is to accept "21st Century reality", he says, and the fact that many jobs simply aren't going to come back.

Governments need to pay more attention to social policy, says Prof Baldwin. "In the post-war period of globalisation we liberalised trade but at the same time we expanded social welfare - instituted low-cost education and retraining for workers.

"In essence there was a set of complementary policies that reassured workers that they would have a good chance of taking advantage of globalisation."

The challenges all this is throwing up for governments are many, but Prof Baldwin says it should be possible to develop policies that embrace globalisation - and give workers displaced by it the support they need.
Follow Tim Bowler on Twitter @timbowlerbbc

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Millions around the globe may have taken to the streets in recent years to protest against the impact of globalisation on their jobs and communities - but this backlash is only likely to grow as globalisation itself becomes more disruptive.