Above: Team members from McKinsey.org, Almado, City of Buenos Aires, and Barrio 31 cooperatives work together to sort waste samples for a baseline assessment
Our Buenos Aires pilot of our Rethinking Recycling initiative is the cover story of the March 2019 edition of Está Pasando Acá (“It’s Happening Here”), the magazine of the Social and Urban Integration Secretariat of the City of Buenos Aires. The city government is our partner in the project.
The article celebrates the initial progress the pilot project has made since its launch in Buenos Aires’ Barrio 31 in late 2018. It profiles the two local cooperatives that are going door to door every day in the barrio to educate neighbors on the value of recycling—and collect a wide variety of recyclables.
It quotes one cooperative member, Héctor Javier Sanabria, saying: “People are learning a lot, there’s less trash, and the barrio is getting cleaner. People who didn’t know about recycling are now joining the effort and starting to recycle.”
The article notes that, in the short time since its launch, the project has collected more than two metric tons of glass, and nearly 2.5 tons of paper and cardboard—as well as tins, plastic, and nylon.
Alongside the work we recently launched in Indonesia, we’re also kicking off efforts in Argentina to develop and test solutions that will put all waste to productive use for the benefit of communities and the environment.
“Latin America is an important region for McKinsey.org to work in and learn from,” says Shannon Bouton, Global Executive Director of Sustainable Communities at McKinsey.org. “Waste pickers here have organized into labor cooperatives that now play an official, vital role in the recycling value chain. This is very much in line with our approach of building on the knowledge and entrepreneurial spirit of recycling workers, especially those with roots in the informal sector.”
Our initial focus in Argentina is Barrio 31, an iconic informal settlement of about 40,000 people in the heart of Buenos Aires. Like many other informal settlements around the world, it’s struggling with waste management. McKinsey.org, together with our partners, is trying to demonstrate that a community-scale solution for recycling in Barrio 31 can be economically beneficial, as well as environmentally and socially responsible. We hope solutions developed here can be scaled across the City of Buenos Aires and beyond.
The city is three years into an ambitious effort to transform the settlement, keeping the community in place while providing quality housing, formal infrastructure and services, and drawing businesses and city attractions that complement the Barrio’s cultural vibrancy.
“Our partnership with McKinsey.org is an exciting step forward in our dream to transform Barrio 31 into the most sustainable, vibrant neighborhood in the city,” says Diego Fernandez, Secretary of the Social and Urban Integration Secretariat of the City of Buenos Aires. “Instead of sending the Barrio’s waste to landfills or allowing it to pollute our environment, causing health and safety issues for our families and children, we will harness the value in the waste for the benefit of the community.
“We can create new recycling enterprises and build a beautiful, clean neighborhood that is a source of pride and an attraction for visitors,” Diego continues. “And we will showcase how engaging our neighbors and waste workers as true co-creators can produce the most creative, enduring solutions.”
In Buenos Aires we’re delighted to be partnering with Almado, an Argentina-based consultancy focused on social impact and a social enterprise.
“We look for solutions that deliver economic, social and environmental return on investment,” explains Alejandro Preusche, Managing Director of Almado. “We’re pleased to be able to bring our experience and relationships, both from working with informal settlement communities as well as with the private sector and impact investors, to this collaboration.”
Alejandro continues: “We hear from residents of Barrio 31 that they worry about their children playing in and around waste in the streets and they see the regular collection service as vital to the quality of their daily lives. “Our hope is that McKinsey.org’s holistic approach to recycling can make a real difference here in Argentina.”
Working together, McKinsey.org, Almado and the City of Buenos Aires have launched a 400-household pilot in Barrio 31, which is educating residents on recycling both dry and organic waste. “Early results are promising,” says Lucas Gastaldi Asensio, Regional Manager of McKinsey.org for Latin America. “In the pilot area, 15 percent of total waste is already being diverted from landfills after just a couple of weeks—comparable to many communities in the United States. Our goal is to achieve 70 percent diversion from landfills.”
Lucas adds: “In close collaboration with city officials, two local cooperatives have quickly set up an efficient processing facility in the Barrio—and they are already collecting and selling recyclables. The change is attracting attention across the Barrio, with other cooperatives coming forward and asking to join the program.”
The initial results of our pilot show that rapid progress is possible in putting recycling at the heart of the social and economic life of communities such as Barrio 31. Our hope is that by collaborating with other cooperatives, city governments, and social enterprises, we can quickly scale solutions across and beyond Argentina.
Writing for GreenBiz, McKinsey.org’s Shannon Bouton and Cynthia Shih make the case that reducing price volatility for recycled plastic could lead to a big increase in recycling activity.
Amid public concern about the global plastic-pollution crisis, companies have begun stepping up their efforts to do more with recycled plastic. But plastic has proven devilishly difficult to recover and process for reuse. A big reason why: the volatility of the recycled-plastic market makes it hard for recycling companies to scale up or even to stay in business. Until that changes, companies won’t be able to source enough recycled plastic to make a dent in the world’s plastic-pollution crisis.
The first step toward unlocking investment in new recycling capacity should be to reduce the volatility of supply and demand. And the volatility-reducing mechanisms that have succeeded in other commodity markets could provide models for plastics recycling. Subsidized insurance, for example, can protect small producers from supply-side and market shocks. Cost-plus contracts between suppliers and customers can keep prices stable at a level that ensures suppliers can pay fair wages, meet high social and environmental standards, while at the same time protecting customers from price shocks. And government-imposed price floors could help limit price volatility, and thereby provide economic security for small companies.
Volatility-reducing mechanisms alone will not end plastic pollution. But they can stimulate investment in the programs and infrastructure required to recapture and recycle substantial amounts of plastic. Whatever the approach, the goal should be a stable market that fosters investment in recycling collection, sorting, and processing. Without more recycling, the world is unlikely to solve its plastic-waste problem, or indeed its waste problem as a whole.
Based on our research across more than 20 countries, McKinsey.org is working to find solutions that will put all waste to productive use, for the benefit of communities and the environment.
Our aim is to demonstrate that a community-scale solution that captures the full value of all waste streams and addresses all stages of the waste and recycling lifecycle—from the communities who generate the waste to the companies committed to buying recycled materials—can be economically self-sufficient, environmentally and socially responsible.
“Today only a small proportion of waste is recovered for productive use. Recycling is stuck in a vicious cycle of unreliable demand and poor supply,” explains Shannon Bouton, McKinsey.org’s Global Execute Director, Sustainable Communities.
“In Indonesia, plastics, which make up 75% of marine debris globally, pose a threat to ocean ecosystems and the important tourism industry,” Shannon continues. “By working with PRAISE, we’re hoping to rethink how a recycling system can work effectively in Bali, to turn the tide on the waste challenge that communities face in Bali and beyond.”
PRAISE, the Packaging and Recycling Association for Indonesia Sustainable Environment, established its Bali BERSIH (“Clean Bali”) initiative to increase waste collection and minimize leakage into the oceans, targeting Bali’s coastal areas.
Our work together will include optimizing waste collection, for example by educating households about waste separation, improving the efficiency of TPS3R sorting facilities, through training and incentivization, and securing demand, by working with companies who have committed to use recycled materials.
We will draw on best practices from across Indonesia and the world, including Bali’s many success stories, and incorporate learnings into a full-systems approach. Both organizations hold core a belief that partnership and collaboration, including with local communities, government, nonprofits and companies, will be critical to success.
“We’re delighted to be building a partnership with McKinsey.org to improve capacity in waste management through studies, education, and wider stakeholder collaboration,” says Sinta Kaniawati, President of PRAISE. “We believe this collaboration with McKinsey.org will multiply the impact of our initiative, Bali BERSIH, to help to solve the waste issue”.
The first, pilot project, Desa Kedas (“Clean Village/Community”), will be launched in one desa in the city of Denpasar, with the intention that this will be scaled across the city, Southern Bali and beyond.
McKinsey.org is a new nonprofit, founded by McKinsey & Company, to have lasting and substantial impact on complex social challenges.
It will be an incubator for new, scalable solutions to social issues that works by applying McKinsey’s capabilities and by partnering with leaders from the private-, public- and social-sectors.
“Today we’re embarking on a journey to build a new organization, and starting to explore the areas where we think we can make a real difference on critical global issues, like the sustainability challenges facing cities around the world, which are putting communities’ health and livelihoods—and our environment—at risk,” explains Mona Mourshed, McKinsey.org’s CEO.
Mona is a Senior Partner and Head of Global Social Responsibility at McKinsey & Company. She is also the CEO of Generation, a nonprofit founded by McKinsey in 2014 to tackle global youth unemployment. McKinsey.org, which takes on the work of McKinsey Social Initiative, will become a cornerstone of McKinsey’s long-standing commitment to social impact and its aspiration to help build better societies.
Helping sustainable cities tackle their waste challenge
As the number of people living in urban areas continues to increase, McKinsey.org is exploring how it can help to address the sustainability challenges this is posing for cities across the world. Cities generate over 70% of the world’s carbon emissions and 10 billion tons of solid waste. It is often the most impoverished urban communities that are worst affected by the effects of climate change and air, water and land pollution.
“We’re looking first at how cities can recycle their waste, particularly plastics and organic materials, like food or garden waste,” explains Shannon Bouton, who is leading McKinsey.org’s work on sustainable cities. “The world generates 3.5 million tons of solid waste every day, a figure that has increased 10 times over the last century and is growing rapidly. Cities around the world are struggling with overflowing landfills and the health and environmental impacts of uncollected, untreated waste.”
Organic and plastic waste can be recycled but, unmanaged, it has harmful consequences for the environment, public health and the economy. Organic waste in landfill is a major source of methane, a greenhouse gas 86 time more potent than carbon dioxide. Plastics often end up in the world’s oceans or release toxic chemicals when burned.
The devastating health effects caused by these toxins can be avoided. Recycling recognizes the value inherent in these materials, puts them back into the supply chain, avoids both global and local pollution, and creates formal employment for some of the most disenfranchised members of society.
McKinsey.org will work with NGOs, governments and businesses to help develop best practices that are already emerging, to prove the economic, environmental and social benefits of recycling, so that they can be scaled across the world, improving the lives of citizens exposed to the effects of air pollution and climate change.
More than a decade ago, McKinsey & Company published its revolutionary greenhouse gas cost curve. Since then, the firm has continued to help businesses, governments and not-for-profit organizations to address the sustainability and resource productivity challenges they face.
Shannon Bouton, who as COO of McKinsey Center for Business and Environment (MCBE) led research that sought to help global leaders make better decisions on sustainability questions, will drive McKinsey.org’s work to help build sustainable communities, looking first at how cities can use recycling to better manage waste.
“As cities continue to grow, so do the sustainability challenges they face,” says Shannon. “From MCBE’s research, we know there are leaders who want to act and we know there are promising ideas that could be part of the solution. What we hope to do at McKinsey.org is build powerful partnerships that can identify solutions that can be scaled and achieve the triple bottom line goal of being good for people, the environment, and have a positive return on investment.”
McKinsey & Company’s recent research has included:
The new plastics economy: Rethinking the future of plastics, published in January 2016, with MCBE’s support, by the Ellen MacArthur Foundation, a leading UK-based nonprofit which advances thinking on creating an economy that is restorative and regenerative by design—the so-called Circular Economy.