Editor's Note: This story is part one in a two-part series that explores the use of blockchain to enhance Brazil's recycling infrastructure. Part one details the current state of recycling in the country and the partnership that was formed. Part two explains the technology and how it will be scaled.
“A circular economy requires partnerships and cooperation all along the value chains,” states Wilhelm Myrer, Empower founder and CEO.
The statement rings true as companies around the globe collaborate on projects to enhance waste infrastructure in countries where such systems are lacking, such as Brazil. The country tops all Latin American countries in trash generation, accounting for 40 percent of the total trash generated, according to UN Environment.
A technology-driven partnership between Norway-based Empower and Brazil-based iWrc to enhance Brazil's recycling outlook couldn't come at a more crucial time as the country ranks 108th out of 137 economies in terms of infrastructure quality, according to the Global Competitiveness Index of the World Economic Forum.
Empower's blockchain-powered tracking has been working to increase the value of waste plastic in "the world's underprivileged populations." Along with iWrc's online marketplace platform, the companies are working to "turn waste into socially-recovered
resources that will guarantee a people-first circular economy."
The partnership in Brazil aims to enhance the capabilities of businesses and organizations that are searching for socially-responsible recycled materials to create a proven impact and provide transparency in supply chains. In other words: incentivizing waste collection.
Waste360 connected with both of the organizations to learn more about how collaboration utilizing blockchain technology is changing waste systems in South America. iWrc President Michael Maggio and Empower's Myrer coordinated with each other to provide insight.
Waste360: What does the waste infrastructure look like in South America and more specifically Brazil?
The infrastructure in Brazil has varying levels of technology, ranging from manual to semi-automatic, but relies heavily on the waste collectors of the informal sector. Approximately 20 percent of the collection and sorting is done within informal sector cooperatives, with the other 80 percent of the collection is done by autonomous waste collectors that are not part of cooperatives and live in and around the recyclables that they collect and sell as part of their livelihood. The typical cooperative, where the partnership between iWrc and Empower will begin, are semi-automatic facilities with simple conveyors and balers. Approximately between 20-40 cooperados operate the facility and sort various materials, PET, HDPE, LDPE, PP, E-waste, Aluminum, glass, and other materials which are sorted and bailed before being sold to an aggregator or processor who converts it into the raw material that can be used in both products and packaging. Brazil’s legal and regulatory framework provides a sound basis for comprehensive waste management.
The 2010 National Solid Waste Policy (PNRS) set principles, objectives, instruments and guidelines on solid waste management, including hazardous waste, in line with the relevant Recommendations. It introduced concepts little known in Brazil before, such as collection of recyclable materials, environmentally appropriate final disposal of solid waste, integrated solid waste management, and extended producer responsibility (referred to as “reverse logistics” in Brazil).
Waste360: How will blockchain incentivize waste collection and change Brazil’s recycling infrastructure?
A third-party blockchain solution like the one provided by Empower can encourage broader participation of all the participants in the waste value chain, from waste collectors to consumers, which can then provide the means to keep track of the entire route the waste takes on its way to the retail store. This valuable data can increase the value of the waste and encourage more people to play a role in this Brazil’s recycling infrastructure.
The National Solid Waste Policy places the responsibility on the producer to develop the recycling infrastructure and maintain it. Global goals and commitments push the producers to use the materials that come from that infrastructure. Because the informal sector is a primary player in the infrastructure it is difficult to engage them without assurance, the risk is often too high.
There are many issues that are present in the informal sector globally, child labor, forced labor, poor renumeration, poor disciplinary practices and especially health and safety issues. The iWrc operational platform helps eliminate these risks. The Empower blockchain will ensure traceability and verify that each transaction is indeed free from the risks. The connection between iWrc and Empower will finally be able to answer the question…”How do you know there is not a child at the other end of the transaction?"
Waste360: Why is blockchain so essential to creating value chains and traceability?
In times of continuous digital transformation, turning to blockchain means providing secure track-and-trace capabilities, help establish product provenance, improve supply chain governance, and enhance trust and transparency. Blockchain is essential to ensure the traceability process and everyone who participates in the supply chain can be validated. Because the first mile of the supply chain is operated by the informal sector there are environmental, social and financial benefits unleashed as well in providing a tool to formalize the informal sector and make them a visible and valued part of the value chains. In the same way it happens in the traceability process, when protected via a blockchain, all participating entities validate the information, meaning that the company that is delivering the waste to the carrier puts all the information in a digital document, the carrier validates that information and takes the material to the next entity, which can be a buyer of recyclables, a cooperative or a landfill. Upon arriving at the final destination, the recipient confirms that they indeed have received the waste.
Waste360: How will this partnership create progress within the circular economy?
Our goal is re-insert material into the supply chain which is aligned with the circular economy. In order to participate in the circular economy, we want to create technical nutrients that can be reabsorbed by the supply chain. In order to do that we have to first eliminate the risk factors and second, equally important, verify that this has been done. Empower’s digital tracking solution and the iWRC platform that turns waste into socially recovered resources are partnering to guarantee a people-first circular economy, connecting brands in need of recycled materials with socially responsible waste-picking cooperatives, and improving health, safety, and financial wellbeing of waste pickers in the process. This technology partnership will bring new possibilities to businesses and organizations looking for easy, reliable, transparent and socially responsible recycled materials with a proven impact. The end producers will be able to issue full transparency on the origin and journey of the materials used, including issuing immutable product passports.
Waste360: What will each partner specifically provide?
Brazil’s National Solid Waste Policy specifically promotes the social inclusion and economic emancipation of waste pickers. Waste pickers are responsible for some 20 percent of the waste separated for recycling. They are also the main contributor the high recycling rates of aluminum cans, PET bottles and paper (the government estimates that 97 percent of aluminum cans, 55 percent of PET bottles and 67 percent of recyclable paper were recycled in 2020). The 2020 draft revision of the National Solid Waste Plan sets a target to increase the percentage of municipalities with formal contracts for handling recyclable materials by co-operatives and waste pickers’ associations from 7.9 percent in 2020 to 95 percent in 2040. Achieving this will require significant increases in financing to pay for services provided by waste pickers. In 2017, only 169 municipalities paid for selective collection of waste-by-waste pickers’ organizations (MMA, 2020). iWrc is a platform business that organizes a socially certified network in the informal recycling sector globally.
The network infrastructure is an ecosystem that will help make the recyclables of the waste pickers and brand partners more accessible to each on an as-needed basis. iWrc experts are present to train and build capacity to lower risk for the brand partners who engage the network and provide an operational trust. As iWrc does not own the network, it simply lays out the rules of interactions that eliminates friction in order to enable information exchanges and create value between waste pickers , the supply chain and the brand partners followed by compensation through fair trade, materials and/or services, and fees. iWrc Inside is a platform business which is a business model (not a technology infrastructure) that focuses on helping to facilitate interactions across a large number of participants.
These interactions could take the form of short-term transactions like connecting buyers and sellers or they could involve the formation of longer-term social relationships, longer-term collaboration to achieve a shared outcome or sustained efforts to accelerate performance improvement of participants by helping them to learn faster together. The role of the platform business is to provide a governance structure and a set of standards and protocols that facilitate interactions at scale so that network effects can be unleashed. Empower provides the digital tracking platform that allows to incentivize data collection and sharing along the full value chain, connecting everyone in the value chain with a layer of trust and transparency and making sure all stakeholders are aligned and can work together to create an efficient and transparent circular economy to the benefits of all the stakeholders as well as to the world.