‘Sustainability helps us stand out in a crowded market’: Michael Topham, CEO of Biffa

Interview

Michael Topham
CEO of Biffa

Sustainability initiatives are high on the agenda for UK CEOs. The COVID-19 pandemic has accelerated a shift towards a more responsible corporate culture, bringing environmental concerns into sharper focus.

Biffa launched its 10-year sustainability plan in March 2020, just as the UK was entering its first lockdown. It includes commitments to increase recycling, invest in energy from waste plants, and reduce the firm's emissions by 50%.

It’s a commitment which is well-received by different stakeholder groups.

"Customers are making decisions based on sustainability factors," says Michael Topham, CEO of Biffa, speaking to PwC for our 24th Annual UK CEO Survey. “They want to know where their waste is going, that it will be properly recycled, and that it will be taken away by a low-emission vehicle.

“We have 75,000 SME customers and they don’t all think that way, but there’s definitely been a positive shift.”

Michael says investors are also becoming more receptive to sustainability initiatives. "We've positioned ourselves well in that respect. We've got an ambitious plan, but we've also clearly set out how we will achieve our sustainability and business goals over the next eight to ten years."

Enabling the circular economy

As the green agenda continues to gather pace, the waste management industry has an opportunity to become a strategic partner for other sectors. Biffa already works with high street chains and local authorities to help them achieve their own sustainability goals. A key part of this is reducing the amount of waste rather than sending it to be recycled or burned for energy. It's a concept known as the 'waste hierarchy'.

This consultancy approach is currently a small part of Biffa’s business – Michael estimates around 5% – but it provides an opportunity to differentiate in a crowded market.

"Everything should be about moving things up the waste hierarchy so more is reused. That’s how we maintain our relevance and become an enabler of the circular economy."

Biffa's strategic commitment to the circular economy includes investing in energy-from-waste plants and quadrupling its plastics recycling by 2030. The UK currently has a shortage of 'green economy' infrastructure, so the firm is well positioned to take a prominent role in helping the UK achieve a sustainable recovery.

“Everything should be about moving things up the waste hierarchy so more is reused. That’s how we maintain our relevance and become an enabler of the circular economy.”

"These recycling plants create green jobs, mean the UK can stop needlessly exporting plastic waste to Asia, and create good quality raw materials in the UK," says Michael.

Another key part of Biffa’s approach to sustainability is a shift to electric refuse vehicles, which are being piloted with Manchester City Council.

Michael explains that although cost will factor in the pace of the roll out, he believes companies such as Biffa should lead from the front. “It costs £150,000 to buy a diesel truck, and almost £400,000 to buy an electric truck, which probably can’t do the same job as a diesel truck in terms of distances. But we want to show we are at the front and pushing the supply chain.”

The outlook for waste management

Though waste management appears to be a reliable industry to work in, Michael says the challenges the business faced last year could have “bordered on existential” had the leadership team not responded quickly. In the first two weeks of lockdown in April 2020, Biffa lost 45% of its revenues from industrial and commercial waste collection. After weathering the initial pressures by removing costs from the business – around 1,500 employees were furloughed and 40% of trucks taken off the road – revenues eventually rebounded to around 90% by September.

The uncertainty around the UK's response to the pandemic and the potential impact from further lockdowns means planning for the next financial year “is more a case of presenting scenarios than a hard and fast budget.”

“We can’t say with certainty how the next year will play out,” says Michael. “In theory our entire budget for the year could be blown in April and May depending on how bad the restrictions are. But as you get further out, the fundamentals of our business and the things we are investing in haven’t changed.”

Michael also believes investors and analysts have become more understanding of the way public companies report their financial plans and results. "What they appreciate is timely communication. Provided you lay out what your thinking is and your assumptions are, then you’re giving them all you can give them really, and they won’t beat you up if things don’t quite work out the way you thought.”

Growth through M&A

Alongside its sustainability strategy, Biffa’s long-term plans for growth include a focus on mergers and acquisitions. The firm will continue to acquire small collections businesses that can be integrated into its national network. "It's a very good business strategy and is very earnings accretive. It's working well for us," says Michael.

PwC chairman Kevin Ellis has talked about the likelihood of a deals-led recovery in the UK, but as yet the waste management sector hasn't seen a spike in M&A. Michael thinks others in the sector probably experienced the same uplift in revenues in the second half 2020, which, coupled with government support, meant they were able to continue operations into 2021.

"The time to tell will be when we come out of this and see if some [businesses] are irreparably damaged. That might create opportunity for some distressed M&A," he says.

M&A will also help Biffa achieve its sustainability goals, as it creates a more efficient waste collection network. "That will help us become a more low carbon, sustainable business and help us manage our customers’ waste more efficiently and sustainably," says Michael.

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Marco Amitrano

Marco Amitrano

Head of Clients and Markets, PwC United Kingdom

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