H&M, Chanel, M&S Back Reuse Market for Sustainability: Q&A

By Bryony Collins, BloombergNEF. This article first appeared on the Bloomberg Terminal.

Globechain is an online reuse marketplace, capitalizing upon corporate demand for reducing waste and gathering data on environmental, social and governance (ESG) impact. The platform shares parallels with eBay or Amazon, and in the last two years has signed up more than 10,000 business members in the U.K. and led to the avoidance of more than 5,000 metric tons of landfill waste, the company says.

“We connect corporations, hotels and restaurants with charities and small businesses to reuse and redistribute unneeded items, such as office furniture, ceiling tiles and mattresses,” May Al-Karooni, founder and chief executive at Globechain, told BloombergNEF.

Companies including H&M, Marks & Spencer Group and Chanel pay an annual membership fee to access the platform and list items they wish to donate – offsetting the cost of landfill tax or incineration fees, Al-Karooni said. “Companies can save tens of thousands of pounds per location” by becoming Globechain members, she said.

The London-based company also provides companies with ESG data on “kilos diverted from landfill, savings made by charities and social benefit”, which they can use to offset VAT on stock or assets on corporation tax.

Most large items are reserved within 24 hours and 98% of what is listed gets reused. Globechain raised almost 1 million pounds in venture capital funding in July, and plans to expand in the U.S., Europe and Middle East. Al-Karooni spoke to BNEF in this interview.

Q: What is Globechain?

A: We are a reuse marketplace, which connects corporations, hotels and restaurants with charities and small businesses to reuse and redistribute unneeded items, such as office furniture, ceiling tiles and mattresses. I launched the marketplace six years ago through a trial with Arcadia Group to find reuse purpose for the fixtures and fittings in its stores.

We received just under 1 million pounds in venture capital funding in July 2018, and now have over 10,000 members in the UK, including H&M, Chanel, Radisson, IHG, B&Q, ISG Construction and the National Health Service. The sectors we cover are offices, retail, construction and hospitality, plus medical equipment that is sent to charities in Africa. We broke even in year 3 and made a profit in year 4.

We are focused on building our presence in the U.S. – where our first client will be a hotel group in Manhattan, and doing more of Europe – like Italy, France and Germany. H&M is signed up to do France and Germany with us as well as the U.K., and we have the Post Office in Spain signed up. Many of our current clients want us to expand to new countries. In the U.A.E., we have signed an agreement with the royal family and government to commit to growing Globechain in the Middle East.

Companies save money by using us and they can also access ESG data, which they use for credit financing, share pricing, offsetting VAT on stock, and some are also offsetting assets on their corporation tax.

We don’t record the embedded carbon impact, because each company has a specific way of approaching it and it’s difficult to know where to start measuring it from.

Construction companies and hotels use the data also for certification under BREAM, LEED or Green Key certification schemes.

Q: What kind of ESG data do you collect?

A: We know [the number of] kilos diverted from landfill, the savings made by charities [from receiving the goods] and the social benefit like upskilling and employment levels. For example, we have prisons that take broken computers and teach young offenders how to fix them – they sell them and the money goes to homeless charities.

Q: What is the cost to a business from listing items on your marketplace?

A: We have annual membership for big companies, and a pay-as- you-go option that costs 10 pounds per 100 items. The PAYG option is targeted at the SME [small and medium-sized enterprise] market.

The annual membership is for our bigger clients. We charge them per store, hotel or construction site. We have a range of cost levels – at around 2,000 pounds annually per site for large corporations with regular waste flows in the U.K. – although the price is bespoke and will vary by location. The highest being mostly for hotels and construction sites, and we charge a fee on top of that to customers for handling containers such as pallets.

A large shopping center in London spends 2,000 pounds per week on waste container hire, and as much as 10,000 pounds per month. So any reduction we can make to that is a real bonus.

Q: What are the main benefits for businesses from doing this, other than ESG data?

A: They would otherwise have to pay landfill tax to dispose of the material, or pay more to incinerate it. Electrical equipment costs a lot more [due to the specific regulatory requirements covering disposal].

By charging them between 500 and 2000 pounds per year, we know that they break even on the price of a skip or container per project. For example, one retailer hires a skip three to four times per week because there is no storage in the middle of Oxford Street, and one skip hire can cost around 500 pounds. So by signing up to our annual membership, they can save a couple of thousand pounds just in one week. So a lot of the time, companies can save tens of thousands of pounds per location by signing up to our annual membership.

The value of ESG data on top of that has been beyond what we expected.

Q: So your model can help customers avoid having to use so many skips?

A: Yes. 98% of what we have listed is reuse, and the rest is split between upcycling, recycling, such as scrap metal, and resell (less than 1%).

Q: What’s been your most successfully reuse story?

A: The largest item request we’ve ever done is 13,000 pallets of B&Q kitchens, which were reserved in 48 hours, and went to domestic violence, homeless charities and refugee centers. So there we saved B&Q warehouse storage space, transport and incineration costs.

So far we’ve avoided just over 5,000 metric tons of waste from landfill in the last two years. Less than 2% of the items we list get taken down because they haven’t been reserved, and this is mostly broken electronics. Members receive alerts about items they are interested in and most large items are reserved within 24 hours.

Q: So it’s the responsibility of the charities, SMEs or other take-up enterprise to go and collect the free items?

A: Yes – they arrange and pay for it – they arrange and organize and pay for their own logistics. They make a commercial decision that it is worth collecting before booking.

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