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Colin Bell, right, and Jacklyn McPhaddon, left, help businesses manage their garbage efficiently.taylor roades/The Globe and Mail

Canada’s got junk. Hotels, hospitals, restaurants, shopping malls—any industry that interacts with people produces vast amounts of waste, which for decades has been handled by a onesize-fits-all system of scheduled bin pickups. But what happens if the Fairmont’s dumpsters are overflowing after a big conference? And why should The Keg have to pay for twice-weekly organic waste pickup when some days the containers are close to empty?

This widespread inefficiency spurred Jaclyn McPhadden and Colin Bell to find ways to streamline the flow of waste. Today, their decade-old company, RecycleSmart, is Canada’s largest manager of garbage and recycling services for businesses, using technology to cut costs both financial and environmental. "Our goal is to help reduce waste generation rates and, with the waste that is generated, at minimum to divert it from landfill,” says McPhadden, who serves as the company’s chief administrative officer. “The combination of the industry’s size, its demand and its antiquated nature made it an attractive industry to disrupt.”

According to Statistics Canada, the steady decline in the amount of non-hazardous waste sent to landfill—roughly 60% of which is produced by businesses and institutions—has stalled in recent years. Back in the mid-2000s, when McPhadden, a former biologist, took a job at a Victoria inn, she was dismayed by the amount of garbage the kitchen and housekeeping departments produced. When she approached local haulers for assistance in diverting used amenity bottles and food waste from landfill, she found no dedicated programs in place. No one bothered to come out to assess the garbage volume or figure out solutions; she was simply quoted a 30% price increase to add organics pickup. “That was the aha moment for me,” she says. “I’m like, we can’t be the only business that’s struggling.”

Bell, RecycleSmart's chief commercial officer, encountered similar frustrations in his field of event management. So the pair—partners in life as well as business—hatched the idea of a service that would track companies' waste production and organize trash collection on schedules customized to need. Instead of each business holding separate contracts with pickup providers for various waste streams (organic, paper recycling, landfill, hazardous liquids), RecycleSmart would insert itself as a go-between that would handle all of the company's waste collection needs. One contract, one fee. Serving a broker-like role, the firm buys waste and recycling services at wholesale prices, then resells them to corporate customers at a markup but still cheaper than they were paying before. The kicker: RecycleSmart's services don't cost the client anything. In fact, businesses end up saving money—RecycleSmart guarantees a minimum 10% savings.

It's a compelling pitch to businesses facing hard-tonavigate recycling bylaws and regular price increases over the life of hauling contracts. RecycleSmart makes the economics work by relying on wireless sensors installed in each garbage or recycling container and linked into a mobile network. The camera-enabled sensors collect data several times a day, enabling RecycleSmart's team to see what's happening: Is a bin going to overflow before the next planned pickup? Did a bin get missed on a route? Are recyclables being thrown into the garbage or vice versa?

RecycleSmart is fundamentally a technology company in the fast-growing Internet of Things arena, not a waste disposal operation—a fact that has enabled it to grow quickly. “We don’t actually haul any waste or recycling, so we don’t have trucks or bins,” McPhadden says. “We’re not limited by capital-intensive assets.” Instead, it simply takes apart the puzzle of a company’s garbage management arrangements by conducting a waste audit and then puts it back together more efficiently.

Some companies initially balk at introducing additional bins to separate recycling or organics, says Angela Nagy, CEO of GreenStep Solutions, which provides sustainability consulting for government and business, believing they can’t afford the added complexity and cost. “But if you can downsize that waste bin, you free up budget to have recycling or organics bins,” she explains. “Plus, you free up budget when you’re reducing the frequency of pickup to the actual need. There are definitely cost savings available, and [making the switch] is also doing the right thing.”

While digital disruption of stodgy industries may be au courant these days, it’s a difficult strategy to execute successfully. For starters, few innovators have a field to themselves for long. When RecycleSmart first moved to digital monitoring, it partnered with Finnish company Enevo to make the sensors. But Enevo recognized the opportunity and became a competitor, establishing its own waste-patrolling network in Europe and North America. RecycleSmart has since found other sensor providers and is working with them to refine its in-bin intelligence device.

The shift also hasn’t gone over well with some waste management companies, whose business models have long relied on unvarying schedules and steady fee increases. “Almost all haulers get their customers to sign these ironclad contracts that basically say, ‘We can increase prices without notice at any time, without any ceiling,’“ McPhadden says. Seeing a potential threat to their margins, “in the beginning there was a lot of pushback” from garbage haulers, says Graeme Dobinson, RecycleSmart’s chief revenue officer, who hails from the waste-management sector and joined the company as the third partner six years ago (RecycleSmart has no CEO, as the partners consider themselves equals). “They were scared. They were, like, ‘You are not putting these sensors in my bins.’” But as the technology’s adoption has spread and more and more businesses discover customized waste services, haulers are being forced to come the table, Dobinson says. The company now has 800 waste-hauling vendors.

Nagy sees RecycleSmart's technology and waste audit approach as having genuinely transformative potential for tackling garbage management. “Being that middle person between the customer and the hauler, and having a real interest and expertise in waste diversion, is what really sets them apart,” she says.

RecycleSmart now has a team numbering nearly 50 across Canada and is on target to top $25 million in revenues in 2019, says McPhadden. And with growth, she sees even more potential efficiencies. With sensors collecting data nationwide throughout the day, the company can track garbage trends by industry, geography, time of year and more. And by more efficiently organizing hauling routes, RecycleSmart can not only shave as much as 50% off its customers’ waste management costs but increase diversion rates by monitoring the separation of recyclables, organics and landfill waste. “As we amass more data, get more customers and get more sensors, data becomes very, very valuable in how we can route bins in a dynamic way,” McPhadden says. “There is a much bigger picture at play.”

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