Green Social Enterprise
Case Study June 2012
By Social Traders
with Sustainability Victoria
Eaglehawk Recycle Shop
Green Social Enterprise Case Study Series
© Social Traders and Sustainability Victoria 2012
While reasonable efforts have been made to ensure that the contents of this publication are
factually correct, Sustainability Victoria gives no warranty regarding its accuracy, completeness,
currency or suitability for any particular purpose and to the extent permitted by law, does not
accept any liability for loss or damage incurred as a result of reliance placed upon the content
of this publication. This publication is provided on the basis that all persons accessing it
undertake responsibility for assessing the relevance and accuracy of its content.
Green Social Enterprise Case Study Series – should be attributed to Social Traders and
Sustainability Victoria.
Green Social Enterprise Case Study Series is licensed under a Creative Commons Attribution
3.0 Australia licence. In essence, you are free to copy, distribute and adapt the content, as long
as you attribute the work and abide by the other licence terms. To view a copy of this licence,
visit: http://creativecommons.org/licenses/by/3.0/au/.
Foreword
Social enterprise is an inspiring model for delivering a broad range of social,
environmental, cultural and economic benefits to individuals and communities
through the trading of goods and services.
While social enterprise in its various shapes and sizes is not new, we have
witnessed an elevation in interest around Australia over the last five years from
a number of quarters – from community organisations and local community
groups, individual social entrepreneurs, governments, philanthropists, social
investors and the commercial business sector. This recent resurgence in interest
recognises that ‘the market’ has an important role to play in addressing many of
the problems it has created.
And the prevalence of green social enterprises is no exception. In a study
undertaken by Social Traders last year in conjunction with Sustainability Victoria,
at least 570 green social enterprises are estimated to be operating throughout
Victoria. Social enterprises are involved in a broad range of environment-related
pursuits from waste management and recycling, energy efficiency, environmental
services, land care management and sustainable food production.
The purpose of this publication is to build broader awareness and understanding
of the way in which social enterprise models can be used to effectively address a
range of environmental challenges. Social Traders hopes it provides impetus and
inspiration to others to consider opportunities that can be applied in other local
community settings.
The Case Study Series builds on other case studies developed by Social Traders
as a critical resource for policy makers, along with would-be social entrepreneurs
and existing operators.
I wish to acknowledge Sustainability Victoria (SV) for their partnership with, and
support of, Social Traders in undertaking this work. And a big thank-you to each
of the five enterprises for their cooperation and contribution to making this such
an interesting and useful resource and reference point on green social enterprises.
Personal thanks to Mark Daniels and Mindy Leow from the Social Traders team,
for fostering the partnership with SV, completing the report and producing these
excellent case study stories.
David Brookes
Managing Director
Social Traders
Eaglehawk recycle shop
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Green Social Enterprise Case Study – Eaglehawk Recycle Shop
Eaglehawk recycle shop
Summary
The Eaglehawk Recycle Shop (Eaglehawk) is a social enterprise started by
Future Employment Opportunities Inc. (FEO) 18 years ago, with the twin goals
of creating jobs and extending the life of landfill through recycling. It was
set up next to the Eaglehawk landfill, where valuable materials are diverted
and reclaimed for re-use or recycling. Recycled scrap materials are sold to
commodities buyers, and products that can be re-used or up-cycled are sold
through the adjacent tip shop, providing the community with access to such
items at a low cost.
Following the experience of establishing Eaglehawk, FEO has established six
more recycling enterprises in regional Victoria:
• Three waste transfer stations in Strathfieldsaye, Goornong, and Echuca
• Two recycling centres next to the Heathcote and Portland landfills
• An Industrial Recycling Centre at the existing Eaglehawk site
For the purpose of this case study, the original Eaglehawk site will be referred
to as Eaglehawk, and the other recycling enterprises will simply be referred
to as recycle shops. Refer Figure 1 on page 19 for a map of recycle shop
locations.
All recycle shops are based on the Eaglehawk model, in which all income is
generated through trade, specifically through tip shop sales and sales of recycled
scrap materials such as metals and wood to commodities buyers. All items in the
Establishment cost
$20,000 (Eaglehawk site)
Years to break even Less than a year (Eaglehawk site)
Annual Turnover
$1.2 million Eaglehawk site
Annual Profit
$10,000
Staff
40 part-time and full-time staff
Environmental and
Social Outcomes
Approximately 13,000 tonnes of waste diverted from landfill in the past year
All 40 employees were formerly unemployed, many of them long-term.
Support
Access to tip face from council
A site next to the landfill
Sweat equity from volunteers
FEO management team (consisting of CEO, Recycling Manager who oversees all
recycling operations, and Training and Employment Manager)
Green Social Enterprise Case Study – Eaglehawk Recycle Shop
1
retail shops are sold as is, without further value being added. Each site maintains
its own separate budget and aims to grow its income and employ more staff
each year.
Based on the Eaglehawk model, 80 per cent of income at each site is put
back into wages to create more jobs. Having more staff means that more items
can be recycled and resold, in turn increasing the site’s income – creating a
virtuous cycle.
Another key feature of the Eaglehawk model is that
all sites are treated independently and are profitable.
None receive financial assistance from government,
philanthropy or FEO for their ongoing operations. This
allows management and staff to devote all their time
to managing the business instead of chasing grants.
Background
The parent organisation FEO began operating in 1981 as a Community Youth
Support Scheme (CYSS) project helping young people into work by providing
personal support and employment training. In 1989, CYSS was replaced with
the federally funded SkillShare Program, which delivered employment training
to long-term unemployed people of all ages, with a view to getting them back
into work. Today, courses continue under a national accreditation framework,
within which FEO is a registered training provider.
In 1990, FEO shifted into its present premises at the Eaglehawk Railway Station
and became known as the Eaglehawk Training Station. In 1993, the unemployment
rate in Eaglehawk, a former gold-mining town in Central Victoria and a suburb
within the City of Greater Bendigo, was about 17 per cent. Unemployment was
high, and the long-term unemployment rate was on the rise.
Another problem facing the community was an increasing level of municipal
waste going into landfill. At the time, the Bendigo Advertiser reported that
$5 million would be needed for another big landfill, given that the Eaglehawk
site was expected to be full in a few years. Recycling and re-use were not at this
stage common practice, and some members of the community started asking
why the community was spending good money burying valuable resources in
the ground.
FEO manager Peter Cox had the idea of turning waste into wages, and the
Eaglehawk Recycle Shop was born. A recycle centre was set up to divert and
recover waste from landfill for re-use and recycling while creating permanent
full-time jobs in a supportive environment for long-term unemployed people.
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Green Social Enterprise Case Study – Eaglehawk Recycle Shop
Figure 1.
Recycle shop locations
Echuca
Eaglehawk
Goomong
Strathfieldsaye
Heathcote
Melbourne
Portland
Feasibility and start-up
To develop the business case, FEO conducted a feasibility study to test the idea’s
viability in mid-1993.
The feasibility study needed to demonstrate that there
would be sufficient saleable goods from the landfill, and
demand for the products, to create five jobs.
Rather than reinventing the wheel, FEO contacted Revolve, another community
recycler based in Canberra, and arranged for one of their senior staff members
to come to Eaglehawk for five days. At the same time, FEO also engaged five
job seekers, who went with the Revolve staffer to the tip to see what they could
scavenge and retrieve. The Revolve expertise was critical in providing an accurate
assessment of what items were saleable and at what price.
The feasibility study took less than six months to complete, and concluded that
there would be enough items of value to pay the wages of five employees. The
proposal was presented to the City of Greater Bendigo.
Green Social Enterprise Case Study – Eaglehawk Recycle Shop
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In early 1994, council approved a licence to recover recyclable materials from
the Eaglehawk tip. Council also provided a small area of vacant land next to the
tip, where a shed was set up. Peter Cox ran an ad in the local paper and held an
information session attended by 24 long-term unemployed people, 10 of whom
were chosen to start the recycling enterprise.
Enterprise Strategy
Self-sustaining enterprise
Each recycle shop must be self-sufficient, meaning that all income is generated
through trade instead of grants and donations. The key performance indices are:
• the number of people employed;
• the tonnage of waste diverted from landfill;
• the annual turnover, in order to employ additional people.
By focusing on earning income for the business, recycle shops have been able to
achieve strong environmental and social outcomes without relying on any financial
assistance.
Keeping budgets separate
Each recycling site has its own budget, with all income and expenses broken
down into line items. Having separate budgets is important for FEO’s strategy
of managing staff by keeping everyone informed. Not only are budgets openly
shared, they are hung on the walls as a reminder of site performance and targets.
Keeping employees informed and engaged
All budgeting decisions are openly shared with staff. Employees understand
how the budget comes together, and work together to meet it. Their goal is to
generate enough income to cover costs (made up predominantly of wages), with
any profits used to employ additional staff.
Weekly site meetings known as toolbox sessions are held so that staff can raise
and discuss any topic related to the business or to other staff members. In
addition to being a forum for tracking weekly budgets and discussing operational
issues, toolbox sessions are where innovation and process improvements are put
forward and discussed. For example, one employee came up with an effective
way to recycle copper (the most valuable recyclable component from a television
set) by using a metal paint can crusher that can be bought for $750.
“We have a pool of great ideas that come to life during
the weekly toolbox sessions.”
“Engaging our staff and using their creative ideas has been very important for
us because they do it every day and know it better. They are constantly thinking
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Green Social Enterprise Case Study – Eaglehawk Recycle Shop
about how to make more money because it benefits them,” says Rebecca
Dempsey, CEO of FEO.
Selling “as is”
Recycle shops do not value-add to recycled items before they are sold in the
shops. All items recovered are sold “as is” without further repair or maintenance.
Recycle shops believe that customers want the basic product at the lowest price
so that they can value-add themselves. Selling more products at a slightly lower
price yields a better outcome for enterprises. Achieving a high sales volume is
important because items resold in shops represent more than 70 per cent of all
waste diverted.
Organisation Structure and Governance
FEO is an incorporated association. This legal structure allows recycle shops to
receive grant funding, which has been important for the recycle shops to expand
their business.
FEO has a volunteer board of directors, consisting of private sector individuals
with a wide range of skills who meet bi-monthly. There is also a recycling
advisory committee that meets regularly to discuss recycling issues and put
recommendations to the board. This committee is made up of several board
members, the recycling manager, the CEO and Bendigo community members
with an interest in recycling.
As well as recycle shops, FEO also manages a number of enterprises including
On Track Training and Employment, Enhance IT, TradeStart and Workspace
Australia. The recycle shops are a business unit of FEO and are managed by
the Recycling Manager. Each recycling site has a site supervisor who reports
to the recycling manager.
Figure 2.
Organisation structure and governance
Recycling
Committee
Site supervisor (Strathfieldsave)
Site supervisor (Goornong)
Board of
Directors
(FEO)
CEO
(FEO)
Manager
(Recycle shops)
Manager (Employment
and training)
Site supervisor (Echuca)
Site supervisor (Heathcote)
Site supervisor (Portland)
Green Social Enterprise Case Study – Eaglehawk Recycle Shop
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Promoting Recycling
The recycle shops frequently host school groups who visit to learn about recycling.
FEO believes that behaviour change starts with young children, who can often be
a positive influence on their parents. Apart from advertising on local television and
in supermarkets to encourage more households to recycle, recycle shops invest
minimally in marketing to enable more income to be invested in wages.
Getting the general public to recycle is an ongoing challenge for the recycle
shops. “We are always convincing people to stop driving with truck loads of stuff
straight to the landfill. Recycling is beneficial [to the environment] and it does not
cost you anything. It does not cost you anything to throw your plastics in a bin as
opposed to throwing it in with your food scraps. In fact, when you sort out your
waste before driving to the landfill, you’ll save lots of money!” says Rebecca.
Financials
For the 2010/2011 financial year, the combined turnover of Eaglehawk and the
other recycle shops was $1.2 million, and profit was $10,000 (approximately
1 per cent profit margin). Their goal is to maximise social and environmental
outcomes, not to chase profits.
The budgeting process
Each site has its own budget, which is broken down into various income
categories such as steel, e-waste, yard sales, plastics etc. Income targets are
the key performance indicators at each site. Employees know how much income
each category needs to generate to reach budget targets. When one of the
categories is not tracking to budget, they will investigate. The budget, including
individual line items, is plotted on a graph and hung on the wall, serving as a
visual reminder of the enterprise’s focus on generating income.
The budgeting process before each financial year is a critical activity in which
income and staffing levels are forecast for the coming year. Because recycle
shops budget to spend 80 per cent of income on staff, it is important that income
targets are achieved so as not to over-commit on wages. Recycle shops plan
to each year increase income and provide more jobs. In the past 10 years, the
number of employees has been steadily growing, proving that the model works.
The replacement of assets, such as a forklift or new vehicles, is typically funded
through reserves from operations, while expansion of existing sites and opening
of new sites (such as the Eaglehawk Industrial Recycling Centre) are typically
financed by grant funding from philanthropy and government.
Shared services and inter-company transactions
The cost of shared services is taken into account within the budget of each site.
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Green Social Enterprise Case Study – Eaglehawk Recycle Shop
Shared services include, but are not limited to, accounting, payroll, IT, telephone
services and management costs. The cost of providing these services is
estimated each year and built into the budget.
“You can’t get something for nothing. Every bit of time
that management spends on the enterprise is taken into
account in the budget.”
Interactions between recycling sites are treated as business transactions and
must be accounted for. For example, when Eaglehawk goes to Echuca to collect
plastic, Eaglehawk will charge Echuca for transportation costs, but will also
pay Echuca for its plastic. This is done so that the viability of each site can be
accurately evaluated.
Environmental and Social Outcomes
Environmental outcomes
In the 2011 financial year, recycle shops (excluding Portland) diverted
approximately 12,700 tonnes of waste from landfill. Their existence has
significantly increased the life of the landfill. When Eaglehawk started in 1993,
the landfill was projected to be full within a few years. It is still being used today.
True to its mission, recycle shops have a policy of
recycling as much as they can, including items that
are not profitable.
Green Social Enterprise Case Study – Eaglehawk Recycle Shop
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For example, cardboard is recycled at a loss because recycle shops feel it is
their social and environmental responsibility to do so. Computer screens and
televisions are recycled at break-even.
Employment outcomes
Recycle shops currently provide 40 full-time and part-time positions, allowing
staff, particularly the long-term unemployed, a gradual transition to full-time
work. Recycle shops also help employees undertake training and to develop
skills. While employment is permanent, some staff have gone on to obtain jobs
elsewhere, with the support and encouragement of the organisation.
The recycle shops employ staff from some of society’s most marginalised
groups, who come with a variety of complex issues. In addition to providing
work, management get involved where appropriate to bring about real change
in people’s lives. For example, they helped one employee achieve literacy.
Six other former long-term unemployed staff have since
bought their own homes.
Success Factors
The success of the recycle shops initiative is largely due to FEO’s partnership with
The City of Greater Bendigo. Without council’s approval, the many recycle sites
that exist today would not have been possible. Obtaining the license to operate is
often the key to setting up a recycling enterprise. It is important to work with local
governments to convince them of the benefits of setting up community recycle
enterprises that both reduce waste and create jobs.
Another key success factor is the recycle shops’ budgeting process and the
way the budget is used to motivate and engage staff. This strategy not only
keeps employees motivated, but also helps each enterprise meet its financial
targets.
Replication
That the recycle shops have come to be the multi-site operation of today is
thanks to the successful business model developed and refined by FEO over
18 years. By fostering a partnership with local government, starting small,
investing in wages and growing sustainably, they developed a business model
ripe for replication.
The first replication took place in the late ’90s, in Mildura, Victoria, and this
recycling site is still in operation today. Subsequent successful replications
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Green Social Enterprise Case Study – Eaglehawk Recycle Shop
have taken place in Portland, Victoria, and as far away as Townsville, Queensland.
Another new enterprise is also being set up in Tamworth, New South Wales.
Today, a new site can be opened with nothing more than a tip licence, a site
and one employee. When enough income is generated, additional employees
are hired to extract valuable components from recycled products, generating
more income. Based on this model, a recycling enterprise can break even within
the first year and grow sustainably year after year.
Recycle shops have developed a guide for starting community recycling ventures,
which can be downloaded from their website at http://feo.net.au.
“Because we want to keep more out of landfill, we’re
keen to talk to anybody and everybody about what we
do and how we do it. We would like to see recycling in
every town – and it doesn’t have to be us doing it.”
FEO has also been involved in starting up the Community Recycling Network
Australia to provide support, advice and mentoring to local organisations.
Where To From Here
FEO is now focused on developing an industrial recycling centre at the
Eaglehawk site to reduce the 45,000 tonnes of commercial and industrial
waste being buried in the Eaglehawk landfill annually. The Eaglehawk Industrial
Recycling Centre (EIRC) will use a similar model of reducing waste to landfill,
creating jobs, and self-sufficiency. It aims to accumulate bulk quantities of
metals, timber, concrete, plastics and cardboard to bale and sell back for
re-manufacturing, as well as encouraging industry representatives to take
greater responsibility for their waste.
For More Information
Further Employment Opportunities
info@feo.net.au
www.feo.net.au
Social Traders
info@socialtraders.com.au
www.socialtraders.com.au
Green Social Enterprise Case Study – Eaglehawk Recycle Shop
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About This Series
This is one of five case studies that comprises the Green Social Enterprise Case
Study Series developed by Social Traders and Sustainability Victoria. The Series
provides a detailed exploration of five organisations that have developed trading
businesses to deliver on their environmental and social missions.
Green social enterprises:
• are led by an environmental mission or deliver environmental outcomes
in the process of pursuing community benefits;
• engage in trading activities to generate a significant proportion of their income;
• retain the majority of profits for achievement of their mission.
The organisations selected for this Case Study Series represent a cross-section
of green social enterprises whose activities range from energy efficiency and
production to waste reduction and reuse to local organic food production.
The case studies build upon the Support and Strengthen Green Social Enterprise
report, undertaken jointly by Social Traders and the Victorian Government through
Sustainability Victoria, and published in August 2011. This report investigated
green social enterprises in Victoria with a view to understanding the scope and
needs of such enterprises, as well as the needs of others in the wider green
movement who are interested in social enterprise. A key recommendation coming
out of the report was the development of resources for those green groups and
green motivated individuals interested in developing social enterprise models to
support their green passion.
The Case Studies Series provides insight into the business models and specific
workings of selected social enterprises. They are an educational resource
designed to provide equal doses of inspiration and trepidation for the wouldbe social entrepreneur. Establishing a social enterprise is not easy, but those
that succeed clearly demonstrate that commercial and environmental aims can
comfortably co-exist within the same organisation in the long term.
The five green social enterprises selected for this series of case studies are:
CERES Fair Food – local organic food production and distribution
Eaglehawk Recycle Shops – waste reduction
Green Collect – waste reduction and renewal
GV Community Energy – renewable energy and energy efficiency
Kildonan Uniting Care’s Energy Efficiency Home Visits – energy efficiency
These enterprises have been selected to illustrate a range of environmental
missions, outcomes, industries, business models, sizes (in terms of annual
10
Green Social Enterprise Case Study – Eaglehawk Recycle Shop
GVCE
CERES
Fair Food
Green
Collect
Kildonan
Uniting
Care
Eaglehawk
Recycle
Shops
Stage
Explorer
Implementer
Implementer
Implementer
Mature
Years of operations
18 months
19 months
7 years
8 years
18 years
Period of Incubation
2 years
7 years
3 years
1 year
1 year
Years to breakeven
Not yet achieved
16 months
3 years
Within 1 year
Within 1 year
Parent Organisation
No
Yes
No
Yes
Yes
Environmental
Mission or Outcome
Carbon
abatement
To reduce food
miles and build
sustainable food
systems
Waste reduction
Energy efficiency
Waste reduction
Industry/Business
Solar bulk-buying Fresh fruit and
Reusing,
and other energy vegetable delivery Upcycling,
services
Retail
Home energy
assessments
Recycling
Metro/Regional
Regional
Metro
Metro
Metro & Regional Regional
Annual Turnover
$650,000
$1.2 million
$500,000
$1.5 million
$1.2 million
No. of Employees
5
13
35
10
40
turnover and number of employees), and levels of maturity (in experience and
development). A table is provided for comparison above.
The Support and Strengthen Green Social Enterprise report estimates that at
least 570 green social enterprises operate in Victoria, including 460 opportunity
shops. While a larger number of green organisations were identified, not all
were included on the list because some did not fit the green social enterprises
definition—some were green businesses and not social enterprises, while others
were green groups and lacked significant trading activity.
The research found that green social enterprises fall into three key groups: waste
reduction, food production and other consumables, environmental services and land
care. Other smaller groupings include renewable energy and information provision.
The research also discovered that 60% of green social enterprises identified are
concentrated in the metropolitan Melbourne area, while the remaining 40% are
spread throughout regional and rural Victoria.
The complete Support and Strengthen Green Social Enterprise report can be
downloaded from Social Traders’ website or obtained from Social Traders directly.
info@socialtraders.com.au
www.socialtraders.com.au
Green Social Enterprise Case Study – Eaglehawk Recycle Shop
11
About Social Traders
Social Traders is an independent not-for-profit company established in 2008
to encourage and support the development of commercially viable social
enterprises throughout Australia.
Social Traders works with government, business, community, philanthropic
and research partners to:
• Raise awareness about social enterprise and demonstrate its benefits
• Build trading capability of start-up and early stage enterprise
• Open up market opportunities for social enterprise
• Increase finance available to start and operate social enterprises
The company offers a number of unique social enterprise development and
investment initiatives, including ‘The Crunch’ and Building Social Enterprise
Trading Turnover (BSETT) Project. Social Traders has completed a national
Social Enterprise Sustainability Project, which involved tailored business
coaching support to 40 social enterprises around Australia.
Social Traders has also developed a range of specialist tools and resources,
runs regular social enterprise workshops and hosts regular conferences
and forum covering all aspects of establishing, operating and building the
sustainability of social enterprises.
The Social Enterprise FINDER is Australia’s first comprehensive online social
enterprise directory. The five enterprises profiled in this publication can be
found in The FINDER (www.TheSeFINDER.com.au) along with over 5,000
other social enterprises operating around Australia.
Social Traders
info@socialtraders.com.au
www.socialtraders.com.au
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Green Social Enterprise Case Study – Eaglehawk Recycle Shop
About Sustainability Victoria
Sustainability Victoria’s statutory objective is to facilitate and promote
environmental sustainability in the use of resources. Established under the
Sustainability Victoria Act 2005, SV is a statutory authority with a board appointed
by the Minister for Environment and Climate Change. SV has obligations under
the Environment Protection Act 1970 for state-wide waste management strategy
and planning, as well as managing the Sustainability Fund. SV supports and
complements the work of its portfolio partners the Department of Sustainability
and Environment and EPA Victoria as well as the Metropolitan and Regional
Waste Management Groups.
Sustainability Victoria
info@sustainability.vic.gov.au
www.sustainability.vic.gov.au
Green Social Enterprise Case Study – Eaglehawk Recycle Shop
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