Social enterprises in waste management sector in Indonesia
This section exploring the linkages between key blocks of selected social enterprise’s business model canvas and just transition elements whether or not its embedded intentionally by the enterprise actors. Furthermore, each part of the cases represents the nexus of business model innovation, social enterprise and just transition perspectives.
The social enterprises were selected in the waste sector in Indonesia, with the involvement of various business models beyond waste management and circular economy innovation such as organic waste management (Biomagg), Community-based waste management and waste banks model (Daur Resik and Seling.id), digital platform to connect waste pickers and households or e-waste trading platforms (Rapel.id), upcycling and recyling (Gammawaste) as well as a new innovative waste cart model (Inowastek), to accommodate different type of business models in the waste management & recycling sectors (Table 04).
Table 04. The selected cases of social enterprise in the waste management & recycling sectors.
| No | Name | Business Model | City/ Region |
|---|
| 1 | Biomagg | Organic waste management | Depok, West Java |
| 2 | Seling.id and Resik | Waste banks and Community-based waste management | Palu, Central Sulawesi and Yogyakarta |
| 3 | Rapel.id | E-waste trading platforms | Semarang, Central Java |
| 4 | Gammawaste | Upcycling and recycling | Jakarta |
| 5 | Inowastek | Waste cart innovation | Yogyakarta |
Organic waste management. With the projection to have an increased population as well as increased waste per person by 38% in 2040 (World Economic Forum, 2020), the necessity for Indonesia to have an advanced waste management becomes more urgent than before. The majority of waste composition is still dominated by organic waste, with about 43 percent in 2018, according to a report by the Ministry of Environment and Forestry (2020). The recent practice of waste handling in households level mostly in Indonesia is unsorted between organic and inorganic due to lack of awareness of the consequences resulting from irresponsible practice of waste from the houses. If organic waste mixed with other waste in the open landfill, the waste potentially becomes a source of environmental pollution such as fire and garbage explosion (Mujahiddin et al., 2018). According to one of the interviewees, organic waste has a wet characteristic and bad odor that makes them difficult to process, yet they contain some nutrition that would be beneficial if treated correctly.
To answer the problem of organic waste, Biomagg as a social enterprise was founded in a mission to provide responsible organic waste management in Indonesia. Initially, in early 2016, Biomagg was founded simply to serve its own catfish farm’s need for nutritious fish feed for the catfish in which they develop products from maggot or BSF (Black Soldier Fly) larvae that resulted from organic waste. Along with the business performance improved, Biomagg expanded its business to open an organic waste management unit that targeted companies and private sectors in general. Legally under the name of PT Biomagg Sinergi International, the company currently has four different business units that are centered in circular economy concepts, including: organic waste management, agribusiness, research innovation, and learning center.
Beside targeting environmental impact by reducing the amount of organic waste ended up in landfill, the social enterprise also aims to empower the community and educate the local neighborhood in how to properly handle their own waste at house using Biomagg model. The learning center unit has been collaborated with several universities and foundation in Indonesia, targeting students and youth to raise awareness and transfer the knowledge relating to environmental issues. Another social impact that created from the business process is the vegetables or organic products that produced using Biomagg’s fertilizer and processed in the farm, is delivered for free to the local resident near the company’s site of processing center in Depok region, West Java. The business itself has generated new opportunity of green jobs that include their current 27 employees in the processing facilities, waste pickers, and other units. According to the data provided by informant, until October 2021, Biomagg has processed 1.662 billion of waste and has expanded the operation to Jakarta, Banten, West Java, and Sumatera as well planning to replicate their businesses in other provinces in Indonesia.
With the characteristics which are relatively easy to replicate, Biomagg business model has a potential scalability in low cost to be replicated in other regions in Indonesia. Especially for maggot cultivation that can be applied at the household level, the economic value resulting from product sales such as organic fertilizer, fish feed, maggot meal and maggot oil have potential to become alternative or additional income for the community. For the fish farmers, the company also targeted to solve the high prices of fish feed by selling the product with comparatively affordable price, and help the farmers to increase their productivity by producing their own maggot cultivation. The company has multiple revenue streams from maggot-related products sales, waste management service for companies and collaboration projects with other stakeholders. The cost structures are mostly linked to the key resources which are development of maggot house facilities, waste transport cost, and personnel or workers who are the key resources within their system.
Major challenges for the company are the waste sorting processes after collected from the companies or individuals. Generally, this problem of unsorted waste from households is the most challenging process to solve waste issues in Indonesia (Chaerul et al., 2007). It is stated by the interviewee regarding this root problem, that the cost to educate the public to properly sort their waste is the most expensive cost in terms of intervention, as it involves changing the mindset and behavioral change process that requires continuous and long-term efforts. This impediment of the lack of public awareness and education at both individual and institutional level also influence their activities as it relates to the demands for their products and services in providing organic waste management and maggot-related products. Table 05 below present the business model findings of Biomagg
Table 05. Biomagg’s business model findings.
| Dimensions | Business model structure | Business model findings |
|---|
| Desirability | Customer segments | Fish farmers; Poultry farmer; Public consumers; Local authorities that responsible for waste management |
| Value proposition | Organic waste management without bad odor; High protein animal feed; Easily applicable in household, districts level, village or town; Community empowerment in the business development |
| Customer relationship | Feed sharing program to fish farmers; BSF cultivation training |
| Channels | Farm and feed shop/ store; Local authorities |
| Feasibility | Key activities | Waste collection from local traditional market, households, restaurants; Maggot cultivation; Bioconversion process (organic waste to feed products) |
| Key resources | Personnel/ workers in maggot cultivation; Organic waste from traditional market, households and restaurant |
| Key partner | Local communities; Traditional and local markets; Local authorities (cleanliness service unit); Research institutions/ universities; Ministry of research and higher education |
| Viability | Revenue streams | Product sales; Environmental conservation projects with the government and CSR program of companies; Organic waste management service fee |
| Cost structures | Personnel/ workers salary; Waste transportation cost; Tools and equipment; Maggot house facilities cost and maintenance |
The importance of a coherent, integrated policy design and implementation also highlighted by the interviewee regarding the current landscape of waste management in Indonesia. It is resonated by the argument of the necessity to have a supporting environment to develop new industry (Gong et al., 2022) which also includes supporting policies and regulation. In order to develop a successful new industry in a region, the key and relevant actors in the sectors depend on initial regional conditions, such as institutional structures, and organizational support system, thus ensuring the supporting ecosystem is a critical point to develop a sustainable waste management sector. The existing regulation of waste management that is unclear, according to the interviewee, is that the formal institutions who act as executor are also responsible for the regulation and supervision which are prone to misused actions and conflict of interests. It is argued that the separation between executor and regulator in the current waste management are necessary (for example through collaboration with private and/or informal sectors as authorized executors, rather than voluntary-based as the current mechanism) to ensure the accountability and better governance of the current waste management system.
In terms of ‘just transition’ element in the business model, Biomagg has created community empowerment and raising awareness through training and education programs that targeted the broader public regarding a proper waste management for household level. Furthermore, through its maggot cultivation and organic waste management services, the enterprise generated new, green and decent jobs as well as ensure the safety and protection measure for its workers as recommended by ILO documents on the Just Transition Guideline (2015).
Community-based waste management and waste bank model. The necessity to have a locally-owned and community-driven waste management in each region led to emergence of localized approaches such as waste banks. The concept of ‘locally managed decentralized circular economy (LMDCE)’ is one of the approaches introduced by Browning et al. (2021) focused on solving inadequate waste management facilities in developing countries. They further show that, with the localized approach, a sustainable solution that is specific to local context can also empower communities to take control of their waste, and harness locally available raw materials to produce goods and sell in the local market (Browning et al., 2021).
One of the common models of waste management in Indonesia that emerge in the community level is waste bank. A waste bank operates on a bank-like system providing individuals to deposit their sorted garbage. The nature of this type of waste management is a communal based that centered their activities in recycling principles. It has been studied that the waste bank model provides their members with economic values as well as community empowerment through their activities (Tauran et al., 2015). Generally, the type of waste received in the system is inorganic, such as paper, plastic, metal, cans, aluminum, and copper which have been demanded by recycling manufacturers or waste brokers and scrap dealers as intermediaries. The model encouraged the individuals and households to collect and sort their own waste at home and contribute to waste reduction efforts in general.
The increasing number of waste banks in Indonesia has been significant, from only 1,072 units in 2014 to more than 7,488 units in 2018 (Ministry of Environment and Forestry, 2020) showed the popularity of the model in recent years. The government through the Ministry of Environment and Forestry launched the specific regulation, with decree number 13/2012 on Guidelines for implementation of Reduce, Reuse and Recycle through waste banks. Given the relatively low initial capital to establish a new unit of waste bank, the model can be started by any institutions such as local groups, private companies, government bodies or NGOs. While the contribution of waste reduction by waste banks is still relatively small (about 1.7 percent in 2017 and 2.3 percent in 2018 of total waste collected), the nature of community-based model of waste bank has proven to trigger behavior changes among local residents to actively involved in the waste bank as a member (Ministry of Environment and Forestry, 2020). Through this direct community involvement in the process of sorting and collecting waste, the members are able to manage their waste consumptions.
In the eastern part of Indonesia, where the development and education gap existed, the issue of waste and environmental-related problems in general are more challenging and complex compared to other regions. Coupled with a significant number of poverty and unemployment among the population, the climate change discussion is not that mainstream yet among the households. One of social enterprises that adopted the waste bank model is Seling.id –stands for environmental school or Sekolah Lingkungan in Indonesian –aims to provide community-based waste management for local residents, and at the same time educate the broader public to be more aware of environmental issues through informal training programs. Based in Palu, a small city in eastern Indonesia, Seling was founded by a group of young environmental activists concerned with the mismanaged waste treatment in their small neighborhood. They started the enterprise operating as a waste bank, with initial members coming from family, friends and a network of environmental-based organizations in the city. Along the way, they served other surrounding neighborhoods, which triggered by witnessing their activities collecting and buying waste from fellow residents.
Potential additional income that generated from selling the waste is the one of the motivations for the members applied to the waste bank. With those incentives, especially for lower income families, it might be an opportunity for them to obtain additional sources of income and help their local economies. The fact that most of the successful waste banks cases in Indonesia have members which come from lower-middle class communities (Ministry of Environment and Forestry, 2020) is resonated with Seling’s waste bank context in which their active members are dominated by this group of families. Other value creation that is observed is the ability to create a community of knowledge, as well as bridging a dialogue between environmental activists, local community with local authorities and other related government institutions related to recent waste management issues. It is consistent with the additional data from recent interviews (in 2024) with two waste banks representatives in Palu city that emphasize this value creation dimension.
The business model of waste banks centered in their key activities to collect, buy and resell the sorted waste to the third party or waste brokers who act as intermediaries. The process involves individual workers to clean and sort the waste collected from the members. For the Seling and Resik cases, the workers paid on a prorated basis, who are mostly women living close to the waste bank site. Other costs that involve transportation, as well as maintenance for waste bank facilities, yet it is mostly a small number. In terms of scalability, the waste bank model is also relatively easy to be replicated in other regions, however, it needs prior knowledge regarding basic waste type, and willingness to support others economically as well as personal calling and motivation regarding solving waste issues. As the success metrics are not to be the only source of income for the owners (not for profit maximization), which according to the interviewee, is one of the paradoxes and unique points that needs to be considered for aspiring entrepreneurs attempting to open similar models. One of the interviewees also stated that in order to improve the business, they need to invest in adequate infrastructure such as buildings, and vehicles to collect the waste for their members. Table 06 below present the business model findings of Seling and Resik
Table 06. Seling.id and Resik’s business model findings.
| Dimensions | Business model structure | Business model findings |
|---|
| Desirability | Customer segments | Individuals, Environmental organization, NGOs, waste brokers |
| Value proposition | Reducing waste in landfill; Community empowerment; Economic incentives for local residents; Relatively easy to be replicated, |
| Customer relationship | Community engagement; Education and training |
| Channels | Group of community; word of mouth; social media |
| Feasibility | Key activities | Waste collection process; Informal training and education; Members engagement |
| Key resources | Sorting workers; Social capital (trust and relationship) |
| Key partner | Third party buyers (intermediaries); Local authorities; Recycling companies; non-government organizations (NGOs); universities; waste banks associations |
| Viability | Revenue streams | Sales from sorted waste; Training and education programs; funding support from Government/ NGOs (donation) |
| Cost structures | Personnel/ workers compensation; transportation cost; purchasing cost |
One of the challenges related to the viability of this model is the low interest by the higher class to become the members of waste banks. This argument also supported by the interviewee that the services they provide are more likely attractive to the lower income group because the incentives are sufficient to support their daily needs, where among the upper-middle class have preferences with low effort to manage their waste, such as pay extra cost for waste disposal and sorting service.
Regarding the just transition elements, the waste bank model can support the generation of decent jobs for the local community with relatively low technical skill needed in all the processes (from cleaning, sorting and transport the waste). A previous study showed that the waste banks model has a positive and strong relationship with the poor women’s empowerment (Mujahiddin et al., 2018). In addition, the model also emphasized the key activities to educate the residents in household level to properly manage their waste which can indirectly shift their behaviors to be more aware with waste issues that can contribute to waste reduction in general.
Previous study shows how social enterprises in waste management have contributed to improve socio-economic values in a given community, for example Tauran et al. (2015) shows that social enterprises in the form of waste banks have ability to (a) provide additional income for local residents; (b) encourage the emergence of innovative and creative community through skill development and training; (c) increasing social capital such as culture of cooperation, trust, and sense of belonging are developed. With their activities, not only environmental problems are addressed in this case amount of waste managed are increased, but also generating new jobs in several activities such as waste collection, transport, sorting, recovery and recycling, disposal, and preparation for re-use (Vesere et al., 2021).
Furthermore, in the waste bank case, it also showed the key role of women involving both as sorting workers and active members as in the Seling case. Also, the fact that the founders in both cases for Resik and Seling.id are women, it also supported the argument that women are more interested to involve in this model. According to the World Economic Forum Report (2020), some successful showcases of effective community engagement were activated by women’s associations and networks. Furthermore, the report showed gender perspective where women also admit to using correct disposal methods more frequently than males, whereas men admit to littering more frequently.
Digital waste management. In recent decades, the development and adoption of new technology has accelerated dramatically (UNCTAD, 2018). It includes the multiple platforms model which benefitting from the exponential growth of data and information, resulting in the emergence of new startups-business introduced a new data-driven business model. The rise of businesses using digital platforms is also adopted by social enterprises following this model, which is increasingly found in developing countries including Indonesia (British Council & UNESCAP, 2018). The adoption of the platform model can be found in almost major sectors such as transportation, food and beverage, finance, energy, tourism, and also waste management (Kurniawan et al., 2022). Some enterprises as early adopters in these industries succeeded disrupting the incumbent business and shifting the habits, norm, and market-rules in the existing regime. In the waste management sector in Indonesia, with the domination of top-down and centralized models of waste collection, some innovative business models introduced by social enterprises attempted to improve the current system and create a breakthrough at a regime level.
One of the social enterprises in Indonesia, providing waste management services using digital platforms (waste e-trading platform) is Rapel Indonesia (Rapel.id). Founded in 2019 in Yogyakarta, Rapel.id delivers a new approach to solve a low-level collection problem in households, limited infrastructure of waste disposal as well as intended to generate more employment through their mobile apps. With their apps, it allows the consumers to sell their sorted waste instantly, by uploading a photo to the platform and waiting for a nearby collector who already partnered with the company to collect the waste. Consumers will exchange their sorted waste with money which is based on the current market price in the regions. After sorted waste is processed in their sorting facilities, the waste will be sold to the industry manufacturers and recycling companies who produce another material from waste. The platform also provides the guideline for new users to properly segregate the waste in which they contribute to educate the consumers regarding waste collection. In the B2B model, Rapel.id also serves the private companies, small-medium enterprises (SMEs), restaurants, waste banks and other organizations to become users of their waste management services.
Currently, the enterprises mostly operate in the Java region: Yogyakarta, Solo, Semarang and Tangerang. The business itself has advantages in the expansion as they are funded by parent companies and has their own mobile apps and sorting facilities in each region where they operate. It allows them to scale up and reach more audiences, despite the fact that they remain challenged with user acquisition problems, because consumer awareness regarding waste collection in their targeted area is relatively low. The incentivized collection that the model offers can be a potential solution to the low level of waste segregation problem at household level. The model also provides opportunities for new jobs as enterprise’s partner collectors that are open to all segments of societies, including traditional waste pickers that are often marginalized (Reddy & Lau, 2020). From the interview, the study found that their collector partners are coming from different backgrounds such as teachers, and unemployed midwives that are mostly being laid off from their prior work.
Similar to the fellow social enterprise in this study, Rapel.id team was also actively involved in the education and training programs related to proper waste management, that targeted audiences in educational institutions, including religious-based schools. According to the interviewee, the majority of their revenue obtained in the B2B model, which sales from waste trading with the private companies, small and medium enterprises, including food and beverage stores who mostly produce more waste in their daily operation. The value proposition that they offer in this model —companies will receive money from selling their sorted waste to Rapel.id —might influence the B2B customer to use their services rather than competitors who usually charge them for another cost to use waste management services. In the B2C model, the company uses the platform fee-based model which charges 10–15 percent from the user for each transaction. In terms of cost structure, mostly linked to the key resources such as mobile apps development, staffs and collectors compensation as well as maintenance for the sorting facilities.
One of the expert interviews conducted in this study, found that the model of aggregator or platforms has advantages that are relatively easy to be replicated in other areas as they are supported by documented system and technology infrastructures. However, in terms of profitability, the model still needs to consider the sustainability of the model that mostly relied on the waste trading sales, where based on the expert observation, the amount of waste collected from their users is relatively low compared to the conventional collection from local authorities. The expert further predicted that the model of platform that increasingly adopted by social enterprise in the waste management in Indonesia, need an economies of scale in which they have to compete with the current traditional collection to process more waste, as well tapping into opportunities to collaborate with third party and government to remain survive in the current waste management ecosystem. Table 07 below illustrates the business model findings of Rapel
Table 07. Rapel.id’s business model findings.
| Dimensions | Business model structure | Business model findings |
|---|
| Desirability | Customer segments | B2C: Individuals/ households; B2B: private companies; Small Medium Enterprises, Hotel/ apartment, education institutions |
| Value proposition | Easily selling sorted inorganic waste through mobile apps; Fair pricing; Door-to-door waste pickups; Rebranding for companies |
| Customer relationship | Training/ education, waste segregation guidelines |
| Channels | Websites, mobile apps, social media, media coverage |
| Feasibility | Key activities | Waste collection, user acquisition, partnership development |
| Key resources | Sorting facilities; Mobile apps; Collector partners |
| Key partner | Industry factories; Recycling manufacturers; Religious organization, waste banks |
| Viability | Revenue streams | Waste trading sales; Platforms fee |
| Cost structures | Team salary; Mobile app developments; Sorting facilities maintenance |
The role of informal collectors such as waste pickers are significantly important that contributed to reducing waste to the landfill and ocean. Waste pickers are individuals, often licensed, who collect and sort any recyclable materials with resale value that can be collected (Browning et al., 2021). Globally, they are responsible for 60 percent of global plastic recycling (Reddy & Lau, 2020), and the informal sector played critical role in the waste management effort in most developing countries (Korsunova et al., 2022; Tong et al., 2021). In Indonesia, waste pickers supply 1 million tonnes of plastic waste to recyclers, and recover about 26 percent of plastics that arrive at landfills (Ministry of Environment and Forestry, 2020). However, the waste pickers who work mostly in the informal recycling sector often not receive acknowledgment and support by formal solid waste authorities (Safitri et al., 2024; Sembiring & Nitivattananon, 2010).
With the platform and the implementation of a new digital approach that can increase the demand for local waste collectors (Kurniawan et al., 2022), the enterprise has contributed to social justice by increasing obtained value for these underpaid workers, allowing them to work independently and further increase their livelihood standards. It also opens the opportunity to generate new jobs for local residents to become their collector partners. This element of just transition is aligned with the key principles of the just transition agenda by ILO (2015), which is “creating decent jobs and providing support to workers (Atteridge & Strambo, 2020).
Recycling and upcycling model. With the growing projection of plastic consumption per capita and listed as a major contributor to plastic pollution in the world, the concern toward plastic pollution becomes a major issue for Indonesia. It is shown by the establishment formal roadmap by the government such as Indonesia National Plastic Action Partnership (World Economic Forum, 2020) and National Plastic Waste Reduction Strategic Actions for Indonesia by the Ministry of Environment and Forestry (2020). The aim of this multi-stakeholder partnership is to reduce plastic pollution through implementing collective actions that involved government bodies, private enterprises, academia, and NGOs. communities and religious groups. Social enterprises are also included in the scenario, with their various innovative approaches and their integration within informal sectors along the chain from upstream to downstream.
One of the key actions from this scenario is to create high-value recycling that turns plastic waste into a valuable commodity, as well as redesign reusable plastic products and packaging (World Economic Forum (2020). With the current plastic recycling rate of only 7 percent (Ministry of Environment and Forestry, 2020), upcycling and recycling activities become an important part of contributing to the increase in the amount of plastic waste recycling in Indonesia. Gammawaste is one of the social enterprises in Indonesia that play their roles in plastic waste upcycling activities. Founded in 2020, the enterprise focuses to process plastic waste into valuable materials that can be sold to businesses and end consumers. The type of plastic they process is Polypropylene (PP) and Polyethylene (PET), two types that are most commonly used. Gammawaste’s products include furniture (barstool), decorative (ashtrays, flower vases, coasters), building materials, accessories and customize design. Collaborating with interior design companies, the enterprises offer aesthetic, functional and customized products that can be used for businesses or end consumers. The majority of the consumers are coming from businesses (B2B) that are mostly in the restaurants, cafes, and coffee shops, which according to the interviewee, are also become the main sources of their revenues.
Prior to focusing on plastic upcycling models, the enterprise has done several research and development activities related to plastic waste, for example from waste to energy model. However, along the way, they decided to only focus on the plastic upcycling model that is because in terms of business is more viable and profitable than other models. One of the value propositions found is that Gammawaste harness a collaborative approach with various actors, that covers up and downstream such as traditional waste collectors, interior design companies and other waste management startups. These collaborations, particularly with the interior design experts are one of the key advantages for the enterprises to create high-quality products that are accepted in the markets. According to the interviewee, a social enterprise should not only rely on its social values as ‘marketing’ tools but needs to ensure its products and services are excellent that can compete with other players in the markets.
In terms of customers, their buying customers mostly come from the segments with a low level of environmental awareness, which contrast with the common senses. Their current customers mainly choose the products based on their quality, functionality, and available budgets. From this case, we found that upcycling products have the potential to receive high public acceptance and contribute to reducing plastic waste significantly if these end products have competitive advantages in terms of design, functionality and price that are comparable with the traditional, non-sustainable products. Furthermore, in the B2B model, the enterprise also sees the opportunity to deliver a rebranding model for other enterprises that uses their products, to disseminate waste management campaigns and sustainable lifestyles to the broader communities. Table 08 below present the business model findings of Gammawaste
Table 08. Gammawaste’s business model findings.
| Dimensions | Business model structure | Business model findings |
|---|
| Desirability | Customer segments | B2B: restaurants, food stores, coffee shops; B2C: individual consumers; |
| Value proposition | Aesthetic, functional and affordable price; Customized products |
| Customer relationship | Partnership programs; Community engagement; |
| Channels | Digital marketplaces; Social media; Reseller and public influencers; Exhibition |
| Feasibility | Key activities | Upcycling activities, research and development, product design |
| Key resources | Processing machine; Workers |
| Key partner | Waste collectors; Waste management startups; private companies; interior design companies |
| Viability | Revenue streams | Direct product sales (B2B and B2C) |
| Cost structures | Workers salary; Waste processing facilities; Tools and equipment; |
Given the relatively early established time, according to the document provided, Gammawaste has recycled more than 700 kilograms of plastic and sold more than 400 units of upcycling products to the customers. To obtain the plastic waste materials to be recycled in their processing facilities, the enterprises partnered with traditional waste collectors, waste management startups and their inner-circle companies such as families and close friends. One of the challenges mentioned by the interviewee regarding the upstream collaboration is that most of the collectors in their regions have established and continuos contracts with other buyers. This current complex relationship and lock-in nature in the waste management stakeholders often becomes the barrier for early-stage enterprise entering the sectors.
Finally, regarding the just transition elements, the enterprises have two main contributions. Firstly, the enterprises contributed to generating new green jobs for their innovative, environmentally friendly technology. It is also indirectly creating added values for plastic material that can influence the obtained income for waste pickers that potentially improved their livelihoods. Secondly, Gammawaste also contributes to providing training opportunities for up- and re-skilling to their existing and future workers in the waste processing facilities, as aligned with the ILO Guideline for just transition (2015).
Sustainable waste sorting products. One of the major issues regarding waste management in Indonesia is the low level of waste sorting from the household, school, public places or the first waste sources. This challenge is often considered as one of the root causes of poor waste management in Indonesia, where lack of education, public awareness and poor attitudes takes place. With insufficient sorting, most of the low value waste ended up in the landfill, leading to lower recycling rate, where in Indonesia, less than five percent of the total amount of waste generated were recycled (Ministry of Environment and Forestry, 2020). It is important to ensure that waste of its highest quality is sorted at the source in order to prepare the appropriate recycling process through education and public education (Vesere et al., 2021). The role of the informal sector here is very important as they work closely with local residents, as elaborated in the waste bank model previously, shifting the mindset and changing behaviour regarding waste is the most difficult aspect which requires continuous effort both supporting facilities and strong environmental regulation.
Concerned with the inefficient way of waste handling in many observations, a social enterprise was founded to contribute to tackle the problem by developing appropriate products for supporting waste management and circular economy in general through a simple but impactful product such as waste sorting cart. Inowastek attempts to design products to support waste management that can be applied in the small-scale spatial context, such as housing, prison complexes, or universities. Their pilot product, waste cart, aimed to ensure that waste that has been sorted in the household, is not mixed in the way they go and when it ends up at the recycling center or temporary disposal place (TPS3R). The massive public campaign such as sorting at home would be ineffectual if the sorted waste is mixed up when they are transported in the trucks or arrived in landfill, as can be seen in most cases of waste management in most regions in Indonesia recently. With the sorting cart, the enterprise encourages better sorting and recycling in a sustainable way, and at the same time influences the public to learn the basic category of waste.
Inowastek’s products are mainly sold to the local authorities such as environmental service bodies (DLH) in a business-to-government (B2G) model. It supports the government project relating to waste reduction programs, where they are participating mostly in a bidding mechanism (Key Informant 5). The enterprise also supported education programs by involving in the public campaign activities aim to raising awareness to young people regarding climate and environmental issues. In addition, they also partnered with waste banks, providing easier sorting process before the waste being sold, as well as collaborated with private companies to implement their CSR projects to run a waste management service in a small-scale regions. Since it founded in 2018, Inowastek has supported several government programs, pilot projects in prison complex, and implementing some CSR programs in Bandung, West Java.
Their value proposition is that the product can be customized according to the specific needs of the users, for example the volume and size of organic and inorganic waste in the cart can be arranged based on the waste volume specificity in the area. In terms of viability, to produce an end product such as waste sorting cart, Inowastek need a relatively high cost of goods sold (COGS) –about 3 million rupiahs, where they need to batch the production in order to achieve cost efficiency. The reason why the business adopted a B2G is because the order from the government is usually in large quantities, in which they favor compared to one individual order from the consumer. The interviewee stated that they plan to start tapping on the B2B and B2C market (as distributors) in the future to address the scalability challenges for their models. The enterprise also stated the challenge of copyright and patents for their products which are vulnerable to be replicated without holding a sufficient legal patent framework. Table 09 below present the business model findings of Inowastek
Table 09. Inowastek’s business model findings.
| Dimensions | Business model structure | Business model findings |
|---|
| Desirability | Customer segments | B2G (local authorities); B2B (CSR programs; housing area; Eco-village; Universities |
| Value proposition | Sustainable waste sorting products; Customized products |
| Customer relationship | Product guideline; Discount |
| Channels | Social media and websites; Exhibition events; Deck and proposals |
| Feasibility | Key activities | Research and Development; Collaboration projects; Education activities; Marketing and business development |
| Key resources | Patent and license; Operational workers; Tools and machines |
| Key partner | Third party vendors; Waste banks; Recycling center (TPS3R); Local community |
| Viability | Revenue streams | Product sales; |
| Cost structures | Operational cost; Marketing cost; Workers; Building and tools rent cost |
Overall, the key activities of the enterprise are in line with the Ministry of Environment recommendation that is “to improve the operation of collection, sorting, processing, packing, and transporting of recyclable materials through the informal sector and/or community-based organisations” (Ministry of Environment and Forestry, 2020). The enterprise through its innovative product, can support the reduction of waste being ended up in landfill, and prepare to segregate the high possible quality of recyclable waste that can be used for recycling efforts. This can lead to minimize the effect of mismanaged waste that ended up in ocean, or open dump facilities that potentially pollute the surrounding areas affecting vulnerable communities who also have the right for clean air. Ideally, the product can indirectly decrease the waste burning activities that can reduce air pollution, GHG emission from landfill, limit the spread of contagious diseases (World Economic Forum, 2020). Furthermore, the enterprise supports the ILO recommendation regarding just transition (ILO, 2015) by supporting productive, safer, and decent work for the waste pickers in the transition.