Recycling: what are the risks and how can they be managed?

Governments and environmental organisations stress the importance of recycling to achieve our climate goals, but economic reality is in danger of throwing a spanner in the works. Many insurance companies have reservations about the sector due to its association with pollution and the risks that the activity entails. Claims figures are often high, and the risks can be unpredictable. A recycling company that can’t find fire insurance can’t operate, though. According to Christel Kiebzak and Sven Bormans, the solution to bringing the recycling and insurance sectors together lies in nuance, technical expertise and a strong safety record.

The problem today tends to lie in perceptions of the recycling sector. ‘The insurance market is challenging for this sector,’ confirms Christel. ‘A lot of insurers pull back simply on the basis of the activity – yet it’s an activity with huge diversity. Our job is to open up the conversation and find solutions that work for everyone. As a society, we can’t do without the recycling sector, so the risks have to remain insurable.’

According to Vanbreda’s experts, recycling has become a catch-all term that encompasses a huge range of risks. This is unfair, because recycling companies differ greatly in terms of processes, volumes, composition of materials and technological maturity. A paper processor’s risk profile is completely different from a car shredder’s. A glass collector isn’t the same at all as a glass melting business. The processing of modern textile blends, plastics or composites presents new, often lesser-known risks.

Unfortunately, due to a few historical claims, these diverse activities are often put in the same box. In reality, the risks vary greatly, and this is where Sven sees the biggest challenge: ‘Everything is lumped together, yet the differences between recycling companies are often huge. If you empty a glass container, the chances of a fire are very slight. Where exactly does the risk lie? If you melt glass, though, you’re already in a completely different phase, a completely different process.’

‘We also used to have much more basic waste materials,’ Sven adds. ‘They were already fairly pure. Textile waste consisted more or less of wool and cotton. There are lots of derivatives these days such as nylon and recycled materials that behave differently. Often, recyclers don’t know exactly what they’re getting.’

Belgium is one of Europe’s recycling champions, along with the Netherlands and Germany. Even so, there’s still too much of an impression that recycling is an end point. ‘In fact it’s often a starting point too,’ says Christel. ‘Recycled products become raw materials for new products or for generating energy.’

The rapid electrification of our society means that the number of lithium-ion batteries in the waste chain is sky-rocketing. They’re everywhere: in bicycles, scooters, toys, tools, household appliances and even greeting cards.

‘Handling a battery is often a difficulty,’ says Christel. ‘How will it react when you put it on the sorting line? Or if it falls on the floor? What’s previously happened to it? Could the battery already be contaminated internally? You usually can’t tell from the outside.’

If a battery is damaged, by being crushed in a grabber or shredder for example, it enters what’s known as thermal runaway,’ Sven explains. ‘That generates a huge amount of heat that’s very difficult to extinguish. If that happens in the middle of a mountain of flammable material, you have a serious problem. That’s one of the reasons why insurers impose stricter requirements on storage, separation, detection and processing times.’

Technological tools already exist to manage the risks, such as thermal cameras, which detect a fire before it becomes visible and can automatically trigger sprinklers. But despite all these technological innovations, risk prevention is still a crucial factor. ‘We talk to the client and also visit the site,’ says Christel. ‘Technology plays a role, but it’s never the first step. First, it needs to be clear how a company operates: material flows, process risks, site organisation and existing preventive measures. Many companies already have good practices, but haven’t formalised them. Making them transparent enables risks to be managed more effectively. Typical considerations include waste volume limitation, lead times, detection and monitoring, employee training and clear procedures. Risk prevention means much more than just investing in resources.’

Vanbreda also has a role to play in this investment strategy, Sven emphasises. ‘We monitor developments closely so we can provide advice in that area as well. There are sensors that don’t detect hydrogen fires, for instance. If you’re working with hydrogen, you need to be aware of this, obviously. For example, we’re currently looking at whether lithium-ion batteries can be extinguished with foam. And we’re discussing risk acceptance in this context with insurers.’

Many recycling companies started out small and grew organically into successful businesses. Good insurance is a real blessing for entrepreneurs too, says Sven. ‘Risks and the potential cost of damage increase as a business grows, so professional risk management becomes a strategic necessity. Insurance itself doesn’t provide peace of mind, but professional risk management does. Fire insurance is the final element: it ensures that a business can recover and remain operational after a serious incident.’

According to Vanbreda’s insurance experts, the market will continue to be challenging for the recycling sector in the years ahead. The requirements will remain strict and premiums high. ‘We are transparent and realistic with our clients,’ says Christel. ‘But there’s definitely an insurance market for companies that can show that they are investing in safety, structure and technology.’

Sven also sees a shift towards greater professionalism: ‘Our mission is to guide clients in this process and in their investments. Companies that manage their risks are banking on the future, and that’s good for the sector, for insurers and for the end customer.’