As sunset fell Friday night and the air was still sticky, the rhythmic beats of gamelan drums began to sound. My team and I wove our way through the gathering crowd to observe the parades in honor of Nyepi, the Balinese New Year celebration. Large Ogoh-ogoh statues, each carried by 20 men, rose high into the sky, nearly colliding with power lines. Women in matching T-shirts carried torches behind them. Preparations for the holiday had been evident all week, as traffic grew heavier and our meetings with stakeholders in Indonesia’s waste management system were rearranged. Most obvious were the demonic Ogoh-ogohs—intended to draw out evil spirits in the parades—that each village was putting finishing touches on after a month of crafting. Still, in the context of our project, I couldn’t help but think the real threat looming around us was man-made rather than spiritual.
My team of five students from the Yale School of Management and School of Forestry & Environmental Studies was in Bali, Indonesia, as part of SOM’s Global Social Entrepreneurship (GSE) course. The class requires us to apply business concepts we’ve learned in courses throughout SOM’s core curriculum—like Accounting, Global Virtual Teams, Modeling Managerial Decisions, and Operations Engine—to meaningful social issues. It integrates closely with SOM’s mission to educate leaders for business and society and with my personal goal to use my MBA education to drive transformative social change.
As part of GSE, my team had weekly conference calls for nearly two months before we arrived in Indonesia with Kopernik, our social enterprise partner based in Bali. Kopernik rigorously tests simple technologies like water filters and solar lights to solve persistent problems for people living in the most rural parts of Indonesia. They wanted our help assessing the viability of plastic waste processing machines by building a financial model. Once on the ground, we would spend five days meeting the team and developing a deeper understanding of our project.
Indonesia lacks a unified waste management system, and as a result is one of the top three contributors to ocean plastic. Bali’s southern beaches are inundated by trash, threatening the tourism industry and the wellbeing of its citizens. A Dutch organization, Precious Plastic, has formed a global community around open-source machines that can process plastic waste into flakes, pellets, filament, and new products. Kopernik wanted to explore whether the Precious Plastic machines could make plastic valuable and thereby reduce the amount of discarded waste. In addition, Kopernik wanted to determine whether they could provide an income-generating activity for waste pickers, who are typically at the bottom of the socioeconomic pyramid.
Though we’d been thoroughly briefed by Kopernik and conducted our own preliminary research, it was no substitute for meeting with stakeholders in person to understand the waste management landscape and gather inputs for our model. After seeing demonstrations of the machines at the Green School and Precious Plastics Bali, we learned the machines’ capacity is limited. They can only process a few kilograms of waste per hour and rust quickly in Bali’s tropical climate. We also didn’t realize how temperamental plastic is: depending on the type, thickness, and color, plastic has different melting points and releases different toxins. This brought up a host of unexpected concerns about the health and safety of operators and the possibility of doing harm despite good intentions. Faced with the magnitude of the problem at Temesi Recycling’s crowded landfill, we felt discouraged about the impact we could have.
The rest of the week renewed our hope. We learned that there is a market for recycled plastic goods, and many companies in Bali are interested in partnering with Kopernik. We were heartened by the work of organizations like Bali PET and EcoBali, which process plastic bottles into pellets to export internationally. These global social enterprises process plastic because it’s good business, but by creating financial value for themselves they are also creating environmental and economic value for their communities. Yet even these positive examples made us question the additionality of our project. Would the machines recycle new waste or simply divert it from existing recycling plants?
On our last day, we presented our initial findings to Kopernik’s leadership and incorporated some of the data we gathered into an early draft of our financial model. We’ll spend the next month digesting what we’ve learned and developing a more robust and flexible model, but we wanted to share our thought process and explain the benefits and limitations of financial modeling. Although we may have to temper our expectations on how much we can address Bali’s plastic waste problem, we’re excited to continue working with Kopernik to enhance the team’s capacity to utilize financial models in their future decision making.