It’s not just Peak Oil; It’s Peak Everything: The Business Case for Extended Producer Responsibility (EPR)

Francesca RheannonWe are running out of the materials to make our Stuff. It’s not just Peak Oil; it’s Peak Everything.

Some industry giants are getting scared that virgin materials for packaging their products are going the way of the Dodo – and they’re putting their hopes into recycling. They want us all to get serious – really serious – about recycling. And they are willing to put their money where their mouth is.

One of those companies is Nestlé — in terms of revenues, the largest food company in the world. Only 35 percent of municipal solid waste is recycled in the U.S. (other industrialized nations recycle twice that amount) and Nestlé has a compelling interest in raising that rate far higher: they want access to lots of high quality recycled materials.

They think other companies do, too. That’s why they want the industry as a whole to step up to the plate and take responsibility for bringing recycling up to 21st century needs.

Recycling Reinvented

Last year, I spoke with Nestlé Waters North America’s VP and Director of Sustainability, Michael Washburn, about the business case for EPR, or Extended Producer Responsibility, a model that requires packaging and printed materials companies to cover the waste management costs of their products. He had begun working on an EPR initiative with As You Sow that sought to bring EPR to states in the U.S. (It already exists in various forms in other countries, like the EU, Canada and some Latin American nations.)

Recently, I checked in with Washburn again, to see how the project was faring.

“We came to this because we want more recycled content in our packaging and in order to get that, we needed a better recycling system in America,” Washburn told me. He’s excited about a new organization that has formed out of the earlier efforts, Recycling Reinvented. An independent nonprofit, with a board comprised of representatives like Nestlé Waters North America Chairman Kim Jeffery and Recycling ReinventedRobert F. Kennedy, Jr. from industry and the nonprofit world, it’s become a think tank for packaging EPR in the U.S., according to Washburn.

It’s also, Washburn says, a platform for Nestlé Waters North America and other consumer brands and non-industry stakeholders to come together on two key questions: one, what is the best approach to establishing EPR, with “best” defined as most efficient at the lowest cost with the best results; and two, to establish EPR as a policy instrument to dramatically improve recycling rates for America.

The initiative is working to pass laws at the state level that would set standards for recycling but give the management and cost of the programs over to companies. Washburn thinks that’s the right approach, both economically and politically.

“If we are right, recycling will not only be increased but will cost society less,” he told me. “If you switch out the way we pay for it today, in the form of taxes and fees, and build the cost into the cost of packaging at a very balanced and modest level across thousands of brands and dozens of materials, you could generate the revenue necessary to improve the recycling infrastructure while, at the household level, people would effectively pay less.”

Extended Producer Responsibility Increases Some Costs, Lowers Others

But wouldn’t that increase the cost of consumer goods? I posed that question to Washburn. “Correct,” he answered. But it would be hardly noticeable. “Imagine a couple of pennies per case of bottled Recycling Reinventedwater or a fraction of a penny for a cereal box, a tenth of a cent for a Tide bottle.”

Moreover, if state or municipal governments stopped charging residents or imposing taxes for recycling programs, it would result in lower costs to consumers. “We can’t make the guarantee that it would reduce taxes,” Washburn acknowledged (since governments could just apply the taxes to another function), “but we can say that for the provision of the recycling function, which doesn’t have to be a government service, we will charge you less.”

There has been pushback from companies, however.

Washburn says the greatest challenge the project has faced in the past year is overcoming their prejudices against working with government and assuming responsibility for costs. He explained:

“If I say to you, Brand Owner X, ‘this is going to cost you money, because you’re going to have to charge your consumers more,’ the reaction is, ‘That’s going to put me at a competitive disadvantage.’ And I say, ‘No, your competitors have to do it, too.’ ‘OK well, that feels a little bit better, but you’re still asking me to pay a cost that historically, I’ve not had to pay.’

Then you say, ‘Yeah, but look, the overall cost of this to the people you serve, your customers, is going to be less than what they have to pay today and there’s a whole host of societal benefits that’s going to come from that.’

There are some industry people who get that — and if you talk to the sustainability folks, they get it in a heartbeat. But the public relations folks get it more slowly. When you get to the corporate executive and you wrap it around brand equity from a sustainability standpoint, protecting the long term access to limited materials, limited commodities, and you talk about it from a standpoint of a political reality that this is something that might happen anyway and wouldn’t it be better if industry had a seat at the table, people are starting to come our way.”

Companies Leery of Mandates, But EPR Promises Greater Control

But the headwinds EPR faces are still formidable. Although the issue has not even made it onto the legislative roster of any state, opponents have begun lining up. Fears have been sparked by the experience of some global companies with EPR in other countries.

“EPR already exists in 45 countries around the world and there are differences both among those programs and between those programs and what we are proposing for the U.S. But if you are a global company and you’ve interacted with those other programs, there are probably things about those programs you don’t like,” Washburn said. “Industry feels like it’s a government mandate that they did Recycling Reinventednot have any influence on when it was established — which is true in Europe and some places in Latin America.”

Washburn also points to the traditional mistrust industry has for “shared responsibility,” where government and industry share the costs of a program and negotiate its terms.

But Recycling Reinvented isn’t promoting shared responsibility.

“We’re calling for a 100 percent industry responsibility, meaning industry will pay the full cost of the recycling program,” Washburn explained. The only role of government is to mandate the recycling target – anything more might muddy the waters.

 Closed Loop Financing

“If you introduce government to that equation where sometimes what’s spent on recycling is very difficult to untangle from what’s spent on solid waste management writ large or other government programs provided at the municipal level, the clarity of the program and your ability to manage to the lowest cost solution is made more difficult.”

Instead, Nestle and Recycling Reinvented want a “closed loop of financing” that requires industry to meet the target and allow industry to manage the costs so that we can make it less expensive for consumers.

Will EPR gain enough corporate supporters to “reinvent recycling” in the U.S.?

Key to the effort will be getting enough companies to understand it’s in their common interest. More on that in tomorrow’s post.

For today, I’ll let Michael Washburn have the last word:

“There’s no defense for 11.4 billion dollars worth of recyclable packaging being landfilled in the United States. I cannot be convinced that there is an environmental, financial or a societal upside to letting that continue.”

This article was originally published on CSRwire
Francesca Rheannon is an award-winning journalist and managing editor for CSRwire’s blog, Talkback.