A consortium’s new initiative to loan to governments for recycling might be just another example of ‘easy sustainability.
AG Lafley, CEO at P&G, said the initiative was “good for consumers, and good for the environment” while PepsiCo’s CEO, Indra Nooyi called the fund a “novel approach” to the problem of low recycling rates.
One headline even described the fund announcement as “groundbreaking”.
According to Walmart, “The aspirational goal is to divert valuable raw materials from landfill by helping to provide 100% of US consumers with access to recycling where and when they need it.” The fund aims to provide low interest loans to municipalities to advance projects that increase collection and improve recycling infrastructure.
For starters, while $100m seems like a lot of money, it’s really just a drop in the bucket – both in terms of what it actually costs the companies, and the amount that’s actually needed to significantly boost recycling in the US. Here are a few numbers for comparison:
• The combined annual revenue of nine of the companies involved is $815bn dollars.
• Their combined annual profits are $61.3bn.
• $100m equals approximately .0001% (one 10 thousandth of a percent) of annual revenue, or .0016% (one 16 hundredth of a percent) of annual profits.
To put this number in a perspective for what it actually means for boosting recycling, consider:
• San Jose, California just spent $50m by modernizing its material recovery facility.
• Minnesota alone spends $60-70m to fund its curbside recycling program annually.
• California tax payers and local governments spend around $520m each year to combat litter and curtail marine debris, which is mostly packaging.
Secondly, this is a loan fund. They’re lending the money, not giving it away. It’s essentially a recycling bank. They’re saying, “Come to us with a worthy project and we’ll loan you some money.”
While this may help some cities finance some relatively small projects, this is not – nor should it be seen as – a game-changer. This loan fund will do little to help achieve the stated goal to “provide 100% of US consumers with access to recycling where and when they need it”.
So why are they doing it? Every company wants to build their green cred through touting sustainability efforts. For example, at the Walmart expo, P&G also trumpeted their detergent compaction process which puts more detergent into a smaller package as a sustainability initiative. This is what I would call “easy sustainability” because it either costs nothing or saves the companies money. Marketers love easy sustainability because it helps them woo higher-income customers who are willing to pay more for a seemingly greener product.
However, many corporations are completely reluctant to do the harder work of “authentic sustainability” – projects or public policy initiatives that may cost money but make significant progress toward solving environmental problems that the companies help create.
For example, chemical companies may resist reformulating their products even when strong scientific evidence suggests they are causing harm. Energy companies may resist legislation to require the reduction of climate change pollution, rather than working with policy makers to design policies to successfully reduce emissions while protecting bottom lines.
The Closed Loop Recycling Fund is another example of easy sustainability. The companies involved are not seeking to take responsibility for recycling the packaging waste they create. They are not even really ponying up the money; they’re loaning it. Unfortunately, the money promised comes with strings: that local governments will continue to clean up after their mess when the money’s all gone.
This is perhaps the unspoken agreement behind this raw deal – that companies bear little to no responsibility for their packaging; and that governments should continue to subsidize the management of packaging waste through municipal waste services and taxpayer dollars.
Which brings us back to another reason why they may be doing this – because they’re scared of extended producer responsibility (EPR) legislation, which would make them responsible for financing packaging collection and meeting recycling targets. EPR is the norm in Europe and increasingly Canada and the rest of the developed world. EPR shifts financial and management responsibilities for collecting and recycling packaging from local governments and taxpayers or ratepayers, to producers and consumers.
When you compare the results on packaging recycling between the US and Europe, it’s not even close:
• Glass: US: 33%; EU: more than double at 70%
• Metals: the most valuable part of the packaging waste stream, US: 55%; EU 72%
• Paper: US: 62%; EU: 85%
• Plastics: US 13%; EU: more than double at 33%, although still under performing.
While the same companies involved in the Closed Loop Recycling Fund have operated under EPR systems throughout Europe for many years, they have given strong resistance in the US. This policy approach would cost money and would require them to internalize the costs that packaging waste creates for society and the environment – litter, beach cleanups, solid-waste and recycling costs, wasted natural resources and energy, habitat destruction and lost opportunities to grow jobs in recycling.
EPR is not a panacea, it is an authentic sustainability approach to packaging waste. It makes the environmental management of packaging just another cost of doing business – like R&D or marketing. Only a few companies have been willing to embrace it thus far. The rest are sitting on the sidelines or cooking up half measures to divert attention from real solutions.
Sadly, rather than being a game-changer, the Closed Loop Recycling Fund appears to be just another example of big corporations passing the buck when it comes to sustainability.