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Tales of the Fox Guarding the Henhouse

In North America stewardship organizations, businesses, government and environmental organizations have endorsed these principles of product stewardship and extended producer responsibility:

  • Producers are required to design, manage, and finance programs for end-of-life management of their products and packaging as a condition of sale.
  • Producers have flexibility to design the product management system to meet the performance goals established by government, with minimum government involvement.
  • Government is responsible for ensuring that producer programs are transparent and accountable to the public.

Here are three stories about the need to improve the commitment to these principles by stewards and government:

In BC, CTV News reported some recycling agencies raking in millions in profits

Solid Waste and Recycling published “LETTER: Response to BC’s ‘A’ grade from EPR Canada

In Ontario, The Toronto Star headlines said, “Auditors called in Tire Stewardship Scandal

While Canada’s EPR are doing a great job of diverting products from the landfill , all three stories suggest that more scrutiny and transparency is needed to answer where the money goes and how these recycling programs are being managed.

In August 2015, The Container Recycling Institute issued a report, “Review of British Columbia’s Container Recycling System Shows Strongly Performing System But Finds Growing Issues Around Fees and Transparency,” uncovering several areas of concern about BC beverage recycling program including :

  • The presentation of financial data in Encorp’s annual report makes it impossible to know exactly how much its beverage container program costs. The report does not provide sufficiently transparent financial information to the Ministry of Environment, the agency authorized to carry out BC’s recycling regulation, nor to the public. Moreover, Encorp’s CRFs are determined by Encorp with no approval required by the Ministry, leaving consumers no recourse to affect change if desired.
  • As Encorp’s CRFs have been steadily rising, its reserve fund has grown far beyond the $17 million it has calculated as a “prudent” minimum. By the end of 2014, the reserve stood at nearly $34 million.

Stewardship agencies submit audited financial statements such as Encorp Pacific’s 2014 financial statement with their annual reports but there are very few details of how the monies collected are spent.

Certainly the annual reports by these stewardship organizations do not summarize board executive expense accounts or spending as outlined in The Toronto Star article Ontario tire recycling fees found boozy board dinners nor do they report contributions to political parties an activity that both Encorp Pacific and Ontario Tire Stewardship have participated in.

Do we need to know what these stewardship organizations are using eco-fees for? Yes, there needs to be accountability by both stewardship organizations and provincial governments otherwise we continue to have the fox guarding the henhouse.

Command and Control – The Coming Garbage Gold Rush

Zero Waste Canada guest blogger :

Erich Schwartz – Founder and President of Greenomics

Erich is a consultant and entrepreneur focused in developing and implementing strategic plans and solutions for a variety of organizations globally and across industries. Specifically, he has been highly successful with sustainability programs, large scale information and educational technology projects, and telecommunications infrastructure integration projects for Fortune 500, Crown Corporations, Governments, and mid-size businesses throughout the world.

Greenomics

Now that the holiday season has passed wherein we generated more garbage than any other time of year, it is time to reflect. Many of us live in a place where the waste is taken to the magic land of “away”, and we don’t have to worry about it. However, as we shift toward a greener economy, this is not the best way to serve our communities and to stimulate local economic development. What if we looked at waste as a resource that can be mined to make products we want and create local jobs? By strategically rethinking the waste stream, politicians, governments, citizens, and businesses can work together to generate wealth from what is currently a financial, environmental, and social erosion.

Strategic thinking from a business perspective can be quite simple. Crystal ball future needs and get positioned to meet those needs. For example, a clear strategic decision was made by the Bush family (former US presidents) when they acquired approximately 100,000 acres of farm land on the border between Brazil and Paraguay. While running a ranch may be part of the plan, the purchase sits on top of significant natural gas reserves as well as one of the largest underground water resources in the world. It is projected that both will be in high demand in the coming years, and now the Bushes are positioned to provide those resources once the price point tips to profitability. Is it possible that garbage dumps can become strategic resources too? We think so, and it appears some businesses and governments are positioning themselves to be players in this emerging resource industry.

While buying a garbage dump will not be as lucrative as the above deal, it is still an opportunity for visionaries. Typical urban waste is around 50% organics, which if composted becomes soil enriching fertilizer. Given our need for rich soil to grow food, by extracting the organics out of the waste stream we enhance our food production capabilities, and reduce our ‘garbage’ and demand for landfills by 50%. We also save money by reducing how much we pay to have our waste removed and acquire fertilizer for our gardens. But what about the other 50% still being dumped in the landfill?

As we move into an increasingly resource constrained world, the solid waste stream will become more important as a source for resources to produce the various products we demand. In most cases, the current perspective is simply to get the waste out of sight and out of mind as quickly and as cheaply as possible. This view will change and savvy businesses are starting to lead the charge in mining the waste stream profitably. For example, there is Urban Ore in Berkeley, California, Gibsons Resource Recovery Centre in British Columbia, and Kretsloppsparken in Gothenburg, Sweden. And this is just the start of the “gold rush” since studies by the World Bank indicate the potential annual production of solid waste to reach 27 billion tons/year by 2050. This is roughly the equivalent of 50 times the number of passenger cars in the US, which means there are plenty of opportunities for other players to enter the arena. We know that some companies have already figured out how to “mine’ the marine plastic in the Pacific to make packaging.

To solve our current challenges related to waste diversion, we need to engage the business community, but the critical question is “What is the best way to achieve success”?

There is much discussion in the waste management industry about moving to an Extended Producer Responsibility (EPR) model. The concept is to decrease the environmental impact of a product by making manufacturers responsible for the entire life-cycle of their products and packaging – including disposal. Given the costs of waste removal are covered through taxes, the idea of transferring those costs onto the producer and those who purchase their products sounds like a good idea. However, it is the implementation that will determine who benefits.

This brings us from thinking strategically to thinking tactically. EPR has been mandated in British Columbia by the Ministry of the Environment, and in response Multi-material British Columbia (MMBC) was formed as a not-for-profit organization to implement EPR across the province. Their mandate is to reclaim 75% of all packaging identified in the regulations. So, from a tactical business perspective, if something cannot be stopped, then it should be managed. A perspective that became clear when Alan Langdon, chair of the MMBC board, stated “From a producer point of view, if we’re going to have full financial responsibility, we want to have a say in how efficient it is.” So what changes are afoot?

First, there will be a management shift away from local governments and to a Command and Control model driven by producers and retailers through MMBC and the Recycling Council of British Columbia. This becomes a philosophical perspective with implications for the economy, society, and the environment. A shift to a command and control (CnC) structure for recycling can actually stymie local creativity in addressing waste issues because of the one model fits all approach. Meaning if an enterprising individual identifies a business opportunity that uses the waste stream as a resource, such as Eco-flex in Alberta, they would have to compete with the provincial entity for that resource. Such a scenario is likely and would lead to lost opportunities for local economic development.

Second, there will be a financial infusion from industry into recycling. BC’s Ministry of Environment claims the EPR program will reduce the financial burden to general taxpayers by $60-million to $100-million a year. However, the costs of an EPR would still be passed on to the consumer and most likely disproportionately given many of the products and packaging we get comes from outside of BC. Further, additional environmental issues are likely to arise as the waste that was distributed through the province would then have to be centralized for processing, which will increase transportation costs and associated greenhouse gas emissions.

The third big shift will be the management of waste from government (i.e. municipalities) to Producer Responsibility Organizations such as MMBC. While the stated intention is to increase recycling rates, it also undermines a local community’s abilities to use the waste stream as a resource for local job creation and economic stimuli.

As an advocate for cultivating the green economy and having the private sector provide the products and services we want and need, I am not suggesting we prevent the private sector from taking over the management of the waste stream. However, the old management style of CnC that is being developed for managing the EPR program is more likely to damage the emerging green economy as it is to address our waste stream challenges.

Waste streams are one of many topics on every municipality’s plate and generally seen as a problem rather than an opportunity. However, from the perspective of seeing the waste stream as a resource rather than a problem, local authorities appear to be unknowingly giving up local autonomy and the opportunity to cultivate a greener economy.

We need to be more creative by developing a grass roots distributed solution.

Recycling fees fund boozy board dinners?

Recently, The Toronto Star newspaper published an article about the Ontario Recycling program, Ontario tire recycling fees fund boozy board dinners.

The investigative piece by Moira Welsh zeroed in on the expense accounts(using credit card statements) of Ontario Tire Stewardship (OTS) board members, as well as political donations the non-profit stewardship organization made to provincial Liberal party.

The Ontario Tire Stewardship organization (OTS) released a response to the article on their website RETHINK TIRES, replying that board “is comprised of highly skilled volunteers who receive no remuneration. OTS’ total expenditures related to the Board (including one meeting a year in an upscale venue and training and tools directly related to their roles as Directors) is .1 per cent of our overall administration costs.”

Reading both article and OTS’ response highlighted how little both government and citizens know about the inner workings of Canada’s stewardship organizations, and how in the case of recycling fees how the money is actually used and distributed.

The Ontario Recycling Stewardship program collected stewardship fees from first importers and scrap tire in the province. The stewardship fees are used for providing incentives for collection, transport, processing of scrap tires as well as manufacturing of recycled goods.

Registered collectors, transporters, and processors have responsibilities that are stipulated by OTS, and these registered participants (collectors, haulers, processors0 are responsible for costs associated with these OTS stipulations including liability insurance, storage, employee wage and training, and reporting.

In Ontario, when the consumer pays an eco-fee of $4.75 for a passenger tire when purchasing a new tire, the eco-fee is collected by OTS which runs the tire recycling program. As well as administration costs for OTS, the fees are used to pay collectors, haulers, processors and manufacturers incentives( stipulated payments) for their role in the tire recycling program. Collectors are paid an average of 88 cents per passenger tires or the equivalent, haulers  are paid an average of $1.25 per passenger tire or equivalent, and processors get an average of $1.07 per passenger tire or equivalent.

While board meetings are important, OTS needs to realize that a $16,104 board meeting at the Fairmont Chateau Laurier or a $2,023 bill for wine seems very expensive to someone getting 88 cents for handling tires, storing and collecting tires. Perhaps this Toronto Star article and the OTS response also highlight the disconnect some stewards have to the financial well-being of the handlers (the businesses that are recycling the products).