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Fixing Recycling: How Do We Close the Loop?
By Holly Testa, Director, Shareowner Engagement

Many communities have recycling programs. And yet, this patchwork system of taxpayer funded programs produces marginal results for the United States overall that lag far behind other developed nations. Why?

Throwing Away $11.5 Billion

As You Sow has estimated that the value of wasted packaging in the U.S. in 2010 was $11.5 billion. Most of these wasted resources end up in landfills, but plastics in particular are making their way to the oceans with devastating results.

While there are notable exceptions, such as San Francisco's remarkable 85% recycling rate, the EPA estimates that the 2012 nationwide recycling rate was a paltry 34.5%. Recycling is left up to local municipalities. Few have implemented mandates such as bottle deposits that provide financial incentives proven to boost recycling rates and improve the quality of raw materials collected. Recycling programs with low participation rates have higher costs—leading to a self-fulfilling stagnation due to chronic underfunding.

U.S. Company Policy: Propping up the Old System

At least U.S. companies are recognizing the problem. A consortium of companies recently launched the Closed Loop Fund, “…formed to provide municipalities zero interest loans and private firms engaged in public-private partnerships access to capital at below market rates in order to spur investments in municipal recycling programs.”

Conrad MacKerron, Senior Vice President of As You Sow, says, “It’s good in that it provides additional financing to communities struggling to upgrade curbside recycling; but it’s also wholly inadequate in that it continues to place the entire financial burden on taxpayers. Major brands continue to lack an overall strategy for how to deal with the problem.”

Shifting to Extended Producer Responsibility

As You Sow advocates a comprehensive shift to extended producer responsibility (EPR)—shifting the financial responsibility for post-consumer waste to producers and consumers.

Why would this make a difference? It puts the cost where it belongs. Taxpayers should not pay for packaging disposal; it is a cost of the product it protects. Integration of disposal into packaging cost incentivizes producers to create the most efficient package, and deposits lead consumers to recycle. A system is created that produces a closed loop—a stream of high quality materials used to create new packaging.

As You Sow points out that the concept is not an unproven one: “…while U.S. companies resist taking responsibility for packaging, their European counterparts are praising the success of EPR systems. The amount of packaging going to final disposal in 15 E.U. countries fell by 43% over the past 11 years, largely due to higher recycling levels generated by these laws.”

 

At First Affirmative, we understand that the ways we save, spend, and invest can dramatically influence both the fabric and consciousness of society. We believe that in addition to the benefits of ownership, investors bear responsibility for the impact our money has in the world. Are you making conscious decisions about the impact of your consumer purchase and investment decisions?

Mention of specific companies or securities should not be considered an endorsement or a recommendation to buy or sell that security. Past performance is no guarantee of future results.

 

Posted: September 22, 2014