Why We Need Regulation for Fair and Effective Stewardship Programs and Why Voluntary Systems are not the Answer
Last month, as the Product Stewardship Institute celebrated its 10th Anniversary at our national forum, a new coalition of manufacturers seeking voluntary programs announced its creation. The Product Management Alliance (PMA) launched a press release stating that it seeks to “…support voluntary market-based extended producer responsibility efforts and voluntary incentives for increased recovery and sustainable product and package design.” PMA is comprised of manufacturers of carpet, electronics, toys, paper, packaging and transportation materials, mattresses, plastics, personal goods, and pharmaceuticals. But while voluntary programs have a definite role in reducing the health and environmental impact from consumer products, they are no substitute for balanced regulation, which is often a better way to foster innovative market-based solutions.
One good place to start is with the facts. Voluntary, market-based approaches will result in high collection rates only when a product has value at the end of its useful life greater than the cost to collect and transport that product to a secondary market. For example, many retailers collect toner cartridges because they can refill and sell them at a profit. No regulations are needed because the value of the used cartridge is greater than the cost to collect, transport, refurbish, and resell the refurbished cartridge. Retailers have the incentive to heavily market the return of those cartridges. In another example, a car battery left on the curbside will magically disappear because some enterprising scrap dealer will always pick it up and bring it to market for the value of the lead. Unfortunately, though, the cost to properly manage many other consumer products – including carpet, mattresses, electronics, toys, and all the other products whose manufacturers have formed the Product Management Alliance – is much greater than the market value of the used product.
After nine years and a signed agreement, the carpet industry’s best efforts to put in place a voluntary collection and recycling system has resulted in the recycling of only 4.5 percent of all the carpet available for recycling in 2010. The rest of that carpet material – more than 95 percent, or nearly 2.9 million tons – was disposed of in landfills and incinerators. Not only was this material wasted, but it causes operational problems at these disposal facilities, resulting in extra costs. The 13-year old voluntary industry thermostat recycling program reached only a 5 percent recycling rate before governments started to regulate. And the voluntary industry recycling program run by the rechargeable battery recycling industry for the past 17 years has posted only a 10-12 percent rate.
Wasted resources result in lost jobs and economic value. This is not a band wagon to hop on and emulate.
Don’t get me wrong. PSI supports voluntary programs under certain circumstances. Voluntary programs work well as a ramp up to regulated programs. They can grease the wheels so that, when a regulated system kicks in, the players know what they are supposed to do. These programs can also allow an industry leader to spark an innovative program. PSI worked with Staples in 2004 to develop the country’s first computer take-back program, which was piloted, then scaled nationally after two years. This voluntary program is available to everyone, and it resulted in innovative programs by others in the office supply sector, such as Office Depot and Office Max, as well as Best Buy. And voluntary programs can operate in areas where no laws, or weak laws, are in place.
But relying on manufacturers to voluntarily collect their products is like trusting that people will stop at intersections with no stop lights or signs…and no threat of enforcement.
Some people will have the sense to do it, but most will not. This is why the environmental movement was born nearly 50 years ago. It was because the market cannot police itself, resulting in environmental externalities in the form of pollution that impacts all of society. Do we really have to explain this concept all over again? Have we regressed this much?
Imagine a professional ballgame with minimal rules, no common goals, and no referee, where each player performs according to his own definition of success, and where there is no penalty for not playing. Like this imaginary game, voluntary product stewardship programs create a competitive advantage for those companies that will not act unless forced to do so. And, in every case, there will be a significant number of those companies. This reticence is unfair to those corporate leaders that know what is needed, have the ability to reach high performance, but get dragged down to the least common denominator.
The buzz among the product stewardship community is that the formation of the PMA is an indication that the product stewardship movement has gained steam, attention, and credibility. There is an interest in finding ways for voluntary industry initiatives to integrate with regulated programs. But there is also a concern that PMA is promoting voluntary programs to block sensible laws that will require them to take greater responsibility, even if the results will be better for the common good. There are other concerns about voluntary programs. Since they rely on the good will of companies, they could be here today but gone tomorrow. And it is often hard to know how effective they are since program operations are often not transparent, and companies selectively report data.
For the past 30 or 40 years, there has been a creeping sense among some in politics that all government officials are inept bureaucrats tying companies in knots, preventing job growth, and wasting investment dollars for little benefit. To be sure, those officials exist. But most officials I know are interested in using their authority to create a level playing field for fair competition that will result in more recycling jobs from materials that previously polluted the environment. They want to set broad performance targets and allow companies the flexibility they need to innovate and reach the targets at minimum cost. That is the type of balanced regulation and progress we need.
Government product stewardship regulations will result in fair and effective systems. Voluntary actions will not.