The Responsibility of Commerce

May 4, 2003

By Michael Jessen

"We progress and mature by fault." It's a line used in the movie Ben Hur by Pontius Pilate as he explains to the Jewish nobleman the reasons Rome has committed so many atrocities while expanding its empire.

But this bit of Hollywood dialogue is also an apt description of the human condition today. As a species we seem to have difficulty getting it right the first time. We are continually correcting past mistakes, whether we are individuals or companies.

Dell Computer Corporation last October required customers to drop old computers off at a recycling centre and pay $20 to $50. As Dell and other computer corporations faced growing criticism over their failure to take responsibility for hazardous electronic waste, the company changed its tune.

Beginning March 25, owners of outdated Dell personal computers have been able to treat them like glass, aluminum, plastic, and paper -- by leaving them at the curb for recycling. For $15, Dell will haul away up to 50 pounds worth of discarded computer components (monitors, hard drives, laptops, and the like) for recycling or donation to other users.

Organizations like the Silicon Valley Toxics Coalition (www.svtc.org) and the GrassRoots Recycling Network (www.grrn.org) have been putting the pressure on American computer companies to take responsibility for their electronic waste or "e-waste."

A February 24 front-page article in the Washington Post newspaper (www.washingtonpost.com/ac2/wp-dyn/A56653-2003Feb24) explains how the United States sends as much as 80 per cent of its obsolete computers to countries like China, India, and Pakistan. The article goes on to detail how carcinogens and other toxins contained in the machines are entering the rivers and soil of these overseas countries. As a result, people there are suffering high incidences of birth defects, infant mortality, tuberculosis and blood diseases, as well as particularly severe respiratory problems.

The issue of taking back obsolete waste is part of a growing movement called Extended Producer Responsibility. EPR is based on the premise that the primary responsibility for waste generated during the production process (including extraction of raw materials) and after the product is discarded, is that of the producer of the product.

The ultimate goal of EPR is sustainable development through environmentally responsible product development and product recovery. The theory is that making producers pay to remediate the waste and pollution they create, they will have an incentive to incorporate a broader range of environmental considerations into their product design, packaging and choice of materials. The incentive is to reduce consumption of resources at all stages of the lifecycle of a product or package. Cleaner production and waste prevention are the goals.

Europe is well ahead of North America in standing up to big companies and telling them to take care of their own waste. Instituted and proposed legislation in the European Union (EU) will soon hold any company that enters the European market responsible for the environmental impacts of its products. Currently 28 countries -- including Germany, Japan, and France -- around the world now have packaging take-back laws.

The Swedish government issued one of the finest statements about EPR in 1975. "The responsibility, that the waste generated during the production processes could be taken care of in a proper way, from an environmental and resource-saving point of view, should primarily be of the manufacturer. Before the manufacturing of a product is commenced it should be known how the waste which is a result of the production process should be treated, as well as how the product should be taken care of when discarded."

There are shocking statistics as to why this is so important. The amount of waste generated to make a semiconductor chip is over 100,000 times its weight; that of a laptop computer, close to 4,000 times its weight. Two quarts of gasoline and a thousand quarts of water are required to produce a quart of Florida orange juice. One ton of paper requires the use of 98 tons of various resources. One automobile generates more than 25 tons of waste during manufacture.

According to Paul Hawken, about 3,200 pounds of waste are generated for every 100 pounds of product manufactured in the U.S. Hawken is the author of The Ecology of Commerce and co-author with Amory and Hunter Lovins of the influential book Natural Capitalism: Creating the Next Industrial Revolution.

Hawken says industry moves, mines, extracts, shovels, burns, wastes, pumps, and disposes of 4 million pounds of material in order to provide one average middle-class American family’s needs for a year. In Natural Capitalism, the authors estimate the annual cost of wasting resources and people in the U.S at a staggering $2 trillion. Hawken concludes that Americans waste or cause to be wasted nearly one million pounds of materials per person per year.

Robert Ayres, the inventor of the term “industrial metabolism,” has carefully analyzed the flow of materials in the manufacturing process. His conclusion: 94 percent of the materials extracted for use in manufacturing becomes waste before the product is even made. And 80 percent of what’s left becomes waste within six weeks of use.

The late New Denver author Grant Copeland writes in his book Acts of Balance, “Only approximately ten percent of economic activity provides us with goods and services that are necessary for biological survival. The rest satisfies our desire for things we want but do not really need."

University of BC ecologist Bill Rees created a measurement called the "ecological footprint" which is the total area of land required to provide the food, clothing, absorption of wastes, etc. for each of use in a year. He finds the collective impact of all Canadians is more than four times the total useable land area of Canada.

There is therefore little doubt that producers should be responsible for the entire life cycle their products from point of creation to ultimate disposal, reuse or recycling. It is also the easiest place to assess responsibility. It is the manufacturer who develops and designs the product or package, and it is the manufacturer who chooses the materials for that product or package. Therefore, the most efficient and effective point at which to reduce waste and encourage reuse, reduction and recycling is at the product development stage. It is at that point in the product's life cycle that decisions can be made to minimize the environmental impact of the product.

There is another reason for EPR. Local taxpayers should be fed up paying the skyrocketing costs of waste removal, disposal etc. The City of Nelson will spend $1 million on waste management in 2003. The Central Subregion of the Regional District of Central Kootenay, which landfills and recycles the waste generated by Nelson's 10,000 residents as well as that generated by an additional 10,000 rural residents, will spend $2.1 million in 2003. This is up from $1.6 million last year and more than double the 1994 expenditure.

One wonders why local municipalities and residents are not screaming the line from the movie Network in which the character Howard Beale shouts, "I'm mad as hell and I'm not going to take it anymore."

EPR shifts the costs of managing post consumer products and packaging from the public to the private sector. Internalizing the external costs through a combination of economic and physical responsibility provides an incentive to manufacturers to design products that have minimal environmental impact throughout their life cycle, and maximize reuse, recycling and reduction opportunities.

There are three categories of policy instruments that can be initiated by government to encourage product responsibility.

Regulatory Instruments: mandatory take-back; minimum recycled content standards; secondary materials utilization rate requirements; recovery rates/time; energy-efficiency standards; disposal bans and restricted; materials bans and restrictions; and product bans and restrictions.

Economic Instruments: advance disposal fees; virgin materials levies; removing subsidies for virgin materials; deposit/refund systems; and environmentally preferable products procurement procedures.

Informative Instruments: seal-of-approval types of environmental labelling (Environmental Choice); environmental information labelling (energy efficiency, CFC content, recycled content); product hazard warnings; product durability labelling.

A number of instruments are currently being employed to shift responsibility for product and packaging waste from government and taxpayers to producers and consumers. Three policy instruments and examples of each are as follows:

Deposit refund systems: Deposit refund systems can encourage reuse, but at the very least they provide a monetary incentive to the consumer to return the product or package, and an infrastructure for its collection and recycling.

Targeted Product Taxes: Product taxes influence the choice of materials used. A targeted eco-tax levied in Belgium reduced consumption of PVC.

Advanced disposal fees: These fees are designed to influence the choice of materials used, and can generate substantial funds that may or may not be used by government for environmental projects. They are sometimes refunded to consumers, but generally the consumer is unaware of the fee.

EPR initiatives are extremely good for companies. As a primary example it can reduce costs. For instance, Xerox saves over $200 million a year by recovering and remanufacturing used copiers. EPR can also help companies retain customers when they offer leasing, take-back, and other post-purchase services.

In addition, EPR can reduce production time and lower production costs; improve decision-making; open new market opportunities; proactively prepare a company for regulation; gain market advantage; increase marketability; and generate consistent corporate environmental principles.

A growing movement of environmental and social responsibility is driving the issue of EPR into greater prominence. Movement leaders include The Global Reporting Initiative (www.globalreporting.org). The GRI is a long-term, multi-stakeholder, international undertaking whose mission is to develop and disseminate globally applicable Sustainability Reporting Guidelines for voluntary use by organisations reporting on the economic, environmental, and social dimensions of their activities, products and services.

Another important organization is the Coalition for Environmentally responsible Economies (www.ceres.org), a community of forward-looking companies that have committed to continuous environmental improvement by endorsing the CERES Principles, a ten-point code of environmental conduct.

The Corporate Social Responsibility (CSR) movement and groups like The Natural Step (www.naturalstep.org and www.thenaturalstep.org) are also providing visionary leadership toward a sustainable world.

But in the end, society may have to develop an ethical and moral foundation toward our use of natural resources. We can also be guided by asking fundamental questions like "Why are we doing this in the first place?"

Just as society needs a vital EPR sector, there is obviously a need for an Extended Consumer Responsibility movement. Just because manufacturers and producers make it, doesn't mean that we have to come and buy it. If we want companies to adhere to social and environmental values, what values are consumers going to live by?

For example, I have chosen to boycott purchasing products in two types of packaging -- tetra paks and aluminum cans. The former is made from three layers of paper, three layers of plastic, and a layer of aluminum. These are complicated, expensive packages to make. Calculate the per millilitre cost of the juice inside one of the small tetra paks and compare it to the cost of juice purchased in a glass bottle or gable top container larger than one litre in size, and you'll realize how much you are paying for the packaging.

An almost two-page description of the complicated process of producing an aluminum can is contained in Natural Capitalism and convinced me these containers are just too costly to the environment.

If you are concerned about the companies that make products you are interested in purchasing, it is wise to first consult www.responsibleshopper.org. You'll discover the good, the bad and the ugly behind the products you buy everyday.

Clearly, humans have a lot to learn about reducing waste. In addition, there is a lot of waste to propel a new economy – an economy based on reusing and reducing waste. A strategic materials policy to shift from resource extraction to materials reuse and recycling will create important economic opportunities for urban and rural regions alike. Eliminating waste and cycling all of our used resources back into the economy will support community economic growth, create jobs, reduce pollution, and save natural resources. It is time for both producers and consumers to turn this challenge into an opportunity. For if we truly do progress and mature by fault, the question each of us should be asking is how many more faults are we going to be allowed to make?

RESOURCES - Interface is the world's leading commercial carpet and interior fabrics manufacturer. It is also a leading U.S. provider of commercial floorcovering services, and the second largest U.S. provider of underfloor connectivity and air distribution systems. For Interface, sustainability is more than surface appearance. It's a belief that is built into their business model. It's an underlying corporate value, ensuring that business decisions are weighed against their potential impact on the economic, natural and social systems the company touches. See www.interfacesustainability.com for more information. Electrolux (www.electrolux.com) is another company that is embracing the leasing and servicizing of its products. The company now leases -- instead of selling -- washers, ensuring customers have the most efficiently operating machine. Visit the environment pages on the company's web site for more information.

For further information on Extended Producer Responsibility, consult the following web sites:

Extended Producer Responsibility & Stewardship, Environment Canada - www.ec.gc.ca/epr/en/index.cfm

Inform - Strategies for a Better Environment - www.informinc.org/epr_00.php

U.S. Environmental Protection Agency, Product Stewardship - www.epa.gov/epaoswer/non-hw/reduce/epr/

ANPED, Northern Alliance for Sustainability, Amsterdam - www.anped.org/index.php?a=4&b=4120

New South Wales EPA - www.epa.nsw.gov.au/waste/epr.htm

United Nations Environment Program, Production and Consumption Branch - www.uneptie.org/pc/pc/tools/epr.htm

Business for Social Responsibility - www.bsr.org/BSRResources/WhitePaperDetail.cfm?DocumentID=436

GrassRoots Recycling Network - Extended Producer Responsibility -www.grrn.org/resources/producer_responsibility.html

Institute for Local Self-Reliance, Waste to Wealth, Extended Product Responsibility and Product Stewardship - www.ilsr.org/recycling/eprhomepage.html

The U.S. packaging industry uses 22 billion pounds of plastic resins, of which only 2 billion pounds or 5.2% are recycled. - www.ilsr.org/recycling/other/take_back_conf.pdf

EPR, A Primer by Pat Franklin, Container Recycling Institute - www.mindfully.org/Plastic/Extended-Producer-Responsibility.htm Extended Producer Responsibility in Cleaner Production by Thomas Lindhqvist - www.iiiee.lu.se/information/library/publications/dissertations/2000/2.pdf

Reason Public Policy Institute - www.rppi.org/052202.html

Product Stewardship Institute - www.productstewardshipinstitute.net/

American Forest and Paper Association - www.afandpa.org/Content/ContentGroups/Trade/Market_Access_and_Product_Issues/Extended_Producer_Responsibility/Extended_Producer_Responsibility.htm AF&PA opposes EPR proposals, including mandated take-back schemes, container deposits and advance disposal fees, that impose waste management and disposal costs solely on the manufacturer. To be successful, any policy proposal addressing waste or litter issues must involve the end user of a product or package -- the consumer. AF&PA believes government bodies should embrace the concept of shared producer responsibility, which connects individual responsibility with industry initiatives and emphasizes joint responsibility between companies and consumers toward our environment.

Michael Jessen is a Nelson-based consultant who helps companies and communities achieve a sustainable future. He can be reached by telephone at 250-229-5632 or by e-mail at Michael@zerowaste.ca. His company -- Zero Waste Services -- has an award-winning web site at www.zerowaste.ca. The above column was adapted from a speech given to the "Waste to Wealth" conference presented by the Kootenay Association for Science and Technology (www.kast.com) on April 29 and 30, 2003 at the Prestige Lakeside Resort in Nelson, BC.


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