Extended Producer Responsibility
Extended producer responsibility, which was regarded as a revolutionary idea only a few years ago, is now rapidly gaining acceptance around the world. Although the United States will probably not adopt EPR legislation at the federal level any time soon, American companies will increasingly encounter the concept in many guises, both at home and abroad.
Extended producer responsibility imposes continuing accountability on producers over the entire life cycle of their products.
Bette Fishbein of INFORM, Inc., a nonprofit environmental research organization, has studied EPR extensively. She notes, "In practice, the term has mostly been used to describe extending responsibility for products to the post-consumer stage--after they are discarded and become waste. EPR shifts responsibility for waste from government to private industry, forcing producers to internalize waste management costs in their product prices."
The concept is often implemented through "product takeback," although producers rarely are required to physically collect discarded items themselves. In most cases, they instead contract with third parties to handle the items.
DEVELOPMENT OF EPR
EPR got its start in 1991, when Germany-- prompted by a serious landfill shortage-- adopted a law making producers responsible for product packaging after consumers discard it. The law simultaneously mandated that recycling rates for many materials (including glass, plastics, steel, and paper) be increased to anywhere from 64 to 72 percent-- an enormous jump from previous levels.
In response to the packaging law, German industry adopted the "Green Dot" system. "Industry established a non-profit company called DSD to operate the system," says Fishbein. "DSD licenses its logo, the green dot, for a fee. Consumer product manufacturers pay DSD to place the green dot on their packages, and this represents a 'recycling guarantee.' The licensing fees paid by companies are used to pay for the collection and recycling of packaging waste throughout Germany. Households have two bins-- one for regular trash, which they pay municipalities to collect, and one for packaging, picked up free by DSD."
The German requirements initially were controversial with industry (which objected to the cost), with environmentalists (who wanted even stronger mandates), and with other European nations (who complained that Germany was interfering with their materials markets). The Green Dot program also ran into financial difficulties early on, when some producers failed to pay the required fees on time and DSD found itself facing higher-than-estimated waste management costs.
Nonetheless, says Fishbein, "the concept spread like wildfire."
A BURGEONING TREND
EPR is now becoming institutionalized throughout much of the industrialized world-- with the salient exception of the United States.
States Fishbein, "The European Union has endorsed the concept of EPR in its directive on packaging. All its member countries, which take in most of western Europe, are adopting EPR in some form. And some eastern European countries like Poland, Hungary, and the Czech Republic have also joined in. The policy also is spreading to Asian countries such as Japan, Korea, and Taiwan."
EPR is also beginning to reach beyond packaging to cover products themselves. Says Fishbein, "The European Union is already circulating a proposed directive on EPR for electronics, and it has another one in the works for automobiles." European companies (particularly carmakers) have begun to respond to the impending challenge by making their products easier to disassemble and recycle at end of life.
The various countries that have adopted EPR have imposed somewhat different requirements-- making it all the more complex for companies that do business multinationally. But some efforts are now under way, particularly in Europe, to harmonize EPR laws.
HOW IS EPR WORKING?
Extended producer responsibility has already had a substantial effect in Germany, the only country that has been living with EPR long enough to develop a solid track record. Packaging material use in Germany dropped about 4 percent annually for the first few years of the program, and is continuing to decline. And the benefits have gone far beyond just freeing up scarce landfill space.
Says Fishbein, "Transferring responsibility for waste to the producer is one of the best ways to force changes 'upstream.' When companies have to worry about what's going to happen to their product when it becomes waste, that affects all their decisions about product design and material use. When companies reduce the amount of material they're using to package a product, that means less raw material has to be extracted. You avoid all the major environmental impacts of extraction, material processing, and manufacturing."
But Germany's EPR program has proven very expensive to implement, and opponents argue that this demonstrates the economic unfeasibility of EPR. These cost figures may be misleading, however, says Fishbein. "The German program has been expensive, in my judgment, for a couple of reasons," she says. "One is that when you set up a dual system-- a separate collection system parallel to the regular trash collection system-- that in itself can be very expensive."
"Second, a lot of the costs of the program have gone into meeting the very high recycling mandates that were imposed, particularly the one for plastic. But such high recycling mandates are not intrinsic to EPR. They're just an implementation choice. More modest recycling rates could be selected. The core idea of EPR is shifting responsibility for waste from the public to the private sector. If industry really is more efficient than government, as is often claimed, this shift alone might actually generate cost savings."
EPR IN THE UNITED STATES
There appears to be little probability that extended producer responsibility will be mandated anytime soon in the United States, at least not at the federal level.
Notes Fishbein, "In 1996, the President's Council on Sustainable Development recommended an EPR policy for the U.S. But it changed the definition of EPR to mean 'extended product responsibility,' which is a much broader concept, meaning that responsibility for the life cycle environmental impacts of products should be shared by government, consumers, and industry, rather than imposed on producers alone." The term "extended product responsibility" can also be used to refer to a wide range of activities than simply taking back products; for instance, it can include educational initiatives such as teaching people about recycling. In any case, even this more modest version of EPR is unlikely to be enacted as a nationwide legal requirement.
However, voluntary EPR initiatives have begun to catch on with U.S. companies in the past few years. Says Fishbein, "Companies like Xerox have realized that they can generate substantial profits by taking back and recovering value from their products. They have also changed their product design to maximize the recovered value. I think these types of voluntary efforts can be encouraged."
In addition, the EPR concept may become increasingly popular among state lawmakers as local and state officials struggle to eliminate "problem" materials (such as metals) from their waste streams.
Some states have already taken action. A few years ago, several jurisdictions adopted laws that prohibited the sale of rechargeable nickel-cadmium batteries unless industry agreed to take them back and recycle or properly dispose of them after use. These laws in turn prompted the battery industry to devise its own nationwide takeback program.
Observes Fishbein, "Nickel-cadmium batteries gave us an interesting lesson. They showed that if a few states take action on a product, industry may respond with a nationwide EPR program, because the last thing companies want is to have to deal with different legislation in each state. So initiatives at the state level, particularly when they're not coordinated, provide motivation for industry to establish a national standard and a national program."
EPR is still a work in progress, with many issues remaining to be hammered out. For instance, who should be designated as a "producer"? What are the true economic impacts of EPR? And what should be done about "orphaned" products, whose manufacturers have long since gone out of business?
Currently, the Organization for Economic Cooperation and Development, which includes most of the industrialized nations of the world, is in the process of holding a series of international workshops on these and other questions raised by EPR, in hopes of providing guidance to countries that are interested in adopting the concept.
MEETING UP WITH EPR
Regardless of how EPR fares in the United States over the next few years, American companies will have to face the challenge of extended producer responsibility laws if their business involves overseas sales. So it makes sense to start becoming familiar with the EPR concept-- and to prepare for the day when your products may be subject to EPR requirements.
Fortunately, the rapidly changing global marketplace may make EPR easier to swallow. Notes Fishbein, "Industry tends to be resistant to this kind of fundamental change because it has a big capital investment in the status quo. But the world's markets are changing very quickly. For instance, if you decide to start retailing products through the Internet, it's a whole new ball game.
"A company that makes cleaning products may not want to hear about having to change its materials or packaging because of its current investment. But suppose it starts selling detergent over the Internet. The packaging then has a totally different function, and the product delivery system will be totally different."
"When a company is making that kind of transition, it's a very opportune time to start thinking of the whole life cycle of the product, particularly end of life, and factor it in."
Excerpted from Environmental Manager: Environmental Solutions That Make Good Business Sense,
Volume 10, No. 1, August 1998 @1998 John Wiley & Sons, Inc.