Producers to pay for packaging and recycling

The Ontario government announced a proposal in October to make producers responsible for packaging and end-of-life products. The plan would amend the Waste Diversion Act to require producers—meaning manufacturers, brand owners or first importers—to reclaim and recycle products, and report on their progress every year.

The program isn’t unique to Ontario. On the west coast, BC is asking producers to take back small appliances at their end of life, effective July 2010. Saskatchewan is working on a program to shift part of the cost of packaging recycling to producers. Other provinces have their own version of extended producer responsibility (EPR).

The trend was on the agenda at the recent I.E.Canada conference in Toronto, during a panel discussion on EPR. The key concerns raised were reverse logistics, industry fees, and administrative paperwork. With every province doing their own thing, companies with a national customer base wonder how they’ll be able to comply with EPR programs.

“The issue for producers is it’s not federally-mandated. So all of us are having to manage individual programs from individual provinces and individual supply chain infrastructures, and it’s all very complicated,” said Warrington Ellacott, senior manager of government relations with Whirlpool Canada.

“I can remember a conversation with a national retailer who has 1,800 designated SKUs in BC, Quebec, Ontario and soon to be Manitoba and Saskatchewan… and they’re not compliant.”

Who's the producer?

At this point in time, Ellacott said large appliances haven’t been designated under EPR programs. Even so, Whirlpool voluntarily diverts 93 percent of its Ontario product away from landfills. The proactive approach might have the added benefit of heading off formal regulation, he explained.

Governments in Canada have already implemented requirements—or are looking at options—for a range of products, such as tires, paints, hazardous materials, pesticides, pharmaceuticals, electronics and computers. Building and construction material is also on the table.

“You have to figure out if you’re designated, and when is the rollout,” Ellacott advised. “You have to pay attention to the ‘producer’ definition, because it varies by province.”

Some provinces place the onus on retailers to recover product, while others leave it up to manufacturers, importers and distributors to work it out for themselves.

Regardless of the set-up, there will certainly be additional costs. Ellacott pegs the cost to Ontario producers will be $85 million. Ontario’s tire recovery program costs producers a collective $74 million.

Some EPR programs allow a cooperative industry approach, while others require an individual solution. But where possible, a collaborative approach seems to be best.

“For example, could a tool manufacturer partner up with a paint manufacturer to combine reverse supply and logistics? I don’t know. How often do the tool guys talk to the paint guys, and the toy guys? We found out they don’t,” Ellacott said. “In fact, what we found is each individual manufacturer runs off and does their own program and has their own independent supply chain and…they’re playing the entire cost and being really inefficient and having lots of trucks going around collecting stuff from the same stores.”

He urged companies to take a look at their reverse logistics capabilities. Most are good at sending product out, but aren’t as good at getting it all back. The issue becomes even murkier with cross-country supply chains.

“You could be importing into the province, but how much of that [product] is staying in the province,” added Carol Osmond, vice-president of policy with I.E.Canada. “How do you track that?”

Shipments coming in to the Port of Vancouver for instance, are recorded as landing in BC, but a large portion of the load is often sent to distribution centres and retail stores in eastern Canada, she added. The speakers agreed robust data management and supply chain visibility systems will be critical to compliance.

Administrative burden

Industries already embroiled in EPR point to the administrative workload. David Adams, president of the Association of International Automobile Manufacturers of Canada, spoke about his members’ experience with the tire recovery program.

“Our members are very concerned about the reporting and monitoring and burden associated with the program,” he said. “A lot of members don’t have the resources to track all their different products, through all the different provinces, and to report on that.”

Automotive manufacturers were swept into the program in Sept 2009, at a total cost of $74 million. The fees are being used to reduce the existing stockpile of tires in Ontario. Once it’s depleted, Adams doesn’t anticipate the fee will go down.

On the plus side, the speakers pointed out EPR can give companies a competitive edge. Keeping product out of landfill is a good metric to add to corporate social responsibility goals.

As Ellacott said, industries that weigh in on the programs before they’re set in stone have more opportunity to shape them. While some companies will just want the issue “to go away” and get their products recycled at the lowest possible cost, others will brand their efforts and use it to market their companies’ sustainability commitment, he added.

Find the Ontario proposal report (PDF) on this page: http://www.news.ontario.ca/ene/en/2009/10/tackling-ontarios-waste.html