Paul Downey
Extended producer responsibility (EPR) laws, long established across Europe and Canada, are now rapidly taking hold in the United States, as more jurisdictions place the onus for the disposal of hard-to-recycle products on the companies that manufactured them.
But policies designed to create circularity in the supply chain聽are increasingly treated as a compliance exercise rather than a strategic opportunity, meaning that rather than having a hand in shaping the future of EPR, producer companies are missing out and dragging their heels on an inevitable change.
The disposal processes for hard-to-recycle products have undergone several waves of transformation over the last several decades, as governments have come to appreciate the unique challenges these materials pose in landfill environments.
A tire, for example, takes up an enormous amount of space in a dump, and by nature, is difficult to break down. When left whole, tires collect water, attract mosquitos, and create a biohazard risk. They鈥檙e also聽, and create toxic, long-burning disasters when combustion events occur.
Faced with mounting liability, cost, and operational complexity in government-run disposal systems, EPRs were introduced to flip the dynamic, shifting responsibility for these products鈥� disposal from government agencies to 鈥減roducers鈥� 鈥� a broad label that can include manufacturers, end-product importers, or anyone else bringing a product into a jurisdiction.
Theoretically, it鈥檚 a process that鈥檚 supposed to drive circularity in the manufacturing of these products, pushing producers to bring an innovation mindset to the recycling space. Rather than being left to burn in a landfill, used tires can be 鈥渂eneficially recycled鈥�, repurposed into building materials, sound insulators, and other materials that give the聽rubber聽from these tires a second life.
The reality, however, has been less clean-cut.
Lacking the expertise and appetite to run collection and recycling systems themselves, Producer Responsibility Organizations, or PROs, have stepped in to fill the gap. PROs operate in markets of scale, enrolling groups of producers with the promise of keeping them compliant, managing the accounting, collection, hauling, and processing of materials into their end-of-life form.
Producers taking such a hands-off approach to their EPR obligations have allowed PROs to turn the system into environmental arbitrage. Rather than fulfill their recycling obligations, PROs often exploit the patchwork geography of EPR regulations to dispose of materials in non-EPR states;聽in some jurisdictions, disposal options that undermine recycling outcomes remain cheaper than true material recovery.
As a result, materials may be exported to jurisdictions with weaker standards, while others are diverted to regions where disposal remains permitted..聽Limited government oversight allows PROs to check a compliance box聽to say their materials were recycled, whether or not they were.
It鈥檚 unethical 鈥� potentially illegal 鈥� but it鈥檚 the economic reality of a fragmented recycling system. But as more jurisdictions trend towards EPR systems to manage parts of the recycling process, playing this arbitrage is going to get less and less effective. Producers stand to gain from the upside of investing in better recycling processes now.
Just look at the US:聽there are now more than聽聽laws across 35 states, covering over 20 product categories.. It鈥檚 not a matter of values or political desire 鈥� just a simple question of liability. Government-run systems place responsibility for proper recycling on political leaders and public servants. EPRs give the government an out 鈥� one that they鈥檙e not likely to give up on anytime soon.
So instead of dragging their feet on producer responsibility, producers should lean into the EPR process to reap the benefits it offers on both scale and reputation.聽Consider the alternative: instead of navigating more than a hundred fragmented laws, companies had only one law to adhere to; if, instead of 35 state-by-state PROs to join, companies could enroll in one to manage their waste nationwide.
Taking this sort of long-term view of the future of EPR means producers can get a seat at the table to manage not only costs but also to gain insight into the recycling process. Rather than continuing to pay fees for their plastic packaging, some companies have reduced聽聽of their packaging through more intelligent design, informed by EPR insights. Additionally, having a seat at the table through PROs has allowed Canadian companies to聽聽some of the country鈥檚 disparate plastic packaging design guidelines 鈥� a move that will make it easier and more cost-effective for the organizations to recycle. Even聽聽of global or national EPR systems, state EPR processes have been shown to have dramatic impacts on recycling rates, creating new possibilities for materials innovation.
Treating EPR as a threat to be dealt with has led to minimal compliance and constant exposure for producers when something goes wrong. EPR is here to stay, and companies that are willing to be early movers will be the ones to see the upside of next-generation circular solutions.
Ignoring this shift is not a strategy. The train is already moving toward producer responsibility. The work now is to align the rules, the economics, and the innovation incentives so that EPR becomes something more than a box to check.