EPR Summit IV Overview

The Future 500 :: The Bridge between Corporations and NGOs :: www.future500.org

Transi'oning to Ac'on on EPR for Packaging

The City Club of San Francisco San Francisco, CA

June 4-‐5, 2012

Extended Producer Responsibility

Dialogue IV


The Problem

A range of stakeholders believes recovery rates in the US are too low and sees EPR as the best tool to improve recycling.

Other ideas are welcome.


The Process

1. AcHon oriented: puJng soluHons on the table 2. Clear goal: model state legislaHon

3. AdapHve: beMer ideas always welcome

4. Transparent and open to all producHve stakeholders


The Dialogue Process: Prepare for AcCon

Develop the PRINCIPLES

DraG a MODEL POLICY

IdenCfy the OPTIMAL STATES

Convene the STAKEHOLDERS

IdenCfy and ORGANIZE Those CommiOed to Advancing Policy

COMMIT and Take the First Steps


Group Discussion to Date

Roundtable MeeCngs • EPR Dialogue I – New York, 6/16/2011 • EPR Dialogue II – Atlanta, 8/24/2011 • EPR Dialogue III – DC, 12/1/2011 • EPR Dialogue IV – San Francisco, 6/3-‐6/4/2012

Conference Calls • EPR Teleconference -‐3/23/2011 • Policy Webinar – 10/18/2011 • State Webinar – 10/20/2011 • DraZ EPR Policy Rollout – 2/21/2012 • Policy Proposal: Round 2 Discussion – 4/13/2012


The ObjecCve

“To implement a strategy to develop and promote model mul4-‐material packaging and printed paper EPR policy in non-‐deposit states that will increase the volume of recyclables collected in a more economically-‐efficient manner”


Core Principles

To be economically, poli4cally, and environmentally viable, EPR policy needs to reflect three shared principles:

1. Internalize Costs — When polluHon and waste costs are externalized, polluHon and waste increases. However when the costs are internalized, businesses and consumers implement the most cost-‐effecHve means of achieving the desired outcomes.

2. Brand Owner Financing — Because brand owners make front-‐end design decisions, they are best posiHoned to pay the external costs, and have the best opportunity and incenHve to reduce them.

3. Brand Owner Management — Government may set the performance standards, monitor progress and create a level playing field for EPR, but brand owners are best posiHoned to design and manage the program to achieve those goals.


Goals

Based on group discussion, our process must meet the following minimum benchmarks:

1. Policy must meet the three core principles: cost internalizaHon, brand-‐owner financing, and brand-‐owner management.

2. Address packaging and printed paper. Need mechanisms to support and enhance exisHng markets for recyclables, and create the markets for materials without adequate end markets.

3. Achieve high rates and quality, to meet the needs of the materials sector: aluminum, steel, glass, plasHc, and paper.

4. Boost domesCc economy – keep enough volume in domesHc market to serve as raw materials in packaging and other sectors, and help drive job growth in the US.


MeeCng IV Topics/Agenda

Big Picture Issues Policy Discussion PoliHcs of EPR Breakout Discussions

– Policy versus plan – Role of local government – Challenges and soluHons

Preparing for AcHon Key Takeaways Needs and Next Steps


Big Picture Issues NaConal vs. State-‐specific Strategy

– NaHonal issue: To demonstrate momentum, consider mulHple states simultaneously (Federal policy a non-‐starter)

– Make sure stakeholders are aligned before we proceed in states

– Make final invitaHon to stakeholders to provide input

Framing

– Jobs, climate, waste issue, local government financial situaHon

– BeMer messaging is needed to communicate

– Clear list of pros/cons Problem DefiniCon / Goal

– Stakeholders have different perspecHves and prioriHes that need to be aligned. – Common ground exists; we just have to dig for it.

Data gaps

– Context maMers. We need domesHc data, not just EU/Canadian evidence.

– Much data exists, but not integrated or readily accessible.

– Vital to quanHfy the business case – what is the cost range to each sector?


Policy Discussion (white paper and presentaCon available upon request)

Premise: LegislaHon needed to ensure a level playing field and support effecHve program

Outstanding issues: -‐ Need to be explicit: which (if any) away-‐from-‐home spaces are covered.

-‐ Ownership of material: Brand-‐owner financed and managed, but no flow control. -‐ Focus on intent: Final language of policy will need refinement and wordsmithing

-‐ Retailers: Need beMer understanding of their role in EPR system -‐ Fee structures: if industry sets the fees, are they going to opHmize over

mulHple environmental parameters? Must be careful not to undermine exisHng infrastructure. Need for Life Cycle Assessments (LCA) As to make sure most opHmal outcome (economically and socially) is incenHvized. Approach to opHons like incineraHon may vary by state.

-‐ Responsibility: Producers to accept responsibility for their packaging choices


Alternate Proposals AMempt to broaden the conversaHon

– No single model is perfect. Very likely that opHmal model is one not currently on the table.

– Consider a suite of policies (Pay As You Throw [PAYT], mandatory commercial recycling, carbon tax shiZ) that – implemented alongside EPR – would best accomplish our goals.

ComplicaHons regarding transiHon to new system

– Voluntary approaches might help secure wider industry support

Shared Responsibility – Benefits of shared responsibility model:

-‐ Incremental approach to change means potenHal for less industry opposiHon

-‐ Allocates costs more evenly among affected stakeholders

-‐ Maintains exisHng relaHonships in solid waste disposal and recycling

– Concerns w/ shared responsibility: - Layering shared responsibility onto heterogeneous state contexts - Experience (EU, Maine) shows that full responsibility from the outset is opHmal

- Full responsibility gives greater leverage to cut costs and drive improvements

Smart poliHcs versus opHmal policy

– If considering shared responsibility, important to state we are driving towards full EPR model


The States

• Four Top Priority States

• Two Secondary States – Plan for legislaHon in 2013 and 2014 – Upcoming elecHons will help determine where best opportuniHes are

– Criteria: Ideal mix of public versus private assets, experience with recycling and producer responsibility, non-‐deposit state

• Local allies would lead iniHaHves in target states

State CoaliHons could include:

– NaHonal Strategists – NaHonal Supporters – State Lead Supporters (Lobbyists) – NaHonal and state-‐level opinion leaders ‒ Input from local governments


The New Phase: Take AcCon Unique roles for each stakeholder based on interest (par4al list)


Key Roles to Coordinate

The Facilitators and Process Drivers


Breakout Sessions

• Policy Versus Plan What is in the legislaHon and what would be managed by the Producer Responsibility OrganizaHon (PRO)?

• Role of Local Government What is the role of municipal government in an EPR program?

• Challenges and SoluCons What challenges need to be addressed to aMract a broad EPR coaliHon in US?


Breakout Session 1 Policy Vs. Plan • Trade-‐off between specificity in statute (to eliminate free-‐rider problem) and

program flexibility (to keep system adapHve). Right balance depends on state context.

• Policy can include guidance: consider X, Y, Z criteria when seJng fees.

• PenalHes and fines: can ensure that we create a level playing field.

– PenalHes for not parHcipaHng? PenalHes for not meeHng goals?

– Issue of No-‐Sale provisions. – State goals vis-‐à-‐vis local gov’ts. Enforcement acHon is last resort. Capacity

building is also key element.

• What should count towards recovery/recycling? How to inventory all that?

• Quality: We should look carefully at this as we create the plan. How do incenHves improve/reduce quality of enHre recycling stream? – Language ensuring quality might hinder passage. Need to find middle ground.

– Goal-‐seJng with transparent costs would ease this.

• KEY TAKEAWAY: Group input will make its way into a revised white paper


Breakout Session 2 Role of Local Gov’t • Local gov’t historic role and investment needs to be recognized, though these

may differ from business objecHves.

• All actors need to let go of legacies and move forward with transiHon • Key issue is stranded assets. No policy recommendaHons came out of this

going forward, but will need to be addressed.

• In designing a system, we need to be transparent about where and why we introduce complexity, which can be inefficient, prescripHve, or poliHcized.

• EducaHon will be key to transiHon. PRO is beMer poised to do broad regional or state-‐wide educaHon. Specific issues and materials can be addressed efficiently, using brand’s ability to market, etc.

KEY TAKEAWAY: Modeling/mapping of exisHng public infrastructure in several target states. What is degree of penetraHon of public infrastructure, etc.?

– Need for F500 or some other subset of this group to convene a meeHng solely on this issue


Breakout Session 3

Key first-‐order issue: What are our goals? Clarity is needed to move forward • Recycling infrastructure must be improved. We want to achieve highest rates at lowest social

and environmental costs. • Clarity about assigning ownership of collected packaging.

• But do we also want to minimize social/enviro cost of packaging? Then we might want to incenHvize design for recyclability. – EPR as a tacHc versus EPR as the goal.

• Do we want to collect a broad swath of materials, to divert them from landfills and create markets? Are we trying to increase PET recycling (energy issue)?

• Do we want to create jobs and build domesHc markets?

• Ethical consideraHons – relieve local gov’t of this burden?

• Set goal of specific reducHon to landfills?

Next step: Develop white paper on group goals, and implicaHons of each goal.

– DelineaHng goals could help define a coaliHon of the willing.

– Test more ideas. We can get more people in the room by showing that we are doing the data collecHon and research. Prove that EPR is the way forward.

Challenges and SoluCons


Breakout Session 3

• Data: AYS report coming out, value of material in our packaging pegged around $11 billion. Not having that valuaHon makes it harder to get business community on board. Could be eye-‐opening for business. – Need for more collaboraHon to get more sophisHcated results. – However, groups need more material now. We need acHon now while we do this research.

• Split between collecHon in Industrial, Commercial and InsHtuHonal (ICI) sector and household waste. Low-‐hanging fruit in household sector (25% of households have no recycling opHons).

• Paper industry bracing for drop in what’s being put on market, less newsprint, less collecHon. But lots of paper is not being collected – high-‐quality fiber (coffee cups, etc.) – could help offset some losses. ContaminaHon issues must be addressed in this stream, but high-‐quality.

• California has a new statewide goal that 75% of its solid waste be source reduced, recycled, or composted by 2020. CalRecycle is required to submit a report to the Legislature (by Jan. 1, 2014) that provides strategies to achieve this policy goal. As part of this process, CalRecycle released an iniHal discussion document: California’s New Goal: 75 Percent Recycling, which includes an item on EPR for packaging (pg 36). Workshops are underway and all are invited to parHcipate (www.calrecycle.ca.gov/75Percent).

• Are there incremental steps we can take, that might support or precede EPR? – PAYT, Mandatory Recycling, landfill bans, state goals

Challenges and SoluCons (Cont.)


The Gameplan: Current Needs • Research

– EsHmate internal/external costs of current packaging end-‐of-‐life system

– EsHmate changes in cost with EPR, using various assumpHons

– IdenHfy approaches that help reduce total costs

– EsHmate cost range for key materials and sectors

– Much data exists, but an excellent research team is needed to develop credible esHmates and provide policy and poliHcal guidance

• Messaging – Why care? Make a clear case to consumers, media, and public

– Why should brands be responsible for their packaging choices?

• Outreach – Secure strategic supporters within each target state: brands, gov’t, NGO, haulers,

retailers, recyclers, etc. – Secure genuine input from current opponents in CPG sector

– Strengthen support from the not-‐quite-‐willing industry segments

– Develop legislaHve opHons based on input from all above


Engagement Network

TOP STAKEHOLDER NEEDS:

-‐ More learning and willingness to have open conversaHons

-‐ Direct input from municipaliHes -‐ Pressure to bring criHcal stakeholders

to acHon -‐ Data on business case/costs -‐ Modeling transiHon scenarios -‐ RecogniHon of needs of different

stakeholders and materials -‐ Concrete plan that is pracHcal and

can be implemented -‐ Broader agreement and buy-‐in on

problem and group’s goals

KEY STAKEHOLDER ASSETS:

-‐ Experience and experHse across relevant industries

-‐ Understanding of local/state government dynamics and extensive network

-‐ CommunicaHons plaxorm -‐ State and/or naHonal lobbying power -‐ Experience with EPR implementaHon -‐ Willingness and need to take acHon

Future 500 will use this informa4on to con4nue engagement as we take ac4on on next steps outlined on slide 23

Leveraging the Assets of Our Group


Key Takeaways • EPR issue is growing in influence

– There is growing momentum. Groups inside and outside the target states are now reaching out to engage on this issue.

• CommuniHes want manufacturers to act – EPR is on the radar, but no single model has widespread support.

• Many brands will stonewall unHl they face genuine state acHon – They hope if they don’t engage, it will all go away

• Some brands may commit if we deliver more credible data – Cost esHmates are now too vague to enable a raHonal decision

• A well-‐designed EPR approach based on solid research is essenHal to build a broader and more powerful coaliHon

• Openness and adaptability will lead to success – There are many paths to victory, if we adapt with skill and integrity


Needs/Next Steps • RESEARCH: Clearly specify the needs; secure and fund credible researchers

– Next Step: Future 500 draZs needs for team review; idenHfy prospecHve researchers • MESSAGING: Build compelling messages, visuals, flow charts

– Next Step: Tunheim and Cone creates; media/poliHcal consultants review/refine for team consideraHon

• STATE: Build network of key in-‐state supporters – Next Step: RR inventories; F500/AYS and dialogue network systemaHcally reach out

• NATIONAL: Seed the naHonal conversaHon and grow organic movement – Next Step: F500 and other allies work to engage other key stakeholders by leveraging tradiHonal and social media,

NGOs, SRIs

• CEO-‐to-‐CEO: NWNA CEO reaches out to C-‐level execuHves for support – Next Step: NWNA and F500 list the most strategic execuHves to approach, then schedule them

• LEGISLATION: Develop a revised model to draw out more stakeholders – Next Step: RR is preparing next model

• OPPOSITION: Reach CPGs and others to secure feedback in order to producHvely address their concerns

• ALTERNATIVES: Reach Alcoa, glass, NAPCOR to clearly idenHfy needs/opHons – Next Step: F500 week of meeHngs to explore opHons in depth and find alliance opportuniHes

• OPERATIONS: Engage operaHons experts on pracHcal EPR implementaHon

• PACKET: Draw messaging, research, and legislaHon into a packet – Next Step: RR build on white paper to make a clear case and build issue literacy


San Francisco – Beijing – Tokyo 335 Powell Street www.future500.org

Business

EPR Summit IV Overview