A manufacturer’s responsibility for the ultimate disposal of a product after the completion of its useful “product life” is increasingly a central issue in the debate over climate change. Policymakers at all levels of government looking to “go green” and reduce the strain on their landfills are looking to extend time-tested recycling initiatives into new industries, such as manufacturers and retailers of electronics products and related devices.
As these policies are debated, affected industries will need to address the regulatory approach to product life issues wisely and in a strategic manner. The response by industries facing increased regulatory burdens must be mindful of the objectives towards which policymakers are striving, as well as the lessons of similar experiences in the past involving other industries. Keeping these considerations in mind is a necessary step in shaping a strategic response that will address the policymaker’s goals while advancing the industry’s interests, avoiding avoidable pitfalls and even possibly creating new business opportunities.
Lessons from Paper Recycling
In preparing a response to “product life” regulatory initiatives, it’s worth taking a look at how similar concerns with regard to newsprint and related paper products, first expressed a generation ago, have played out and what lessons can be learned.
Newsprint and other types of paper, of course, begin life as trees, a quintessential “green” renewable (albeit slowly) resource. They are cut, milled and converted into the newsprint upon which the nation’s newspapers are printed. Some newsprint becomes direct mail advertising coupons and flyers. Still other trees become higher grades of paper, used for magazines, office paper and many other products. Each of these types of paper has distinct qualities and presents its own recycling issues.
While many paper products—such as books—remain in use in paper form for many years, newspapers, direct mail flyers and magazines tend to be consumed quickly and then tossed aside. Until about 30 years ago, very few newspapers were recycled, and magazines and direct mail flyers were simply tossed in the trash. While the author remembers accompanying his parents to a paper recycling facility to sell several months' worth of newspapers for small sums, such efforts were relatively minor. More often, consumers simply deposited the wide range of paper products in community landfills, or even burned them in the open air.
With the original “greening of America” a generation or more ago, the notion of recycling newspapers and other paper products, instead of simply depositing them in landfills, became popular. In response, newspaper companies began giving greater attention to recycling their products and to ways to use recycled newsprint. Over time, some of these practices became ingrained in consumers by habit; others were reinforced by mandatory recycling laws enacted at the state or, often, the local level. The materials subject to recycling legislation were not uniform, but newspapers were routinely included.
One lesson from the history of recycling in the paper industry is that a commitment to recycling can achieve the intended results fairly successfully, although enforcement at the consumer level is always a challenge. On a statistical basis, more than 73 percent of all old newspapers in the United States are recovered and recycled, compared to 35 percent in 1989, according to the Newspaper Association of America. Over the same period, the average amount of recycled fiber content in newspapers has increased from 10 percent to 35 percent. Newspapers today continue to demand recycled-content newsprint. Such results encourage policymakers to pursue recycling initiatives in other areas, a fact which industries coming under scrutiny must recognize.
A second lesson is that newspaper recycling has had broader effects than can be measured solely by statistics. Some changes occurred in the structure of the industry. After recycling took on a life of its own, some newspaper companies became vertically integrated, buying paper mills to ensure a steady supply of newsprint. Other paper mills invested in de-inking equipment in order to be able to offer a full product line. Those companies found it in their self-interest to assume more responsibility at the corporate level for a greater part of the product life cycle, starting with the creation of the newsprint and, in some cases, the recycling. Farsighted companies in other industries should be considering the effects of “product life” measures on their own industry structures.
Third, while the most common use of recycled newspaper fiber is the creation of new newsprint—the reuse of newsprint to make “new” newsprint can be said to be the paradigm of newspaper recycling, and some states even mandate newspapers use a minimum amount of recycled fiber—new market opportunities have arisen over time as recycled newsprint has found a number of uses, many unanticipated when recycling began. One factor is that because the recycling process breaks down the paper fiber, the number of times newsprint can be recycled is limited, a technological restraint that would need to be reflected in regulatory schemes. But in addition, recycled newsprint has developed an export market, with close to 30 percent exported to countries such as Canada and China. The rest is made into a variety of paper products, including cereal boxes, grocery bags, cellulose insulation materials, coffee cups, tissue paper and more. These products were not readily obvious when recycling began.
Fourth, recycling has led to other changes in the industry’s own operations. For example, in the newspaper industry, a commitment to recycling of the newsprint on which their products are printed has, more recently, contributed to a broadened interest by newspapers in the range of the environmental issues that they consider in their business operations. For example, newspaper companies increasing are looking for ways to reduce carbon emissions and to adopt more environmentally sustainable operational practices. This is part of a larger trend, as many technology companies such as Hewlett-Packard increasingly are striving to become green and “sustainable” throughout their operations.
Fifth, recycling also had spillover effects in related industries. After newspapers took on larger roles in recycling, public attention widened to include direct mail, another substantial contributor to community landfills. The recycling of direct mail—slightly more than one-third of direct mail is recycled—stands, when measured by percentages, about where the newspaper industry was two decades ago.
As did the newspaper industry some time ago, the direct mail industry, led by the Direct Marketing Association, is taking a proactive role in encouraging recycling initiatives. They are also sponsoring initiatives to make it easier for individuals to opt-out of receiving unwanted catalogs and other advertising. The United States Postal Service, realizing that advertising mail comprises the majority of the mailstream today, has undertaken several initiatives to recycle paper, starting with the recycling of undeliverable mail.
These actions are not entirely altruistic. One motivation is to deter the adoption of “do not mail” laws urged by some privacy and environmental advocates, which direct marketers fear would be detrimental to their businesses. (In the case of newspapers, cancelling a subscription can have a similar effect.) Still, economic self-interest can serve as a useful motivational tool to accomplish socially desirable ends.
Tips for Industries to Consider in Shaping Their Strategy
What insights can we draw from this? Perhaps the first is the need for patience. For recycling efforts to take firm hold can take considerable time. Absent an external pressure—such as a legal obligation—the process requires sustained commitment over time. Even if a legal duty exists, substantial time can pass before compliance becomes generally widespread. An industry coming under new regulation will want to remind the regulator of this history.
Second, recycling a product such as newsprint or direct mail, not to mention household plastics and electronics, requires consistent effort by many persons other than the creator of the product—producers, consumers, homeowners and other consumers of the final products. More product is made, used and discarded every day. A sustained commitment to making the operational changes is necessary. Laws and regulations must appropriately spread the obligations, such as is done by laws, as in North Carolina and other states, requiring separation of different types of recyclable containers.
Third, any requirement that an original producer must use a prescribed amount of recycled material in subsequent products must be conditioned on the availability in the relevant market of recycled material of comparable price and quality. This typically is the case in mandatory newsprint recycling laws. As recycling or other “product life” requirements broaden, the newly affected industries will need to consider how best to make the case that requiring manufacturers to incur greater costs to use recycled matter could create deleterious market distortions.
Fourth, keep in mind that recycling may give rise to unexpected products and markets. To be sure, the new products may not emerge as immediately as the new burdens, especially when product life laws obligate manufacturers to take back reused products or pay fees, such as in Connecticut, to fund the program. However, these new requirements can create opportunities for innovative businesses or disposal companies. Companies may want to consider whether and how regulations may be crafted that would facilitate such after-market products.
Fifth, recycling and other “product life” initiatives can cause dramatic and sometimes surprising changes in affected industries. Consider efforts by some newspaper companies to integrate vertically. Some verticals may become involved to allow affected businesses to acquire greater control of the overall process. Others may become proactive to address public pressures. Others may look for ways to use the new regulatory process as a way to gain a competitive advantage over rivals.
Now attention will turn to the national stage. As industries prepare to face “product life” regulatory initiatives on a national scale, they will need to consider how those issues will affect their industries, related industries and the bottom line. Industries will need to engage in strategic thinking, guided by the experiences drawn from earlier initiatives undertaken by states and localities—Justice Brandeis’s “laboratories of democracy”—in determining how to address the regulatory process.