Large investment funds definitely influence corporate policy on sustainability. These organizations have made ESG (Environmental, Social, and Governance) major requirements for investment consideration. That was my message in my last column. I used changes in deforestation as an example of investment power. 

In this column, I want to explain how EPR (Extended Producer Responsibility) is also a tool used by investment firms to create, even demand, change in corporate focus.

There is no question that investment firms regard sustainability as a top management priority. And, frankly, as I look at our latest buzzword – circularity – you can’t have circularity without EPR. The two go hand in hand.

First, what is EPR? Very simply, it puts the burden of disposal of by-product on the producer. It is a waste management strategy to put responsibility, cost, on the producer throughout a product’s entire
life-cycle. 

“EPR is an environmental protection strategy to reach an environmental objective of a decreased total environmental impact of a product, by making the manufacturer of the product responsible for the entire life-cycle of the product and especially for the take-back recycling and final disposal.”

This is a quotation from Thomas Lindhqvist, who formally introduced EPR to the Swedish Ministry of the Environment in 1990. The idea was to get producers to make products that had a more friendly end of life.

By putting the financial burden on the producer, it would encourage manufacturers to design products with end of life as the critical issue. EPR is a game-changer as it forces us to transition from our current linear, “take – make – waste” relationship to a circular one.

Keep in mind that the OEM, the original producer, can engage or contract with a third party, who can create reuse, buyback, or recycling schemes. These third parties are called Producer Responsibility Organizations, or PRO’s.

The whole point, whether waste diversion is handled directly or through a third party, is a shifting from government to private industry. This obligates producers and/or third parties to internalize waste management costs in their product prices and engineer the safe handling of their products.

EPR goes back to the Lester Brown concept of producer responsibility. If you remember, he used cigarettes as an example, saying the cigarette manufacturer should be responsible for the costs of healthcare caused by smoking, hence, producer responsibility.

The goal of EPR isn’t just to shift financial burden on the producer. It is to:

1. Encourage companies to design products for reuse, recyclability, and material reduction
2. Connect market signals (linear to circularity) to the consumer by incorporating waste management costs into product prices
3. Provide innovation in recycling technology

I think you can see why investment portfolios that are focused on ESG also incorporate EPR. The two go together. And much of the focus of EPR is on packaging by-product. 
Here are a few snapshots of EPR activity here and globally:

• The state of Maine may adopt the first US EPR program that would require producers to fund packaging end of life.

In January, on the East Coast, a draft prepared by the Maine Department of Environmental Protection is the next step in the state’s first-of-its-kind plan to start an extended producer responsibility (EPR) program for packaging materials. EPR requires producers – manufacturers and distributors like Proctor & Gamble (P&G), Walmart, Unilever, etc., – to fund costs for the take-back, recycling and/or disposal of their products. It puts the responsibility of packaging’s end-of-life on the brand owner.
Maine Governor Janet Mills signed legislation in May 2019 that would “support municipal recycling programs” through an EPR law for packaging in the state.  The next step of this legislation was presented to the Maine Committee on Environment and Natural Resources on January 8, according to a contact. 
There is no set date of when the bill will be completed.

• Just this month, 100 leading businesses called for EPR for packaging in Europe. Here’s an excerpt from the press release:

“Cowes, UK – Today for the first time, more than 100 businesses in the packaging value chain, together with more than 50 other organizations, publicly recognize that without Extended Producer Responsibility (EPR) packaging collection and recycling is unlikely to be meaningfully scaled and tens of millions of tons of packaging will continue to end up in the environment every year.”

The statement, published recently by the Ellen MacArthur Foundation, has been signed by leading brands and retailers (including Beiersdorf, Danone, Diageo, Ferrero, FrieslandCampina, H&M, Henkel, Inditex, L’Oreal, Mars, Mondi, Nestle, PepsiCo, Pick n Pay, Reckitt, Schwarz Group, The Coca-Cola Company, Unilever and Walmart), manufacturers and recyclers (including Borealis, Berry Global,
DS Smith, Mondi, Tetra Pak, Indorama Ventures and Veolia), investors (such as European Investment Bank and Closed Loop Partners), and NGOs (including WWF, The Recycling Partnership, The Pew Charitable Trust and As You Sow).

For a circular economy, packaging that can’t be eliminated or reused must be collected, sorted and recycled, or composted after use. But currently the economics do not stack up: collection, sorting and recycling or processing packaging costs more than the revenues made from selling the recycled materials.

We need dedicated, ongoing and sufficient funding to make the economics of recycling work. This statement and the supporting position paper set out why mandatory, fee-based EPR is the only proven and likely way to provide this funding.

• And, most recently, an announcement by the Province of Ontario that they will make packaging producers responsible for the cost and operation of their Blue Box recycling program.

Toronto – following extensive consultations, the Ontario government is improving blue box recycling by expanding service to more communities, standardizing the list of materials that can be recycled across the province and saving municipalities money by making producers of products and packaging fully responsible for the cost and operation of the program.

“Producers and municipalities have been advocating for an enhanced, producer-led Blue Box program for over a decade, and I’m proud that our government has finalized these improvements,” said Jeff Yurek, Minister of the Environment, Conservation and Parks. “Our goal is to ensure our program remains convenient, affordable and right for communities. That’s why we are creating a stronger and more effective blue box service that will have some of the highest waste diversion targets in North America to promote greater innovations in recycling technologies and increased use of recycled materials.”

Look, it’s pretty simple: EPR is here now and it is only a matter of time before others implement the strategy in one form or another. The above are just three recent examples of proposed change, all incorporating Extended Producer Responsibility.

It seems to me that our industry has to look at EPR very seriously, too.  We can’t continue to generate non-recyclables and put the cost on the end user.  The responsibility for cost and solution belongs to the company that made the product in the first place.  This may sound like heresy. But, it’s not. We have solutions and options for non-recyclable diversion from landfills. 

The real issue is cost. People and companies want to be sustainable but money becomes the roadblock. I believe our industry must be proactive and consider these options now, rather than wait until we are told by legislation and regulation, “Do it!”

Financial institutions, investment portfolios, environmental, social, and government policy will demand that we clean up the mess we’ve made. Let’s not wait. Let’s do it now!


Another Letter from the Earth.

PS: As Label & Narrow Web goes to press, we have been advised that Maine has approved LD1541, Extended Producer Responsibility
(EPR) for packaging. This means the manufacturer of the packaging, regardless of type, and regardless of recyclability or not, is responsible for approved disposal of any waste generated by the product. This could be “end of life” or processing waste/byproduct.

It was not surprising to learn that AF&PA (American Forest and Paper Association) sent a letter to Governor Mills of Maine urging her to veto the bill. Not surprising because it will cost AF&PA
members MONEY.

Bottom line: Of course it’s going to cost money. Sustainability doesn’t come cheap. Someone has to pay for “clean and green!” I urge Governor Mills to ignore the request from AF&PA and stay the course for a better Maine.


Calvin Frost is chairman of Channeled Resources Group, headquartered in Chicago, the parent company of Maratech International and GMC Coating. His email address is [email protected].