The CSR Newsletters are a freely-available resource generated as a dynamic complement to the textbook, Strategic Corporate Social Responsibility: Sustainable Value Creation.

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Tuesday, September 4, 2018

Strategic CSR - Recycling

The article in the url below lays out in detail the deteriorating situation in the recycling industry:
 
"Prices for scrap paper and plastic have collapsed, leading local officials across the [U.S.] to charge residents more to collect recyclables and send some to landfills. Used newspapers, cardboard boxes and plastic bottles are piling up at plants that can't make a profit processing them for export or domestic markets."
 
The extent of the problem is illustrated in the chart accompanying the story, which shows the dramatically decreasing average prices for recycled "old cardboard" and "mixed paper" since the beginning of 2017:
 
 
This situation has arisen due largely to two driving forces: First, ironically, is the rising popularity of recycling. As cities and counties have moved to expand their recycling in an effort to reduce the amount of waste being redirected to landfills, the quality of that recycling material has decreased. That is, the waste has become 'contaminated':
 
"U.S. recycling programs took off in the 1990s as calls to bury less trash in landfills coincided with China's demand for materials such as corrugated cardboard to feed its economic boom. Shipping lines eagerly filled containers that had brought manufactured goods to the U.S. with paper, scrap metal and plastic bottles for the return trip to China. As cities aggressively expanded recycling programs to keep more discarded household items out of landfills, the purity of U.S. scrap deteriorated as more trash infiltrated the recyclables. Discarded food, liquid-soaked paper and other contaminants recently accounted for as much as 20% of the material shipped to China, according to Waste Management Inc.'s estimates, double from five years ago."
 
Second, and more dramatically, is the action taken by the Chinese government at the start of 2018 to limit the amount of recycling waste being imported into their country:
 
"The tedious and sometimes dangerous work of separating out that detritus at processing plants in China prompted officials there to slash the contaminants limit this year to 0.5%. … The changes have effectively cut off exports from the U.S., the world's largest generator of scrap paper and plastic."
 
The extent of the impact of this decision is illustrated by the second chart accompanying the article, which shows the large percentage of all exported waste that was previously exported to China:
 
 
The combined effect of these two drivers is to place recycling in the U.S. in grave danger. We have to rethink our approach to recycling on a community-wide basis or the incentives to recycle our waste will gradually disappear:
 
"The waste-management authority in Lancaster County this spring more than doubled the charge per ton that residential trash collectors must pay to deposit recyclables at its transfer station, starting June 1. … The additional transfer-station proceeds will help offset a $40-a-ton fee that the authority will start paying this summer to a company to process the county's recyclables. Before China raised its quality standards at the beginning of this year, that company was paying Lancaster County $4 for every ton of recyclables."
 
The economics of the present system simply no longer make any sense:
 
"China stopped taking shipments of U.S. mixed paper and mixed plastic in January. … mixed-paper shipments to other Asian countries now fetch $5 a ton, down from as much as $150 last year. Other buyers such as Vietnam and India have been flooded with scrap paper and plastic that would have been sold to China in years past. … Sacramento County, which collects trash and recyclables from 151,000 homes, used to earn $1.2 million a year selling the scrap to Waste Management and another processor from scrap. Now, the county is paying what will amount to about $1 million a year, or roughly $35 a ton, to defray the processors' costs."
 
Ultimately, at a minimum, we are going to have to separate our recycling before it is picked-up (as the citizens of many European countries already do), with recyclers refusing to pick-up waste that is not pre-separated or cities/counties fining residents for failing to do so:
 
"Some recyclers said residents and municipalities need to give up the "single-stream" approach of lumping used paper and cardboard together with glass, cans and plastic in one collection truck. … Collecting paper separately would make curbside recycling service more expensive but cut down on contamination."
 
Take care
David
 
 
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The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/
 
 
Recycling Firms Hit by Crushing Economics
By Bob Tita
May 12, 2018
The Wall Street Journal
Late Edition – Final
B1