A recent online article on the GreenBiz.com website briefly describes the Closed Loop Fund led by Walmart — a consortium of major corporations that also includes Coca-Cola, PepsiCo, Johnson & Johnson, Procter & Gamble, Unilever, Keurig Green Mountain and Goldman Sachs. The fund is designed to loan $100 million to municipalities in the United States to help local governments collect more waste packaging for recycling.
While the aspirational goal of increasing recycling is admired even by critics of the fund, most knowlegable observers recognize that the real goal of the fund is to distract policymakers from promulgating true extended producer responsibility (EPR) regulations that would force companies to fully pay for the end-of-life management of their product and packaging wastes. A major goal of EPR is that ultimately the private sector will design the most economically and environmentally efficient products and packaging when companies are made internalize the end-of-life management costs of these materials.
Major companies like those in the consortium have divisions in European countries where EPR legislation is already in place. They know how to comply with EPR legislation, to some extent, but hire bright people to help them strategize how to avoid such legislation in North America. The Closed Loop Fund is part of such a strategy. While $100 million sounds like a lot of money, it’s pennies on the dollar compared to the true end-of-life management costs of these companies’ materials. The sad part is that local ratepayers have paid these externalized costs for decades and will continue to do so in the United States for years to come. The Closed Loop Fund continues the cynical tradition founded by the major soft drink companies that gave seed money to the Ontario Blue Box curbside recycling program in the 1980s: pay a few million dollars here and there to keep local governments distracted from the fact that they’re saving industry billions in waste recycling and disposal costs.
(It’s worth mentioning that certain jurisdictions in Canada are moving beyond this status quo situation and implementing EPR. Though it’s being done imperfectly, BC’s new program for industry-funded waste diversion of packaging and printed paper is the leading-edge and is worth watching closely.)
Here’s the GreenBiz article:
Which way to recycling? Walmart’s Closed Loop Fund vs. EPR
A 2012 report by As You Sow included an illustration that reveals the shortcomings in U.S. recycling efforts. According to the illustration, the value of wasted packaging in the U.S. in 2010 alone was almost $11.5 billion. “U.S. packaging recycling rates lag behind other developed countries by significant amounts,” the report stated.
Led by Walmart, a consortium of major corporations that also includes Coca-Cola, PepsiCo, Johnson & Johnson, Procter & Gamble, Unilever, Keurig Green Mountain and Goldman Sachs recently announced an initiative with the aim of boosting municipal recycling rates. The Closed Loop Fund is described by its investors as “a social impact fund that provides municipalities access to the capital required to build comprehensive recycling programs.” The Fund plans initial investments amounting to $100 million that will be distributed to municipalities in the form of zero-interest and low-interest loans.
“We don’t want to be the sole source of capital for a city,” Closed Loop Fund CEO Ron Gonen told Resource Recycling. “Solving the recycling issue requires a lot of pieces coming together.”
The appeal of extended produced responsibility
A measure of irony is in the Fund brochure’s use (PDF) of an illustration previously published in the As You Sow report. Through its Waste Program, the organization always has been emphatic in its advocacy for extended producer responsibility; widespread adoption of EPR policies “challenge companies to take responsibility for the impact of products and packaging over their full lifecycle,” it stated. Instead of taxpayers shouldering the externalized financial and environmental impacts of unnecessarily high percentages of plastic waste, under EPR companies would take the responsibility of recycling.
The markedly superior recycling rates in Europe certainly have as a component legislation mandating EPR there. In the U.S., on the other hand, only a small number of bottlers — Coca Cola and PepsiCo, two of the Closed Loop Fund consortium, among them — have agreed to accept responsibility for some of their post-consumer plastics. Resolutions filed by As You Sow with a number of consumer products companies have met with significant support at some companies’ annual general meetings — over one-fourth of Kraft Foods shareowners voted for a first-time resolution on the issue — but generally consumer products companies have been resistant to taking responsibility for internalizing product lifecycle costs through EPR.
As You Sow points out in its argument for EPR, “There is scant funding for new municipal or state recycling operations.” That being the case, the Closed Loop Fund does have the potential for being somewhat helpful. But $100 million in investments from some of the world’s wealthiest corporations is unlikely to make serious inroads on the recycling crisis facing the U.S. And even if the $100 million was provided as grants instead of loans, it hardly would meet the responsibility of companies operating in accordance with EPR legislation.
Can the fund really close the loop?
After the launch of the Closed Loop Fund was announced, a number of public interest organizations wrote to the CEO of Walmart. “While we acknowledge and appreciate your aspirational goal ‘to provide 100 percent of U.S. consumers with access to recycling where and when they need it,’ we don’t believe the proposed fund will do much to achieve it,” the signatories wrote.
“Instead, we urge you to support extended producer responsibility (EPR) legislation, which would make your consumer goods companies responsible for financing packaging recycling and meeting recycling targets.”
Noting that many Closed Loop Fund investors operate under EPR legislation in Europe while resisting similar legislation in the U.S., Matt Prindiville, associate director for UPSTREAM, said, “This is perhaps the unspoken agreement behind this raw deal — that companies bear little to no responsibility for their packaging; and that governments should continue to subsidize the management of packaging waste through municipal waste services and taxpayer dollars.”