Renewable Matter # 10 / May-June

Circular Economy and Producer Responsibility: A Match that Can Work

by Giovanni Corbetta

The maker of a product must manage its entire life cycle, dealing with it even when it becomes waste. This is the only way to avoid distortions and inefficiencies that could jeopardize the objective of creating a circular economy model. 

 

Over the years, managing end-of-life tyres has confirmed that, in order to achieve the objective of an effective total recycle thus creating a circular economy model by minimizing resorting to consumers’ economic contribution, responsible and scrupulous management is needed. In particular, all producers must pay attention to their goods and to the clients who buy them (and guaranteeing them the best price).

The concept of Extended Producer Responsibility (EPR) is the answer to an integrated vision: from designing to reusing recycled materials in new applications, through the production and marketing of products and their collection and recycling at the end of their life.

EPR represents a very advanced approach able to support not only increasingly more sophisticated technological development in ecodesign, production and recycling methods – ensuring at the same time that business choices fully respect environmental and people safety – but also the development of potential markets.

The last link of the waste treatment chain, that is every single recycler, must often tackle the problem of finding sound market outlets for materials deriving from recycling. For obvious reasons of recycled material flow balancing and valorisation, their market of reference must be increasingly represented by the industrial sector that designed and made the product which turned into waste. 

A necessary condition to become a “facilitator” of the creation of a well-working and profitable chain is that the producer must be enabled to organize and control the management of its end-of-life products.

This is the only correct way to implement EPR deriving, as it is clear from the expression, from the need to invest the producer with responsibilities not only on the most traditional aspects of marketing a product (performance, respect of technical standards, guarantee) but also on the sos-called “end of life” aspects, according to the principle that “those who pollute must pay”. 

So EPR cannot be confined to producers only, thus to the relevant industrial sector, that after designing, making and marketing a product are required to manage the end of life. 

It seems contrary to the principles of EPR to transfer responsibility for the management of end of life to a subject other than the makers of a specific product. The assignment of this role to subjects who are not directly involved in the production of an item, such as organizations and consortia managing other waste on behalf of their members, not only would mean to exclude the “real” producers from the management of the end of life of their products but it would also cause a series of other risks. 

The first risk would involve the achievement of an optimal level of cost efficiency. The greater the specialization of a Producers Responsibility Organization (PRO) in managing its product at the end of life (and thus finding a single waste type), the greater the capacity of this PRO to find, thanks to its deep knowledge of its sector, optimal solutions able to have positive effects on cost management, on the amount of environmental contribution, as well as on the price of the product. Even more so, where the PRO is managed by the sector that produced the item now at the end of its life cycle. 

The achievement of an optimal level of cost efficiency is the real interest of a product’s maker since no one is in a better position to reduce the amount of environmental contribution to ask its clients to manage the end of life phase. 

There can also be risks of conflict of interest: a PRO, dealing with waste X, when it can deal with waste W, Y and Z it would not be any different from an ordinary multi-waste recycler from whom waste is a the heart of their company’s operation. As such, they tend to be interested in antagonistic prevention of waste generation. 

Moreover, managers of waste supply chains have an opposite interest compared to manufacturers. While for the former, the financing of EPR systems represents a source of income, the same financing causes a negative effect for manufactures since it impacts on the product price without generating any income for them. 

There is also a risk for ecodesign effectiveness, an aspect that only concerns the manufacturing sector and is at the same time closely linked to EPR: the allocation of end of life management to subjects other than producers who do not represent a direct link between designing and end of life management. 

Organizations managing waste show multiple levels of maturity and different market positions. Letting them deal with waste not produced by members can lead to competition distortion in favour of more experienced players on the market that would expand their ambit to other waste types thus gaining an indubitable advantage compared to new PROs. Mixed management of multiple waste types by the same operator can also cause risks with management transparency, such as transfer of costs and profit, criticality and advantages and disadvantages and benefits. 

The circular economy relies on the correct management of waste and this leads immediately to two important points: impacts connected with a strong social (environmental) responsibility and the responsibilities deriving from the delicate management of economic contributions (sums that the consumer must pay by law). It is therefore essential to outline specific behavioural obligations for Producers Responsibility Organizations such as reporting, transparency, ethical and environmental performance indicators; non distortion of competition; nationwide coverage; mechanisms to prevent cherry picking; respect of the waste hierarchy and no mechanism, even indirect, to generate substitute profit or benefits. This implies the existence of an efficient control system: supervision authorities, regular checks on organizational models and business processes, regular audits on competence flows and economic indicators. 

Most probably, it will be the very EU legislation to make compulsory very soon the creation of regulatory national mechanisms for the various EPR schemes present in different countries. 

Given the variety and different evolution stages of these schemes, the European Commission, in the recent proposal for the revision of Directive 2008/98/EC on waste put forward in December 2015, suggested the necessary contents to define unequivocally this concept. 

Italian legislators also recognized the need to control and monitor EPR systems. Art. 29 of “Collegato ambientale alla Legge di stabilità 2014” (law n. 221, 28 december 2015) assign now to the Ministry of the Environment and Sea and Land Protection the task to supervise and control such aspect, in line with the dictate of the proposal for the revision of waste directive put forward by the EC. 

Obviously, the time is ripe in Italy as well.

 

Waste: Different Forms of Responsibilities

by David Röttgen,Partner of Ambientalex Law Firm/Member of the IPCC Committee of the Ministry for the Environment

 

When dealing with waste, it is necessary to pinpoint the appropriate subject in charge of managing it.

Apart from a few exceptions, the Italian law opted for joint responsibility for all those involved in the waste production and management processes, envisaging that the initial producer, or whoever holds some waste, is to be held responsible for the whole chain of waste treatment (art. 188 Dlgs 152/2006).

However, there is another kind of responsibility, the so called “Extended Producer Responsibility,” which was recently introduced (Art. 178-bis, Dlgs 152/2006), addressing those who materially produced the goods, extending their responsibility to the “end-of-life” phase of their products, i.e. when it becomes waste.

Nevertheless, one should not confuse the “extended producer responsibility” with the “classic” responsibility of those producing waste and the subjects involved in its treatment (governed by article 188 of the same Dlgs 152/2006).

Not only are they different from a legal perspective, but the interests of a manufacturer and those who manage waste are often different. A producer responsibility aims at reducing the amount of waste generated with his/her products, while those involved in waste management would most certainly not profit from a waste reduction, since it is their “raw material.”

Nevertheless, in the daily debate, the role of manufacturers is often confused with that of subjects who materially manage waste disposal (collectors, recyclers, etc.).

Such confusion stems from the often-misused term “shared responsibility.”

Actually, in some cases, the concept is used to state that all subjects in the waste management chain are jointly and severally liable in case of bad waste management. In other instances, it is referred to in order to justify the need for collective systems to act together, i.e. they collaborate with subjects involved in waste collection and management. Lastly, for some it would justify the right of participation of collectors, recyclers, etc. to collective systems set up in accordance with extended producer responsibility, in their capacity as partners.

Those claiming this distort the meaning that this very law gives to the concept: as a matter of fact, Italian legislators recognise “shared responsibility” solely in the packaging sector. On the contrary, the “general rule” (art. 178-bis) on “Extended Producer Responsibility” does not mention it at all. 

But even in the specific sector of packaging, the recipients of “shared responsibility” provided for by law are not those operating in the waste sector but solely “operators in the respective packaging sectors” [see Art 217, paragraph 2]: that is manufacturers (providers of packaging materials, producers, transformers and importers of empty packaging and packaging materials) and users (traders, distributors, packaging fillers and users of packaging and importers of empty packaging).

In brief, the following conclusions can be drawn:

  • “Shared responsibility”, solely referring to the manufacturer of a product (and not to the waste producer as well), must be kept clearly separate from “joint responsibility” of all subjects concretely taking part in the waste production and management cycle.
  • The notion of “shared responsibility” does not require the collaboration amongst collective systems and subjects operating in waste collection and treatment.
  • Least of all, it is able to justify the fact also those who physically manage waste have the right to take part, as partners, in collective systems (consortia etc.), institutions as provided for “extended producer responsibility.”It is contrary to the principles of “extended producer responsibility” to transfer it to subjects other than the producers of a specific product.However, excluding operators of waste management from the governance of collective systems, we do not generate the risk of excluding from the system of extended producer responsibility the industrial sector dealing with waste management. As a matter of fact, the production sector, subject to “extended producer responsibility” needs the waste management sector to meet its obligations anyway. But all this by keeping the respective roles and functions clearly separate.

 

Legislative Decree of 3rd April 2006, n. 152 “regulations regarding the environment”, www.camera.it/parlam/leggi/deleghe/06152dl.htm

 

 

Top image: illustration by freepik.com