One of the largest waste management companies in North America is disinvesting in recycling. Waste Management CEO David Steiner recently went on to discuss the company’s current business spend, which went from 12 percent five years ago down to 8 percent now. Citing low oil prices as the culprit behind the driving down of prices for fiber and plastics on back-end channels, Steiner argues that in order for recycling to be profitable again, "you either need to draw down the processing cost or you need to drive up the price on the back-end," a position he held early last year.
If the value of an item cannot be sold for more than the cost of collection, logistics and processing, there is no economic incentive to recycle it because there is no potential for profit. To begin with, most of the product and packaging waste created today is considered unrecyclable by this economic limitation. That items that have so long been top of mind as profitable commodities (plastic, paper and certain metals, for example) are diminishing in market value is reason for waste management companies and municipal recycling facilities to disinvest in recycling and view landfilling and incineration as cost-effective alternatives to more regenerative solutions.
But where major U.S. waste management companies are pulling resources from recycling processes at a time when Americans still only recycle about 34 percent of their trash, European waste management companies such as SUEZ are putting them forward.
SUEZ, a French waste management company, recently partnered with my company, TerraCycle, to bring our consumer-facing program structures to its customers in France, the UK, Belgium, Finland, the Netherlands and Sweden. Globally, TerraCycle currently recycles more than 100 specific “unrecyclable” waste streams (disposable items, flexible packaging, office supplies, beauty products, oral care, used coffee capsules and cigarette butts, to name a few) through free recycling programs and custom recycling solutions. SUEZ purchased a 30 percent stake in TerraCycle’s activities in Europe, enabling SUEZ to expand its services and add value for its customers using our platforms.
In this collaboration, TerraCycle gains access to perhaps the world’s largest sales force dedicated to the circular economy, and SUEZ sets an example for global environmental stewardship while keeping its eye on the prize: long-term relevance and profitability.
For the European waste management company, diversifying offerings from waste recovery to the recycling business has been a priority in recent years, as evidenced by its published reports highlighting Europe’s recycling challenges, contracts for the development of waste and recycling facilities, and project-based recycling efforts for difficult-to-recycle waste. By investing in recycling, SUEZ scales for efficiency and growth by showing leadership in materials recovery and resource management, conducting its business around building a stable, circular infrastructure, rather than allowing its actions to be dictated by the current price of oil.
From a business angle, there is critical need for more circular systems of manufacturing and consumption as sheer market demand and resource scarcity put a strain on virgin materials, which are resigned to single-use lives and are volatile in price. We are expected to integrate an additional three billion middle-class consumers into the global market by 2030, and commodity prices rose more than 150 percent between 2002 and 2010.
TerraCycle has yet to partake in a stake partnership with a U.S. waste management company of any size. In Europe, SUEZ accommodates an increasing demand for recycling options by offering to expand its services, creating value for consumers and easing costs for suppliers. Some of the biggest consumer product companies in the world are also now investing in recycling, securing supply chains and generating jobs. Future efforts to strengthen our recycling infrastructure and to sustainably develop for future generations are inevitable, and organizations who invest today only stand to make a return.