Nine essential insights on managing product stewardship schemes, from REMONDIS Australia’s CEO

So the first one is – and it sounds very obvious, but I've seen programs falling over because of this – you need a market for your components.

That sounds easy. But I can tell you, particularly in Australia, when it comes down to infrastructure and particularly recycling infrastructure, not having processing facilities to actually do the recycling, converting recyclables into commodities for which there is a commercially viable market – it is absolutely crucial to think about it up front. It's one thing to have a program in place to collect the materials, but they should not end up in warehouses.

Some schemes thrive at the front end but struggle at the back end because commodity markets are volatile, unavailable or immature, leaving you stuck with resources you can’t find a market for.  

So it is really important to consider whether there is infrastructure and a market ready to receive your output. And it's also important that the Government understands this segment of the circular economy and enacts policies to ensure that there is a market for recycled and recyclable commodities.

Editorial note: The 9 November 2022 pause in collections for the Redcycle soft plastics stewardship scheme underlines the importance of a robust market for recyclable commodities. More on SBS online

As quite a few people here might know, the waste hierarchy usually goes like this: Prevent > Reduce > Re-use > Recover > Recycle > Energy recovery > Dispose.

Let me make a side point here. That critical energy recovery pathway on the second last rung is badly missing in Australia right now, at a time when safe and effective combustion technology is thriving overseas. REMONDIS has said this before and I’ll say it here now… the energy recovery pathway is going to have to open up soon in Australia if this country wants to manage its worsening landfill problems and fall in line with world’s best waste management practice. [Explore our perspective on energy recovery, also known as Energy from Waste or Waste to Energy, here Energy recovery.] 

But back to my point. When we talk of the waste hierarchy as a journey, we need to recognise that the desired destination mightn’t always be possible at the start.

You may have residual material you simply can’t deal with, and this could be a significant proportion of your collected material. The highest end use for your recyclables may not be achievable in the first instance or – given the scale of Australia – may not be achievable in every region.

It might be a case of settling for a good enough journey as opposed to a perfect one, until the perfect one is achievable.

Sometimes one has to compromise and that's to say, okay, although it might not be possible in the first instance to bring this waste material back to higher use, maybe there are other solutions – including thermal recycling for products for which we don’t currently have higher order recycling solutions. From our perspective converting non-recyclable waste to energy is definitely one of the ingredients in a maturing circular economy.

So treat the waste hierarchy as a journey. Don’t lose sight of your goals, but recognise that it may take time to move up the hierarchy.

It’s important to have a back-up plan – a ‘redundant infrastructure’ approach. That may mean sharing your volume across multiple processing sites, even if it comes at a greater cost because unexpected events such as fires, floods, fines, delays in regulation or business failures may require a quick diversion of material to alternative facilities.

Existing relationships are important here. You need people and places you can call on as back-ups. It’s contingency planning 101, but is often absent from well-intentioned but poorly framed stewardship schemes.

Not having these basic contingencies can cost you dearly when it comes to meeting your goals. We have seen whole programs falling apart due to lack of contingency planning for infrastructure, and this is particularly important here in Australia where there isn't a lot of redundant infrastructure available in the market.

REMONDIS has built hundreds of processing sites globally. Such sites always take a long time to establish, and require major investments underpinned by secured feedstock and commodity markets for outputs.

Look at the approval times for recycling infrastructure in Australia – we are looking at easily 12, 18, 24 months. Once you’ve built the plant, it may take months to get it to work optimally and – being very honest about deploying new technology – you may need expensive retrofits to fix unexpected issues.

It all takes time, and it takes money.

Everything takes longer than you hope, particularly in voluntary schemes in which you can have very ambitious targets.

The reality is that not everybody shares your enthusiasm.

Very often it takes a little bit longer – often several years longer – to get to that break even point in which the system is working efficiently. So have realistic expectations for the scheme’s ramp-up phase. Silver bullets and magic wands rarely exist.

Hope is not a strategy. Or as we say in Germany, 'Die Hoffnung stirbt zuletzt’ – hope dies last. Instead, it's much better to have a contingency plan to allow for the inevitable delays in the process.

Oh, this is a bit of a strange one, I guess.

I have to explain what I mean by ‘freeloaders’. In a voluntary scheme not governed by government policy or mandate, you really want every member of the industry to join the scheme – in the interests of equity, volume and effectiveness. But many won’t.

How do you deal with that? We have seen some schemes opting for exclusivity and limiting the scheme to inputs from funding members. 

But the reality is you make it very difficult for the collection point logistics, and for members of the public who may not easily distinguish between participating and excluded brands. Restricting the material inputs to specific brands or sources requires costly community education, onerous sorting, separation and waste management at the collection point – and will limit the growth of your scheme. It may also make it more difficult for other companies to join your scheme at a later date.

To be very honest, you probably need to be prepared to take on some ‘freeloaders’ for the first two or three years and have a strategy to manage the associated costs. This may mean preparing your scheme funders to cover the cost of non-member, non-funding participants.  

In most cases free loaders will probably join the scheme eventually out of corporate responsibility, consumer expectation, shame or ultimately regulation and political pressure.

So it is really important before you set up a scheme to consider this issue; to think hard about what you are going to do with all these companies which are not joining your scheme, and be very wary of introducing barriers that may affect your scheme’s ability to grow.

This is, I think, another very obvious insight.

Very few product stewardship schemes will be cost sustainable on their own. If you expect to collect, process and sell a commodity and have a commodity-based revenue stream that will support the scheme in totality, you’re likely to be disappointed.

I think that's very straightforward because very few recyclables have an intrinsic value; there’s often no direct economic benefit to use recycled materials. Most of the time recycled materials actually are more expensive than virgin materials. So it is really important to make sure that when you build your scheme that you consider how to fund that gap between what the recyclables are actually worth and what it costs to collect and extract the recycled materials.

There is another big factor in this one, which is all about the volatility of commodity pricing. I don't want to say it's a roller coaster, but actually it is.

In countries such as Australia, recycled commodity values can halve from one month to the next; this is something that is really important to keep in mind.

Other schemes are not the enemy. Other schemes are a great opportunity to work together. Maybe not so much at the front end, but definitely at the back end. Definitely when it comes to data sharing. Definitely when it comes to logistics processes.

The cost of collection is likely to be 50–70% of your scheme costs. Collection of many materials is also likely to be highly inefficient – you will spend big dollars to collect low payloads, at least initially. Regional area collection costs will be worse, although we’re starting to see opportunities in consolidating collections for multiple schemes. You’re going to need a big scheme mobilisation fund to cover these costs until efficiencies are developed, or until you find beneficial collaborations. 

So I would really encourage – especially when volumes are not very large – that schemes are cooperating.

REMONDIS is in a very fortunate situation. Our Integrated and Managed Services division is in the product stewardship consulting business. They have a network of approximately 1,300 third parties which they can use to provide stewardship scheme infrastructure – which is a big driver for collaboration both across schemes and with other industry players in the market.

Technology is definitely your friend.

What I mean by that is, for example, having apps which allow you to track your waste stream from collection to the point it is recycled. It's important to allow you to detect any problems in your flows, your volumes against capacity and targets, and it allows you to optimise not just the logistics but the overall supply chain. 

REMONDIS has its own software developers in-house, based within our Integrated and Managed Services team. We've deployed our own app technology for collection and processing sites that helps address scheme faults, contaminants and outcomes in real time. This gives us a high degree of control, positioning us and our clients for success. 

On screen now is our Product Stewardship Tracking App – this version was developed in-house by our specialist digitalisation team and customised for our client, Paintback. This app is responsible for reducing contaminants in the stewardship supply chain, driving behaviour change and enabling higher resource recovery rates. [Find out more about our award-winning Product Stewardship Tracking App here.] 

Overall, such technology gives visibility of so many moving parts – and product stewardship schemes have a lot of moving parts to monitor.