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OM in the News: Companies Pick Up Used Packaging and Recycling Cost

March 27, 2012

The New York Times (March 25, 2012) reports : “A growing number of large food and beverage companies are assuming the costs of recycling their packaging after consumers are finished with it, a responsibility long imposed on packaged goods companies in Europe and more recently in parts of Asia, Latin America, and Canada.”  Called “extended producer responsibility”, this is another sustainability task for OM managers to handle as they address the design-to-disassembly decisions  (Chapter 7). There are 3 causal factors:

First, “Environmentally conscious consumers are demanding that companies share their values,” says Starbucks’ director of environmental impact. Second, financially strapped local governments are looking for ways to shift the costs of recycling onto someone, and companies that make the packaging are logical candidates. And third, it is now cheaper to recycle some products (like aluminum cans) than it is to make them from virgin material. (Shredding, melting, recasting and rerolling used aluminum into new can sheet  saves 95% of the energy it takes to make it from raw ore).

Company-sponsored recycling efforts are voluntary in all states, except Maine, at this point in time. But a few big firms are going full-speed ahead. Coca-Cola has a stated goal of recycling 100% of its N. American cans and bottles by 2015 and 50% in the rest of the world. Coke is also trying out nonpetroleum-based packaging material. Dasani and Sprite come in PlantBottles that are 30% plant-based and can go through the same recycling process as oil-based containers.

Starbucks’ goal is to have recycling bins in all its stores in 3 years (it is at 18% right now). It asks customers to throw their cups in the bins, from which they are turned into napkins and new cups. Stoneybrook Farms collected 11 million no.5 yogurt cups last year at collection bins placed in Whole Foods stores. The cups are turned into toothbrushes and razors!

Discussion questions:

1. Why are grocery chains opposed to mandated packaging recycling?

2. What role might Walmart play in the trend?

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