The CEO of Waste Management, Inc. (WMI) commented to CNBC that, based on the facts, glass and organics should not be collected because they lack economic value for shareholders. In a related panel discussion, the need for top-down legislation to help recycling was deemed unnecessary. Accordingly, WMI is reducing its investments in recycling. “As profits in this area decrease,” one report states, “WMI has reduced its investment in recycling from $300 to $400 million per year to under $20 million per year, (See, Waste Dive for September 6, 7, and 14).
I disagree with these “facts.”
These comments indicate that David Steiner’s business model is off kilter and that he doesn’t quite realize what has happened in the US during the past 40 years.
The “top down legislation” cited is really a manifestation of the grassroots, bottom up activism that has changed the rules of the game for recycling in countless communities. WMI may be the largest recycling company in the country but they became so kicking and screaming against these new rules, such as: mandatory recycling for households, businesses, schools and government facilities, unit pricing for households (such as Pay As You Throw), minimum recycled content for manufacturers, bans on plastic bags and Styrofoam packaging, bans on all recyclables from landfills and incinerators, container deposits or bottle bills. These rules were imposed by citizen and local environmental organizations in towns, cities and counties. This is where decisions are made about solid waste and recycling management.
Perhaps Steiner wants us to believe that his company is a victim of arbitrary government power. But his real nemeses are every day people who want more recycling that lead to zero waste. At the same time recyclers clamor for redesign of products and packaging, less toxics and less pollution from manufacturers. The future is less waste and companies that learn how to maximize their ROI from the materials they handle will be rewarded. Most shareholders (who are, after all, people) already know this and see the long-term benefits of recycling.
WMI makes more money using their landfill infrastructure than by recycling. Wall Street has consistently warned shareholders that recycling is bad for WMI stock price. So WMI’s motivation is clear. Steiner’s comments reflect this self-interest. But he misses his (and WMI’s) long-term interests.
In practice, Waste Management fights bans of yard debris from landfills and incinerators. Now, Steiner wants to drop glass recycling because it is uneconomical for WMI. However, just go to a state with a bottle bill and you will see a vibrant glass market for clean cullet.
In Kansas City, Ripple Glass has promptly quadrupled the recovery of glass to 20%. Strategic Materials in Houston stepped in as WMI backed out of glass collection as unprofitable. They are making a profit. Instead of receiving money for this glass from the abrasive’s industry, WMI uses its dirty MRF glass for landfill cover.
Steiner opposes the trend in organics collection as well. This is diverting some 30% of the waste stream in communities that have adopted curbside collections. This material is invaluable to the country, which needs to replace our greatly diminished topsoil. Composting creates jobs, saves water (see ILSR’s, “Compost Impacts More Than You Think”), and applications of composting programs reverse climate change (see, the Marin County Carbon Project).
Compost enterprises, greenhouses and gardens have a transformative impact on communities.
Waste Management puts organic waste in landfills and recovers methane, one of the least efficient and environmentally damaging methods to recover methane from organic matter (See ILSR’s Press Release on new US EPA landfill emissions rule).
Steiner’s lack of a business model for composting harms shareholder value by focusing only on the short-term, putting more garbage in landfills now. Landfills are the company’s prime asset. The value of landfill capacity in the future is far greater than current value. Thus the more the company can process yard debris and food discards into compost programs or anaerobic digestion facilities the more future value it creates.
The US grassroots recycling movement has always wanted “more” as Penny Hansen, EPA’s first recycling expert recognized as early as 1972. More source separation, 2
more composting, more bans on toxic and hard to manage materials and products, and more corporate responsibility to remove toxic materials. While Waste Management clings to the old garbage paradigm, the US recycling movement has evolved into a zero waste movement.
Mr. Steiner is clinging to the old landfill calculus that made his company rich and powerful. But times have changed. His policies are now hurting shareholder long- term interests.