Why is there competition in the system of producer responsibility for packaging?
In Finland, activities related to producer responsibility for packaging have been taken care of by five material-specific producer organisations for a long time. There has been no competition, and no one has really thought competition in the sector necessary.
Things are changing now. There are plans to set up two producer organisations that deal with all materials, and they would replace the existing material-specific organisations. The new producer organisations would also compete with each other for customers.
Producer responsibility for packaging was introduced in Germany in the early 1990s. It spread to other countries, and now the EU’s Waste Directive requires it to be introduced in all Member States. Several competing producer organisations operate in many EU countries. There are about ten in Germany, three in Estonia and two in Sweden and Norway.
Why is producer responsibility interesting as a business? Despite the fact that the company managing the responsibility is not allowed to distribute dividends in Finland, for example?
The reason is the power that the legislation gives to the producer organisation. Producer organisations have a say on the operations in the entire value chain, from manufacturers of materials and packaging to companies that offer collection and recycling services.
A producer organisation is responsible for handling its customers’ collection and recycling obligations. It decides who collects and processes the waste. It also has an influence on decisions concerning where recycled materials end up. This will be an important aspect when the mandatory recycling obligations for manufacturers of packaging and products are introduced. The producer organisation collects fees from its customers to cover the operating costs.
Producer organisations have a say on the operations in the entire value chain, from manufacturers of materials and packaging to companies that offer collection and recycling services.
Producer organisations make decisions concerning a growing amount of money. Eight years ago, the annual cost of producer responsibility for packaging in Finland was well under 10 million euros. In 2021, customers paid almost 40 million euros for the handling of their obligations, and in a couple of years’ time the bill will be 70-80 million euros per year. The costs will continue to go up as decision-makers keep transferring new responsibilities to producers.
It is obvious that the producer responsibility scheme could not work without producer organisations.
And will those who pay, i.e. the companies with producer responsibility and, ultimately, the consumers, benefit from competition between different producer organisations?
Yes, they will, if it enhances cost-effectiveness and improves the quality of the services. However, if competition leads to overlapping collection and recycling systems and cherry-picking then no, they will not.
Juha-Heikki Tanskanen
CEO, Finnish Packaging Recycling RINKI Ltd