PRODUCER RESPONSIBILITY IN UPSIDE-DOWN LAND

In his article Stig Ervik claims that a profitability ban for producer responsibility companies hinders innovation and access to capital for circular solutions. The debate about the commercial operation of producer responsibility companies is important, but from there Ervik turns the issue on its head.

In Norway, the industries chose to organise the producer responsibility companies as limited companies, owned by trade associations. Norsirk itself is owned by four non-commercial organisations. NHO is the largest player in Norwegian producer responsibility, through its indirect ownership in many producer responsibility companies. In other countries, there are also associations without economic purpose that do this job.

Far from the purpose

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The purpose of the producer responsibility scheme was to ensure that producers and importers would cover the costs of collecting and processing waste through their membership in one or more producer responsibility companies. When Norsirk argues that a non-profit requirement keeps investors away and hinders access to green capital, this is both far from the purpose behind the scheme and far from today's reality. The owners of today's Norwegian producer responsibility companies have not injected any risk capital. The owners do not have a commercial purpose. Producer responsibility companies obtain capital from the members, i.e., producers and importers, through the so-called "environmental fee." This happens in accordance with the mandate from the authorities, and it means that producer responsibility companies in practice cannot go bankrupt.

Reduced membership fees

That owners who do not take risks and do not inject risk capital should still extract profit in the form of dividends, as is the reality after the change of purpose in Norsirk, is a perversion of the producer responsibility scheme. If producer responsibility companies operate efficiently and generate a surplus, this should benefit the members in the form of reduced membership fees, as the Swedish packaging company TMR did last year.

When it comes to the question of whether producer responsibility companies should engage in innovation and development, it should be posed to the members. What are they willing to pay for? Members should be aware that it now costs 309 million kroner a year just to operate the Norwegian producer responsibility companies, and that is before collectors and processors have received a penny to do the job. We who collect and process waste spend a lot of capital on research, innovation, and development. When the value in the waste does not cover our costs of doing the job, this will be included as an element in what we should have covered through producer responsibility. Instead, the money goes to the administration of the scheme, and in Norsirk's case: dividends to the owners. Do the members know that?

Dysfunctional responsibility

Norsirk accuses Stena of having formed Proretur to be able to send the bill to "those whom KLD has prohibited from making a profit". The reality is the opposite. Stena, like other collectors and processors, should be paid for the work we do via producer responsibility. Today, we are experiencing a situation where producer responsibility companies collect several hundred million kroner from members but refuse to pay us for the work. Producer responsibility companies refer to a strange rule that they themselves can define their collection obligation via a portal at the Norwegian Environment Agency, where only producer responsibility companies have access. Stena has formed Proretur to be able to register our processed volume as part of the total processed volume in Norway, so that Norsirk and everyone else must pay out their rightful share according to membership volume. We did this to ensure that the scheme actually works.

Stena agrees with Norsirk that producer responsibility is dysfunctional today, but from there on, Ervik's description is like a topsy-turvy world.