Don’t Get Trashed — Is Recycling Discarded Mail Profitable? — Part II

In our previous post of “Marketing Sustainably,” we introduced an expert discussion on whether or not recycling collection of discarded mail, catalogs, printed communications and paper packaging is profitable, and why this matters is an important business consideration for the direct marketing field. In this post, we continue and conclude the discussion with our two experts, Monica Garvey, director of sustainability, Verso Paper, and Meta Brophy, director of procurement operations, Consumer Reports.

In our previous post of “Marketing Sustainably,we introduced an expert discussion on whether or not recycling collection of discarded mail, catalogs, printed communications and paper packaging is profitable, and why this matters is an important business consideration for the direct marketing field.

In this post, we continue and conclude the discussion with our two experts, Monica Garvey, director of sustainability, Verso Paper, and Meta Brophy, director of procurement operations, Consumer Reports. The conversation is based on a Town Square presentation that took place at the Direct Marketing Association’s recent DMA2012 annual conference.

Chet Dalzell: If much of the recovered fiber goes overseas, what’s the benefit to my company or organization in supporting recycling in North America?

Monica Garvey: The benefit—companies can promote that they support the use of recycled paper because they believe that recovered fiber is a valuable resource that can supplement virgin fiber. Recycling extends the life of a valuable natural resource, and contributes to a company’s socially responsible positioning. While it’s true that the less fiber supply there is locally, the higher the cost for the products made from that recovered fiber domestically, it’s still important to encourage recycling collection. Because recovered fiber is a global commodity, it is subject to demand-and-supply price fluctuations. If demand should drop overseas, and prices moderate, there may be greater supply at more moderate prices here at home, helping North American manufacturers; however, this is very unlikely. RISI, the leading information provider for the global forest products industry, projects that over the next five years, world recovered paper demand will continue to grow aggressively from fiber-poor regions such as China and India. Demand will run up against limited supply of recovered paper in the U.S. and other parts of the developed world and create a growing shortage of recovered paper worldwide.

CD: Is there a way to guarantee that recovered fiber stays at home (in the United States, for example)?

Meta Brophy: Yes! Special partnerships and programs exist that collect paper at local facilities and use the fiber domestically, allocating the recovered paper for specific use. ReMag, for example, is a private firm that places kiosks at local collection points—retailers, supermarket chains—where consumers can drop their catalogs, magazines and other papers and receive discounts, coupons and retailer promotions in exchange. These collections ensure a quality supply of recovered fiber for specific manufacturing uses. It’s a win-win for all stakeholders involved.

I recommend mailers use the DMA “Recycle Please” logo and participate in programs such as ReMag to encourage more consumers to recycle, and to increase the convenience and ease of recycling.

CD: What’s the harm of landfilling discarded paper—there’s plenty of landfill space out there, right?

MG: Landfill costs vary significantly around the country—depending on hauling distances, and the costs involved in operating landfills. In addition, there are also environmental costs. By diverting usable fiber from landfills, we not only extend the useful life of a valuable raw material, but also reduce greenhouse gas emissions (methane) that result when landfilled paper products degrade over time. There are also greenhouse gases that are released from hauling post-consumer waste. While carbon emissions may not yet be assessed, taxed or regulated in the United States, many national and global brands already participate in strategies to calculate and reduce their carbon emissions, and their corporate owners may participate in carbon trading regimes.

CD: You’ve brought up regulation, Monica. I’ve heard of “Extended Producer Responsibility” (EPR) legislation. Does EPR extend to direct marketers in any way?

MG: EPR refers to policy intended to shift responsibility for the end-of-life of products and/or packaging from the municipality to the manufacturer/brand owner. It can be expressed at a state level via specific product legislation, framework legislation, governor’s directive, or a solid waste management plan. EPR has begun to appear in proposals at the state level in the United States. EPR, for better or worse, recognizes that there are costs associated with waste management on all levels—not just landfilling, but waste-to-energy, recycling collection and even reuse.

These waste management costs currently are paid for in our taxes, but governments are looking to divert such costs so that they are paid for by those who actually make and use scrutinized products. Thus EPR can result in increased costs, were states to enact such regulation on particular products such as paper, packaging and electronic and computer equipment. Greatest pressure to enact EPR most likely focuses on products where end-of-life disposition involves hazardous materials where recycling and return programs may make only a negligible difference. Many will state that the natural fibers in paper along with the extremely high recovery rate of 67 percent makes paper a poor choice for inclusion in any state EPR legislation. That is also why the more we support the efficiency and effectiveness of existing recycling collection programs, the less pressure there may be to enact EPR regulations directly. It will likely vary state to state where specific concerns and challenges may exist.

CD: Does the public really care if this material gets recycled? Do they participate in recycling programs?

MB: Yes, they do. Even a public that’s skeptical of “greenwashing”—environmental claims that are suspect, unsubstantiated or less than credible—participates in recycling collection in greater numbers. Both EPA and American Forest & Paper Association data tell us the amount of paper collected is now well more than half of total paper produced, and still growing—despite the recent recession and continued economic uncertainty. Recycling collection programs at the hometown level are politically popular, too—people like to take actions that they believe can make a difference. And as long as the costs of landfilling exceed the costs or possible revenue gain of recycling, it’s good for the taxpayer, too.

CD: At the end of the day, what’s in recycling for my brand, and the direct marketing business overall?

MB: I see at least three direct benefits—and nearly no downside. First, a brand’s image benefits when it embraces social responsibility as an objective. Second, being a responsible steward of natural resources, and promoting environmental performance in a way that avoids running afoul of the Federal Trade Commission’s new Green Guides environmental claims—positions a brand well in practice and public perception. And, third, and I see this firsthand in my own organization, both the employee base and the supply chain are more deeply engaged and motivated as a result, too. Certainly, in the direct marketing business overall, there are similar gains—and I’m excited that the DMA has embraced this goal for our marketing discipline.

Setting Sustainability Goals: DMA Takes Industry Aim at Bottom-Line Benefits

One of the challenges for advancing sustainability in everyday business practice is that investments made toward the “triple” bottom line must indeed generate payback in three ways: financial, environmental and social. Many times, “people” (social) and “planet” (environmental) may get an obvious nod, but “profit” (financial) is difficult to articulate.

One of the challenges for advancing sustainability in everyday business practice is that investments made toward the “triple” bottom line must indeed generate payback in three ways: financial, environmental and social. Many times, “people” (social) and “planet” (environmental) may get an obvious nod, but “profit” (financial) is difficult to articulate.

As a member of the Direct Marketing Association Committee on the Environment and Social Responsibility, we are focused on articulating triple-bottom-line benefits in each and all of the activities we undertake on behalf of the business. Two such Committee initiatives have been given specific recognition by the DMA Board of Directors as industry-wide sustainability goals: (1) a commitment to apply preference, data hygiene and proper postal preparation to reduce Undeliverable-as-Addressed-Advertising (UAA) mail by 25 percent by 2013 and, by doing so, generate savings approaching 1 million tons in carbon equivalents (announced July 2008); (2) a commitment to increase recycling collection rates for catalogs and direct mail, as tracked by the U.S. Environmental Protection Agency, to support growth of recycled paper markets (not publicly announced by DMA yet, but approved by the DMA Board at its recent October 2011 meeting).

The triple bottom-line benefits of each of these two goals are worth articulating. They include (but are not limited to):

Public Goal 1: List Hygiene & Carbon Reduction

  • Less mail waste is generated as more mail is delivered as properly addressed (financial);

  • Preferences as indicated by consumers are respected and honored (social); and,

  • Unwanted or improperly addressed mail avoids entering the municipal solid waste stream (environmental).

Public Goal 2: Increased Catalog/Direct Mail Recycling

  • The more paper fiber that is recovered for recycling, the greater supply and availability of paper and packaging made from recovered fiber thereby decreasing pricing pressure on products made with recovered fiber (financial);

  • Less hostility toward discarded mail waste, as more material is put toward subsequent, useful purpose -and recycling programs are fully supported (social); and,

  • Less discarded catalogs and direct mail are destined for landfills (environmental).

Perceptions persist that sustainability initiatives are “feel good” activities that don’t support the enterprise. In contrast, DMA and CESR will be emphasizing in 2012 that sustainability is an industry imperative that will lead to measurable, accountable benefits to our industry’s collective bottom lines—all three of them. In this blog, I will discuss in more detail some of the specific efforts being undertaken to achieve these important goals.

Helpful Links: