A new INSEAD report, conducted by the school’s Sustainability Research Group of the INSEAD Social Innovation Centre, examines the diverse stakeholder concerns and key factors impacting the legislative mechanisms to manage e-waste recycling in the European Union in a changing socioeconomic context, and makes recommendations for future policy enhancements. The report, entitled ‘Extended Producer Responsibility: Stakeholder Concerns and Future Developments’, finds that legislative mechanisms originally designed to stem waste and encourage efficient reuse, have failed to keep up with shifts in the marketplace - including the rise of a profit-based recycling market. The publication of the report coincides with the deadline for the transposition of the EU’s Waste Electrical and Electronic Equipment (WEEE) Directive recast into national legislation in EU member states.
The INSEAD white paper showcases the Centre’s expertise on e-waste recycling and was produced in partnership with the European Recycling Platform (ERP), an entity established in 2002 and offering producers cost-effective compliance services for fulfilling their obligations under the EU’s Waste Electrical and Electronic Equipment (WEEE) Directive. As of 2014, ERP has managed the recycling of over 2 million tonnes of e-waste — the equivalent of avoiding nearly 22 million tonnes of CO2.
The INSEAD team conducted a study on the future of “extended producer responsibility” (EPR), a concept that requires producers to pay for the cost of recycling their product. EPR evolved into a legislative tool to reduce landfilling of e-waste and spur design innovations for improved recycling. However, the INSEAD scholars found that several major factors — such as volatile commodity prices, uncertain waste volumes, and dynamics related to competition, regulation and design — curb or disrupt the effectiveness of EPR systems.
“We found that e-waste recycling is a highly dynamic market and that different sources of instability limit its effectiveness,” said Luk Van Wassenhove, the Henry Ford Chaired Professor of Manufacturing, founder of the Social Innovation Centre and one of the report’s four co-authors. “Our research indicates that a regulatory framework imposing general principles would bring better adaptation and that flexible transposition could adapt the detailed rules to changes in the market.”
The INSEAD study presents several recommendations to remedy this dysfunction. Among these, the researchers say, should be efforts to let the market develop to maturity without being distorted by outdated EPR legislation. “To drive the efficiency of EPR up and costs down, national authorities should, for example, ensure that markets remain open to allow and improve competition between PROs [producer responsibility organisations] as well as waste operators,” according to the report. The researchers also advise PROs to consider their competitive positioning to differentiate themselves and design viable, sustainable strategies.
“Over the past 10 years, INSEAD’s Sustainability Research Group has developed important knowledge and business expertise in the field of recycling by working closely with practitioners and other stakeholders involved in e-waste”, said co-author Nathan Kunz, INSEAD postdoctoral research fellow. In fact, he and his co-authors, including Atalay Atasu (Associate Professor, Scheller College of Business) and Kieren Mayers (Executive in Residence, INSEAD Social Innovation Centre), say that the new INSEAD report draws on that practitioner-oriented expertise to provide a comprehensive survey of e-waste recycling.
“Our paper is unique in that it is built on multi-stakeholder interviews with those engaged in production, collection and recycling as well as legislation,” said Kunz. “Based on our diverse stakeholder analysis, we developed a future outlook on EPR, one that takes account of waste as a potential revenue source driving a profit-oriented market.” As the recycling market has evolved, e-waste has shifted from being regarded solely as a cost to being seen as a revenue-generating opportunity. Legislation, though, so far has failed to adapt to this critical shift, the report finds. Despite the appearance of an improved European Directive announced on 14 February 2014, “this market remains dysfunctional,” Kunz said.
To read the full INSEAD Extended Producer Responsibility report, visit: http://centres.insead.edu/social-innovation/documents/Extended-Producer-Responsibility.pdf
