Did you know, twenty-one 21 U.S. states have passed more than 50 Extender Producer Responsibility (“EPR”) laws pertaining to seven products? Do you know what EPR is? Do you know its potential implications for your industry and business?
What is EPR? It is a principle in environmental prevention policy and law based upon the construct: polluter pays! It is actually a simple concept based upon the precept of responsibility. Whoever designs, produces, sells or uses a product must take responsibility for minimizing the product’s impact on society throughout all stages of the product’s use and eventual disposition. And, inherently, the producer of the product has the most responsibility in that they have the greatest potential to minimize negative impacts, from inception.
If EPR laws are enacted regarding a certain product, a business has four (4) fundamental facets of responsibility that must be rationalized:
1st- Precautionary Responsibility: The producer as well as distributor and user must minimize adverse effects during the entire life-cycle of the product. This refers to responsibility for proven environmental damages caused by the product in question. The extent of the liability is determined by legislation and may embrace different parts of the life-cycle of the product, including usage and final disposal.
2nd- Economic Responsibility: The producer or distributor has take-back responsibility on an operational and/or financial basis. This means the producer or distributor will cover all or part of the costs for collection, recycling, or final disposal of the product manufactured. These costs could be paid directly by the producer, distributor or user at time of purchase and/or disposition.
3rd- Informative Responsibility: The producer has a requirement to ensure hazardous information labeling. This presents several different possibilities to extend responsibility for the products by requiring producers to supply information on the environmental properties of the products manufactured.
4th- Liability Responsibility: The assumption of liability is borne on part of the producer, distributor or user in accordance with proper use and product defects. This is used to characterize the systems where the manufacturer is involved in the actual physical management of the products or the effects of the products.
So, what does all this mean to business? Simply, the actual cost of a product must be re-thought of in terms of the entire life of the product. This is a concept known as Life-cycle from “cradle to grave”. The cost of a product must now include its economic or environmental burden in terms of waste as well as bi-products (i.e., pollution, environmental damage, etc.). This cost is now to be borne by the actual producer, distributor or even user versus society at- large.
This future liability has serious implications to business in the design of products as well as the business model being utilized to sell and take-back products. EPR and Product Stewardship have already been implemented with regard to: bottles, batteries, tires, phone books, electronic equipment and isotopes.
Several states are now also considering EPR legislation relating to: paint, white goods, utility poles, gas cylinders, carpets, pesticides, pharmaceuticals, mercury- based products, et. al. If enacted, producers, distributors and users of these products will be faced with serious questions and considerations as to: who is responsible, how will disposition be managed, and what is long-term liability.
In addition, numerous industries and companies are trying to get ahead of the EPR issue and are actually addressing the re-design of existing and new products to ensure a more environmental as well as economical approach. One such approach in design is a “cradle to cradle” concept that facilitates the re-use of products back into the production process as feed stock or, if not possible, at a minimum make products that can be re-cycled or down-cycled for other usage.
EPR or Product Stewardship is not something new; it has been in existence in several states for over three decades. What is new is the rationalization by many states of the unfair burden being placed on society in terms of waste and negative environmental impacts by the “few” or “limited” users of a product.
Concepts like Total-Lifecycle Management, Cradle to Cradle and business take-back processes are becoming serious considerations in procurement evaluation and the procurement process. Businesses are, and should; be, asking vendors how are they addressing this EPR issue not only in terms of product design (i.e., cradle to cradle) but also business process (i.e., selling and take-back model-reverse logistics) and intelligent information systems (i.e., RFID) that provide accurate data and reporting information in response to product management.
So now ask yourself, What will be the impact of EPR or Product Stewardship on the products you purchase, and what are your vendors telling you they are doing to lessen your potential liability?