Turning Trash to Treasure: The Fiscal Case for Revisiting Pollution and Waste Management
Knowledge

Turning Trash to Treasure: The Fiscal Case for Revisiting Pollution and Waste Management

Key Takeaways

  • Legislation at both the federal and state level is trending toward heightened regulatory action concerning pollution and waste output; businesses should get ahead of the curve to avoid costly ramifications

  • Modernizing pollution and waste management thinking can lead to a corporate policy that reduces waste generated from emissions, packaging, and electronic devices, in order to be aligned with investor and consumer concerns

  • Businesses that dedicate time and resources to pollution and waste reduction stand to benefit from a number of government programs and incentives

 

Amid a changing regulatory landscape that is prioritizing climate change, and with an increased emphasis on incorporating Environmental, Social, and Governance (ESG) concepts into business practices, it is critical that every company evaluate its pollution and waste management policy to not only reduce its carbon footprint, but to capitalize on available cost-saving strategies, economic opportunities, and incentives as well.

The rise of ESG awareness coupled with the tighter environmental regulatory framework marshalled in by the Biden administration, and seen at the state level as well, should cause every company to proactively address its pollution and waste management policy in order to avoid costly ramifications down the road. Failure to appreciate the significance that a sound pollution and waste management policy can offer will likely lead to a financial setback resulting from future costs of compliance, in addition to scrutiny from the socially conscious investor and consumer that will undoubtedly affect your company’s bottom line. There are an innumerable amount of strategies that can be adopted to address pollution and waste output, but here, we offer a few simple concepts that can be impactful and instrumental for the success of your business.

Modernizing Pollution and Waste Management Thinking

With the green energy revolution, a sound pollution and waste management policy should no longer be viewed as simply a reduction in “trash” generated from daily operational activities, but instead, should have the dual focus of pollution reduction and sustainability, which can be addressed via policies aimed at reducing emissions, waste creation from material packaging, and proper disposal of electronic waste.

Emissions Reductions

Waste generation from emissions is so broad that reduction measures can be tackled in numerous ways, some of which may be obvious, while others are not as traditional. For example, a smart building can serve the dual purpose of not only providing useful building services to keep employees comfortable and productive, but at the lowest cost to a business’s operations and the environment. Optimizing building systems to match occupancy patterns and energy use to only pull from power grids as needed can immediately reduce emissions and daily operating costs with no impact to worker productivity.

Aside from buildings and structures, emission reductions can be realized with upgrades to and the use of alternative fuel vehicles that reduce emissions per waste generated by your company, and reduce costs in maintenance and power over the life of a vehicle. These savings can be even greater when considering the costs of conversion associated with an entire fleet of vehicles.  Moreover, and of particular relevance amid the COVID-19 pandemic forcing much of the workforce to work from home, a telecommuting policy can reduce costs and emissions while maintaining worker productivity.

Further, and depending on the nature of your business, opportunities exist in which renewable energy can be generated from emission waste output as well. As regulations continue to focus on reducing emissions targets and increasing penalties for failing to comply, these simple steps can have an immediate impact on the bottom line of your business.

Packaging and Material Waste

Another corporate pollution and waste management policy objective should be integration of sustainable packaging and waste reduction concepts into products sold to the public and used in the workplace. Investors and consumers alike are more mindful of products that fit into a circular economy in which the expectation is that products never reach a landfill. Environmental risks associated with virgin source product manufacturing may not be reflected in current pricing schemes, but are sure to be in the future with carbon pricing regulations and measures such as single-use plastic bans and packaging taxes, not to mention reduced demand from the modern ESG-conscious consumer.

Therefore, it is critical that businesses reevaluate their allocation of commodity costs to be aligned with foreseeable regulatory changes and consumer demand for sustainable packaging.  Business should look to create packaging from material that is recyclable in the circular rather than linear sense and compostable to support a closed-loop system. These strategies can be realized by using post-consumer recycled content over virgin content, and bio-based materials into packaging. With respect to the workplace, another easy to implement virgin source reduction measure is the use of post-consumer waste paper and a preference for electronic delivery methods when available.

Electronic Waste

Increased reliance on and demand for newer, better, and faster technology has resulted in an emerging problem, which is the rise of e-waste generation.  E-waste is broadly defined as a range of electronic devices that have ceased to have value to their users and include everyday appliances (e.g., refrigerators, microwaves, and air conditioners), information technology equipment (e.g., mainframes, computers, laptops, and cell phones), and consumer equipment (e.g., radios, televisions, and camcorders). Electronic devices are made out of materials that are toxic to the environment, such as heavy metals and chemicals, and often leach into the environment when not disposed of correctly.

Since formal e-waste recycling is costly, companies can adopt policies to limit e-waste generation such as repairing and repurposing electronic devices and products for second life consumption.  Additionally, businesses should practice product disassembly before disposal to identify available second life markets for components of devices that cannot be reused internally. For example, the second life battery market is a billion-dollar industry that can repurpose batteries used on electronic vehicles to continue efforts and maintaining a closed-loop system.

Government Programs

Businesses can stand to benefit from a revamped pollution and waste management policy for a multitude of reasons other than simply costs savings associated with compliance. There are a slew of market-based economic incentives for business that commit to emissions and waste reduction as well. For example, marketable permit systems, which limit the amount of pollution any one business or group of businesses can produce, offer flexibility for companies to either reduce their own emissions or purchase “allowances” from other companies that have reduced below their required levels. There are two types of these programs currently used across the country: emission reduction credit based systems (ERCs), and capped allowance systems.  ERC’s allow for polluters to receive credits upon notable reductions, while capped allowance systems allow businesses to sell off portions of their pollution allowances as they reduce their outputs. Further, there are a number of subsidies available for businesses that partake in environmentally friendly activities such as grants, low-interest loans, and favorable tax treatment, to name a few. Another benefit to prioritizing waste management and pollution reduction is that businesses stand to avoid hefty fees that come with high pollution outputs. These fees can come in the form of pollution taxes, water-user fees, and solid waste disposal fees, among others. It behooves every business to revisit and reconsider their pollution and waste output policies to determine whether public benefits are available.

Conclusion

Environmental concerns are in the vanguard of national awareness, and will continue to be at the forefront of government policy, investing, and consumer spending as we see more and more examples of climate change impacts in our everyday lives. The ramifications of a poor ESG assessment from the socially conscious investor and consumer can be drastic. As environmental regulations get stricter, businesses with sound pollution and waste management policies will be positioned to minimize disruptions from government interference, to reap the financial benefits prioritized by the ESG aware investor and consumer, and to capitalize on available public programs and incentives.

*The author was assisted by legal intern and University at Buffalo student Colin M. Jackson.

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