Posted in GreenBiz
January 7, 2022

Where others see waste, Waste Management’s new CSO see opportunity

GreenBiz

In January 2018, after handling nearly half of the world’s recyclable waste for decades, China banned the import of most plastics and paper that other countries, primarily the U.S. and Europe, had been sending its way. The move sent the global recycling market into a tailspin. Pricing soared. And many U.S. municipalities curtailed their systems or scraped them all together.

It looked pretty bad, but America’s recycling system didn’t die the untimely death some predicted. In fact, according to Tara Hemmer, chief sustainability officer for Waste Management, business is booming. That’s largely because another force has been at work over the past few years. Pressure on brands from consumers and political leaders to reduce the amount of packaging waste headed to landfills, incinerators and waterways has forced them to act. And this has created demand for recycled materials that wasn’t there before.

Waste Management is North America’s largest recycling company, serving more than 20 million residential, commercial, industrial and municipal customers. Hemmer is its first CSO, a role she took on earlier this year, after nearly 23 years with the company.  

GreenBiz recently sat down with Hemmer to talk about her new role, Waste Management’s investments in next-generation recycling technology, the progress the industry has made over the last few years, and the demand driving the industry forward.

CJ Clouse: How did the creation of the company’s first CSO position come about? And why did it happen now?

Tara Hemmer: [President and CEO] Jim Fish came to me and said, “This is a role that I think we need, it’s absolutely critical for us moving forward,” and he was very intentional about it. He felt the role needed to go beyond the traditional duties and responsibilities of a CSO, which tend to be more focused on a company’s internal sustainability efforts. And the reason he decided to move forward and create the position was because of the growth potential that we both see for the company longterm. We really view sustainability as probably the biggest growth platform for WM based on the external trends we are seeing around circularity and around decarbonization.

Clouse: Right. So for many companies, it’s more of a headache: How do we deal with this? How do we reduce waste and decarbonize? But for Waste Management, it’s a business opportunity, no?

Hemmer: Absolutely. We are the largest environmental solutions provider in North America and have been for years, and we are at the intersection of every aspect of circularity that customers are dealing with. We manage vast amounts of materials on a daily basis, and we are trying to partner with our customers to find the best homes for those materials available today but also to innovate and think differently about homes for those materials in the future. We’ve invested extensively in recycling infrastructure, in organics infrastructure, in our natural gas collection fleet, and in renewable natural gas facilities on our landfills.

Clouse: I understand that the recycling infrastructure piece is probably your main priority for 2022, no?

Hemmer: Yes, that’s right. In 2022, we hope to invest over $200 million in recycling infrastructure and that takes us to over $700 million in investments since 2018. There is going to be very strong demand for recycling as a service. We are seeing those demand signals with consumer products companies, and we are seeing it on the price side. So, that $200 million investment is really about us building out more MRF [materials recovery facility] infrastructure across our network. In the last two years, we’ve built facilities in Chicago, Salt Lake City, Raleigh and Sun Valley, and we’re fully renovating MRFs in Houston, Cleveland, Woodinville, Washington, and Elkridge, Maryland.

In 2022, we hope to invest over $200 million in recycling infrastructure and that takes us to over $700 million in investments since 2018.

These new and renovated facilities include things like robotics, intelligent sorting, volumetric scanners and cameras on collection vehicles to help us be much more efficient and allow us to add capacity in those locations. So we are able to meet demand and improve the quality of the materials we are generating from those facilities. We are looking at other key markets across the country and deciding where we should invest in new MRF infrastructure and where we should invest in upgrading facilities. Our goal here is really, by 2023, to have 95 percent of our residential recycling facilities fitted with this next-generation technology.

Clouse: Does this technology expand the types of materials that you can recycle or would it just increase the amount?

Hemmer: Both, really. For example, we have some facilities where we’ve been able to invest in advanced optical sorting technology, and as a result, we’ve been able to capture polypropylene [plastic]. And this is a great example where many of the consumer products companies, those companies that generate shampoo and medicine bottles, yogurt cups, lotion bottles and deodorant containers, all of those things, they are buying recycled materials. And because we were able to have that infrastructure in place, we could set those sorters to look for polypropylene, because we knew that there were end markets for it. And at those locations we were able to increase capture by close to 40 percent, which is huge.

When there are strong demand signals, we can continue to adapt our facilities based on where there are robust markets. That’s the beauty of many of these technologies. As markets emerge, we can set some of those systems to look for these material types.

Clouse: So you are seeing more demand from companies for this type of material that didn’t really used to get recycled so much.

Hemmer: Correct, and we’re seeing it in like pretty much all of the plastic commodity types. It’s one of the reasons pricing this year has been so high. There’s been strong demand for recycled content, and a lot of that is driven by brand commitments. And California is a great example where they have minimum content legislation, and that certainly helps.

Recycling only works when you have strong demand for the materials that you are capturing. And if you go back five years, there really wasn’t strong demand for recycled polypropylene. But now there is. So this is a great example of brands saying, “We want recycled content in our materials.” And if you pull it out of the system, we will buy it, and we’ll turn it into something else that goes back in our shelves.

Clous: Okay. So let’s talk a little bit about the overall system. How much progress has the industry made in the last few years, since China stopped accepting the materials we were shipping over to them? If the circular dream is: 100 percent of recyclable materials are collected, recycled and used to make products here in the U.S. or, even better, at a local or regional level, how close are we to that dream?  

Hemmer: Well, listen, I think it’s clear that what happened with China really was a pivotal moment for global recycling.  The good news is WM, through the investments we had already made in our materials recovery facilities, we had a strong model. But we also had a business model that had to evolve, and a big piece of that was making sure that we contemplated the true cost associated with running and processing recyclables through our facilities. So we spent a lot of time fixing that business model, and I’m proud to say we are close having most of our contracts in a fee for service format. Which means there will be resiliency in the recycling business and the processing capabilities long term.

When there are strong demand signals, we can continue to adapt our facilities based on where there are robust markets.

The second piece, which was critically important, is the demand challenge. There’s now a recognition that just because something has a triangle on it that says it’s recyclable, if there’s no market for it, it really doesn’t matter. So, the markets that have developed really have made an impact.

Clouse: In addition to the technology and the increased demand, what do you see as the holy grail that would help us achieve circularity in waste management? Better materials design?

Hemmer: We do have to think about the types of products that are put on shelves. Even with state-of-the-art facilities with vast amounts of technology, if there’s no way to capture something because it’s so small it falls through our system before it gets to the spot where it would be sorted out, then that material won’t be recycled. Having those conversations with the sustainable packaging organizations, and we are plugged in with them, to educate them on what actually happens when these types of materials go through our facilities, is important. Because ultimately all of us want them recycled.

Clouse: A lot of municipalities that have been struggling to finance their recycling programs. So I’m wondering if you’ve seen any movement toward creating extended producer responsibility laws.

Hemmer: We’ve certainly seen extended producer responsibility in certain areas of the country and in certain regions in Canada. California comes to mind, and Maine as well. We don’t necessarily see a national framework taking hold but certainly more regional. One of the things we’ve been trying to do is work closely with municipalities to offer options and solutions to ensure that they have recycling as a service now and in the future.

[Continue the dialogue on  how to build a circular economy with forward-thinking leaders at Circularity 22, taking place in Atlanta, GA, May 17-19.]

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