Big grocers, retailers want Ontario's recycling plan changed

Premier Doug Ford's government is facing corporate pressure to change Ontario's plan that sees industry taking on the full cost of blue box recycling programs, CBC News has learned.

Two organizations led by some of Canada's biggest supermarket chains, retailers and consumer goods companies want Ontario's blue box regulations amended, just as the industry faces a sharp rise in expenses under the transition.

While the two corporate groups insist the changes they want would not weaken Ontario's recycling program or slow down the cost shift to companies, the push is raising alarm bells among municipalities and environmental groups.

The industry is "trying to shirk its environmental responsibilities," said Ashley Wallis, associate director for Environmental Defence.

"If producers are not paying for this packaging, it's going to be taxpayers, it's going to be the environment or it's going to be human health, and that would be a massive step backwards," Wallis said in an interview.

Municipal governments fear the changes could saddle them with higher costs, more waste in landfills and more litter on the streets.

Ontario's plan to shift recycling costs

Ontario is in the process of shifting the cost burden of trash away from municipalities and onto companies that make and sell products that generate waste.

With this shift called "extended producer responsibility" industry now bears the full costs of recycling or recovering such items as tires, batteries, light bulbs and electronics.

Under the system, companies pay fees, based on the amount of waste material they create, to businesses that manage recycling programs, known as producer responsibility organizations (PROs).

It's up to the companies to choose whether to pass those fees on to consumers or to absorb them as a cost of doing business. The theory is that the fees provide the companies with an incentive to reduce their packaging and other waste.

For material that fills up blue boxes including beverage containers, paper, plastic, glass and metalthe transition to industry paying the full costs only began last year and is to complete by 2026.

Right now, companies are seeing their blue box fees shoot upward exponentially.

What industry wants changed

The biggest producer responsibility organization in the blue box sector, Circular Materials, is actively lobbying the government for changes that it says would save companies upwards of $100 million in running the blue box system, according to a March 21 document labelled "confidential" obtained by CBC News.

The board of directors of Circular Materials includes executives from Loblaws, Costco, Coca-Cola, Maple Leaf Foods, Procter & Gamble and a dozen other major companies.

In its confidential document a 38-page slide deck Circular Materials urges the companies that pay its fees to pressure the government on the issue of costs.

On a page headlined "Next Steps," a sentence in bold reads: "Recommend producers reach out to their government representatives to share their concerns on the impact of fees in Ontario as a result of the current Blue Box Regulation."

Meanwhile, the Retail Council of Canada, which represents many of the same big retail and grocery players, has written to Ontario's environment minister calling for similar reforms.

Multiple retailers believe Ontario's recycling legislation, originally introduced by the then-Liberal government in 2016, "represents the single greatest source of red tape in Canada," saidRetail Council vice-president Michael Zabaneh in a written submission from November.

Companies say changes would save $100M

Allen Langdon, the chief executive of Circular Materials, says companies were expecting fees to double in the transition to taking over blue box costs but are "incredibly concerned" that the increases are turning out to be even larger.

"We meet with them on a monthly basis and the overriding topic that we're discussing is just the enormous increase in fees over the last couple of years," Langdon said in an interview.

"What we're seeing are increases of four to six times what they used to pay and we're not even halfway through the transition," he said.

The solution that Circular Materials is pushing: it wants the government to give it a monopoly as the only producer responsibility organization for blue box materials.

"In the current framework, there are multiple organizations involved in managing the system, which leads to a lot of duplication and inefficiencies," said Langdon. "Where you've got one organization overseeing things, we'll have a much more efficient system."

Langdon says the change would save companies $100 million.

Doubt cast on industry's claims

However, other players in the sector question whether duplication is really to blame for the sharp rise in fees and warn against giving a monopoly to an organization that's led by the biggest corporations in the industry.

• "Eliminating competition is not typically the answer for controlling costs," said Gordon Day, vice president of Ryse Solutions, a smaller producer responsibility organization that competes with Circular Materials.Day says administration is not the most significant factor driving waste management fees upward. Instead, he says it's the rising cost of labour, trucks, fuel and insurance.

• The Canadian Federation of Independent Grocers has concerns about the push. "Red flags go up for us when we hear somebody talking about efficiencies and having everything in the hands of one company," said Gary Sands.

• The umbrella group representing municipal governments says it's concerned about the industry's effort to change what it calls Ontario's "strong action" on waste reduction. "This approach shifts the burden from taxpayers to polluters, incentivizing them to reduce waste at the source during production," said Brian Rosborough, executive director of the Association of Municipalities of Ontario, in an email. "Companies can reduce costs by reducing waste."

Wallis, of Environmental Defence, says big supermarket companies have for years been sending customers home with too much "garbage packaging" without any consequences.

"Now that they're the ones who are financially responsible for collecting and managing the waste, they have issues with how expensive it is," she said.

What retailers want changed

The Retail Council's submission to the government lists nine changes it wants made to the province's blue box regulations.

The most significant involves Ontario's recycling targets, which are currently set by cabinet. For instance, the industry is mandated to recover 60 per cent of all rigid plastics by 2030. Companies that don't meet the targets face fines.

Instead, the retailers want to shift to a model where targets are laid out in an industry-wide recycling plan submitted to the province for approval, as is the case in several other provinces, including British Columbia.

"In its current form, Ontario's legislative and regulatory framework is the least efficient in Canada in terms of driving environmental objectives," said Michelle Wasylyshen, spokesperson for the Retail Council, in an email.

However, according to Environmental Defence, the model in those other provinces has failed to boost recycling rates and the targets are nearly impossible to enforce.

Where Ford government stands

The government is not ruling out making the changes that industry wants.

A spokesperson for Environment Minister Andrea Khanjin says the government is working with producer responsibility organizations as well as retailers on the transition to a fully producer-run blue box system.

"Last year, we held consultations to be responsive to industry feedback and identify ways the government can minimize administrative burden and maintain program continuity," said Khanjin's press secretary Alex Catherwood in an email. "We will continue working with the sector on these priorities as the transition continues."

Drink cans, bottles and cartons

Parallel to all this, the government is consulting with industry stakeholders specifically about ways to recover and recycle non-alcoholic beverage containers, including soft drink cans, water bottles and juice cartons.

The beverage container industry group initially planned to fund the program by slapping non-refundable fees on every packaged drink purchased by Ontario consumers.

The government pushed back against that plan, and launched consultations on creating a deposit-return system for non-alcoholic drink containers, just like the Beer Store runs for cans and bottles of alcoholic beverages.

Provincial regulations mandate the industry to recover 75 per cent of all non-alcoholic beverage containers by 2026 and 80 per cent by 2030.

Various insiders say the only way the industry can hit those targets is through a deposit-return system, such as in Quebec, which last fall doubled the deposit on cans to 10 cents.