U.S. firms increasingly picking up the tab for recycling costs, though opposition mounts

Companies in the U.S. are increasingly incorporating the costs of recycling items they produce into manufacturing, the result of a number of factors.

Recycling initiatives in the U.S. have actually gained traction over the past few years, even in the wake of the worst financial contraction since the Great Depression. Businesses are increasingly assuming the costs of recycling their packaging after consumers are done using it, according to The New York Times. Firms elsewhere in the world, including those operating in Europe, have long done so, but companies in the U.S., Latin America and Asia are more and more doing the same.

It may seem counterintuitive that in a time when businesses are focused on cost reduction they are paying more to account for recycling, but there are a number of variables that have coalesced to drive such a trend, according to The Times. For one, cash-strapped local and state governments across the U.S. have worked to offset costs amid a slowdown in tax revenue and federal assistance by charging companies for services for which they formerly paid.

"Local governments are literally going broke and so are looking for ways to shift the costs of recycling off onto someone, and companies that make the packaging are logical candidates," Starbucks environmental impact director Jim Hanna said recently. "More environmentally conscious consumers are demanding that companies share their values, too."

Moreover, although some companies are simply reacting to new rules and regulations, others are increasingly eyeing the limited availability of resources as a future obstacle to growth. Hanna said "companies are becoming more aware that resources are limited and what they've traditionally thrown away … has value." For firms scrutinizing spend management and indirect spend, they are working to keep costs down, especially amid volatile commodities.

It is currently less expensive to recycle an aluminum can into a new one than to produce the alloy from scratch, according to experts. The same is also true for other raw materials, a fact that is not lost on cost-conscious company executives. Although spending more on recycling could initially hurt profitability, experts assert over the long term it will help drive efficiency and potentially augment earnings.

"Shredding, melting, recasting and rerolling used aluminum beverage cans into new aluminum can sheet saves 95 percent of the energy that it takes to make can sheet from raw ore," Alcoa recycling director Beth Schmitt noted.

Companies in the U.S. are currently absorbing recycling costs because of corporate initiatives. While Maine has enacted legislation that allows lawmakers to force firms to pay for the costs of recycling, the state has thus far not moved forward with plans to do so. Other states require companies to foot the bill for the removal of batteries and mercury, but there is no comprehensive federal law mandating businesses pay for recycling and repackaging costs.

Nevertheless, not every business in the U.S. is paying for the costs of recycling – nor do they want to. There has been mounting opposition to laws aimed at mandating firms to do so. The Grocery Manufacturers Association, for example, a consortium representing more than 300 food and beverage firms, has pushed back against proposed legislation in the U.S.

"We're not convinced there's compelling evidence that it's the most appropriate solution for the U.S.," affirmed Meghan Stasz, the group's sustainability director.

Amid a tepid U.S. economic climate and a focus on procurement cost reduction, many businesses are maintaining such payments are unfair and potentially useless. Still, proponents, particularly those from larger companies, are moving forward with such programs as they work to keep raw materials costs down in the future by recycling in the present.