David Steiner, President and CEO, Waste Management

Editor's Note: Waste Management president and CEO David Steiner set off a minor firestorm last month when he declared, among other things, that "recycling is not profitable," during a speech at the Business for Social Responsibility conference. The company has since sought to clarify Steiner's comments, culminating with a blog post penned by Steiner himself, which we are mirroring here with the firm's permission.

For a broader perspective on the profitability of recycling and its ongoing viability as a business, be sure to read our companion analysis piece featuring exclusive insights from the leaders of the industry's top firms.

Last month, I spoke at the Business for Social Responsibility conference in San Francisco, addressing its theme, “The Power of Networks.” Since I faced a room full of folks who see sustainability as their business, I seized the opportunity to discuss recycling and the need for a network’s power to sustain it.

Recycling is a good thing. Waste Management is committed to it because it makes good environmental and business sense – it’s a service our customers demand.   We are using single-stream recycling technology – where you put your recyclables in one bin and we sort it for you – because it’s proven to increase recycling volumes in communities by 40 percent.

But keeping recycling healthy and viable takes more than just sorting materials from the bin. The producers of materials, the consumers who buy them, the residents and businesses who use them, the companies (like mine) who collect them, the purchasers of recovered materials, the re-users, and the governments who regulate and participate in this process all create a recycling network. And, frankly speaking, it’s a network that’s facing challenges.

One of these challenges is that of the changing waste stream, which has resulted in very different types of materials in the recycling stream. This is not a new phenomenon:  Aluminum cans replaced glass in the 1980s; plastic bottles began replacing both glass and aluminum in the 1990s; and newspaper volumes began dwindling early in the 2000s.

What is different is the speed of change – a dramatic reduction in newspaper use combined with the explosion of various types of plastics packaging in the waste stream.  Recyclers acutely feel the impact since recycling programs have expanded in communities across the U.S. We are receiving half as much newspaper, but an exponential growth in the volume and types of plastics, and more single-serve packaging.

What’s more, many of the new types of materials weigh less, take more space in the recycling stream than the materials they are replacing, and don’t have viable reuse markets.  This new mix of recyclable materials has contributed to dramatic increases in operating costs at our recycling facilities.  Consequently, we are seeing a dilution in the overall value of recyclables that we process, and an increased cost to handle this new lighter-weight material.

To add to the challenges of the changing waste stream, the very materials that are growing in popularity are those affected by China's Green Fence. That is, China’s enforcement of its quality controls for imported recyclable material has seriously changed the way the network functions. Investments among recycling industries worldwide are adjusting to this new environment.

Right now, markets are responding to a need for cleaner, reusable material. The Chinese are no longer taking everything they receive, as they once did. New domestic outlets for recycled materials are not emerging at a clip fast enough to fill the gap.

Simply put, the sustained profitability of recycling is confronting behavioral and global changes beyond our immediate control. We must all work together to ensure ongoing, economically sustainable programs in communities across the country.    

Waste Management is the largest residential recycler in North America with decades of experience in collecting and processing recyclables. One of the many efforts we are undertaking is to look carefully at every aspect of the recycling process. Since contamination is a barrier to recycling greater amounts of material, we have to devise better quality control measures. That brings us back to the power of networks. We must work with our municipal customers to help educate and enforce. We need to Recycle Often, and we need to Recycle Right.

If operating costs are increasing due to non-program materials in the recycling stream, we need to address those variables. If market demand for recycled materials is out of balance, that must be understood and addressed too.

Glass is an example of a commodity that is both widely collected and very important to recovery rates since it is the second heaviest material in the recycling stream and makes up a big part of most communities’ recovery rates.  Unfortunately, it is very expensive to process into a useable commodity and is expensive to handle due to its weight and abrasive character – leading to high maintenance, handling and transportation costs.

Over the past 20 years, communities across the country have experienced piles of un-recycled glass so high that they look like sparkling ski slopes.  At Waste Management, we’ve worked to find alternative uses for glass including roadbed, sand blasting, swimming pool-filter medium, kitchen countertops and other decorative “niche” products. Ultimately, however, glass recycling continues to be such a challenge across North America that much of it simply goes to use as landfill cover, or for temporary roads at landfills, despite the efforts of many end-users.   

With no solution in sight to the poor market conditions for glass, Waste Management is working with customers, suppliers and end markets to look for solutions to the complex and thorny problems associated with glass recycling. We must work together to find sustainable solutions so that we can continue to offer this service to our customers.

The fact is that the power of networks has the potential to improve every single dimension of the recycling process:

Working together via the power of networks. That’s the message I shared at the BSR Conference – a shared responsibility for recycling.

All of us want to protect the planet. At Waste Management, our goal is to hand the planet to the next generation in better shape than when we received it.  We’ll be working hard in 2014 and beyond to find the right solutions to our recycling challenges. We’ll be tapping into the power of our networks.

David Steiner is president and chief executive officer for Waste Management. Prior to being elected president and CEO in March 2004, Mr. Steiner was Waste Management's chief financial officer.