January 6, 2016
The waste and recycling industry’s two biggest companies, Waste Management Inc. (WM) and Republic Services Inc. (RSG), have been aggressive in developing the sustainability side and profile of their businesses, both as haulers and processors, and as generators themselves. Their recent sustainability reports give a comprehensive analysis of this aspect of their businesses.
Recent News from WM and RSG on Their Sustainability Reports
This past December, WM released the 2015 update to its more comprehensive 2014 sustainability report, “Creating a Circular Economy.” Also in December, RSG received recognition for its 2014 Sustainability Report, published in March 2015, from CDP, a leading, international, non-profit organization dedicated to measuring and disclosing environmental information. In the CDP S&P 500 Climate Change Report 2015, RSG earned a disclosure score of 98 out of 100, and an A- in performance. WM had been recognized by CDP in the prior year.
Recycling Travails Addressed in WM’s 2015 Update; RSG Highlights the Blue Planet
Recycling has been very controversial during the past year, as the business’ economics have been squeezed by a combination of low commodity prices and higher processing costs. Solid waste industry leaders have been united in calling for and implementing an overhaul in the way recycling contracts are structured and priced, while emphasizing education programs that instruct what can and cannot be recycled.
In his opening letter in the 2015 sustainability report update, WM CEO David Steiner addressed the increased difficulties facing the recycling industry, and thus “the circular economy.” He acknowledged and emphasized the importance of global environmentalism, climate change, carbon emission reduction and sustainability positives that stem from recycling, while noting that those positives were more difficult to measure.
As a result, he also stressed that recycling must be put on a firmer, more viable economic and financial footing, in order that the consequent positive environmental and carbon impacts from recycling can continue to be defended and protected. Bottom line, CEO Steiner reaffirmed WM’s commitment to the circular economy–in essence the concept of waste reduction and reuse of materials back into the manufacturing process in a closed loop system–while noting it had become fractured in certain areas.
RSG CEO Don Slager also discussed the “regenerative economy” in his opening letter of RSG’s sustainability report, with the emphasis on extracting value from the country’s waste stream and offsetting the use of fossil fuel across its operations to minimize RSG’s carbon footprint. RSG’s game plan for this focuses on three main areas–recycling, fleet emissions and the use of landfill gas-to-energy (LFGTE) technology at its landfills to generate renewable energy—in order to protect what the company calls “our Blue Planet,” under the umbrella of its Blue Planet sustainability initiative.
Both companies are very focused on reducing their carbon footprint and furthering recycling education.
WM Maintains its Circular Economy Emphasis and 2020 Goals
“Creating the Circular Economy” has five main prongs, which were addressed in the 2015 update– reducing waste, increasing recycling, extracting value from organics, recovering energy from waste and reducing residuals. With regard to reducing waste, WM noted its consulting services to both private and public customers to reduce the waste they generate.
As for extracting value from organics, the company has 35 organics processing or composting facilities and discussed its work on the challenges and economics of organics transport and processing. Steiner noted that despite a lower overall national recycling rate, WM was able to maintain recycling at 17 percent of revenues and still manage 15 million recovered tons, in part because of its increased conversion of coal ash to usable products.
Recovery of energy from waste also remained fairly constant, though hampered by low natural gas prices. Although WM maintained all its 2020 goals, it should be noted that the recycling and waste-to-energy (WTE) goals look to be more challenging in light of current recycling economics, low energy prices and the 2014 divestiture of its Wheelabrator WTE operations. On the other hand, WM has already achieved its 2020 goals in the areas of fleet emissions, number of acres protected and number of wildlife habitat programs.
RSG on Track for 2018 Goals
At present, RSG has sustainability goals in three main areas–recycling capacity, LFGTE projects and fleet emissions. By 2018, RSG wants to add 750,000 tons of recycling capacity and 10 LFGTE projects. Also by 2018, RSG intends to reduce its Scope 1 Fleet absolute greenhouse gas emissions by 3 percent. RSG noted that it is on track to reach its recycling and fleet emission goals, and as of 2014, is ahead of its LFGTE project goals.
Compare and Contrast
Obviously, WM and RSG have different types of sustainability goals as well as differences in how they measure their progress toward reaching those goals. That said, there are a number of common themes between the two companies, and similar strategies both companies are focusing on in their operations to achieve their various sustainability goals. For perspective, in terms of annual revenue, RSG is about two-thirds the size of WM, at $8.8 billion versus $14 billion for WM in 2014.
First, with regard to recycling operations, WM has a larger footprint, both on an absolute and relative basis. As a percentage of revenues, recycling makes up 17 percent of WM’s revenues, as previously noted, versus 9 percent for RSG. Republic’s 66 recycling centers process about five million tons of recyclable material annually, while, again, as previously noted, WM processes about 15 million tons (including coal ash conversion), or roughly 3x that of RSG, at 126 recycling facilities.
Another key area of overlap in their initiatives is the number and growth in LFGTE projects, the single commonality in the various WTE initiatives. RSG currently has 72 LFGTE projects across the country. As a percentage of its active solid waste management landfills, that approximates nearly 40 percent. WM has 134 LFGTE projects, out of a total of 247 active solid waste landfills, or more than 50 percent.
Both RSG and WM are very focused on conversion to CNG-powered trucks, not just for sustainability reasons to reduce emissions, but also for advantageous economic reasons as well, even with the price of diesel as low as it is currently. RSG has invested in more than 2,200 CNG-powered vehicles and installed 38 CNG fueling stations nationwide. This represents conversion of roughly 14 percent of the total collection fleet to CNG-powered vehicles in 2014.
WM has 3,700 alternative fuel vehicles with 72 natural gas fueling stations. In its 2015 update, WM cited 32,000 total vehicles, thus putting conversion on that basis at just less than 12 percent.
Leone Young is the Principal of LTY ERC, LLC, providing consulting and research services to, and conducting special projects for, the environmental services industry, primarily the solid waste sector.
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