The Super Bowl Test Case
When the Super Bowl graced the Minneapolis stage at U.S. Bank Stadium our team at Capsule was given the opportunity / burden of designing a system to recycle or compost as close to 100% of the trash produced during that condensed period of extensive consumption. The client, Pepsi Co, was not just looking for a campaign, brand or creative idea, they were seeking a behavior changing initiative to achieve zero-waste.
The initiative included any and all the assets, from wearables to a superbowl ad to experiential events, but the entire effort centered around one moment. The one described above. In the end the success of this program, 91 percent of all trash (63 tons) redirected to either compost (29%) or recycling (62%), was directly tied to the moment we all face almost daily. Now imagine that concept going from one city over one week and consider it globally.
That “least wrong answer” moment is an estimated $400 billion dollar decision. The cost of collection, sorting, recycling, landfill, incineration globally, just to add a bit more pressure the next time you’re standing there with perplexity on your face.
Enter the Regulators
If you’re wondering who is looking at this problem, check with your state government – if they haven’t written a bill, they will soon. At the state, county and city level, the burden of these costs is always growing. And, the extended costs on the environment are creating an exponential problem with no great solutions.
Consider the moment above and apply it to the largest corporations producing packaged goods, like P&G, General Mills, 3M, Nestle, Pepsi Co, Mondelez, and many others. They are facing a movement with the most boring name possible. The Extended Producer Responsibility (EPR) regulatory movement, sorry if you took a nap while reading that sentence. The EPR laws showing up state by state include Maine, California, Minnesota, Maryland, Washington have laws passed, Colorado, Oregon, Colorado and California are already on their way and invoicing corporations.
We certainly need to be more aware of our trash, where it goes, the impact on the environment and the cost to deal with it. And, it makes some sense to look at the corporation in order to change behaviors, improve materials used and reduce the volume of packaging. Yet, like most things “designed” by any government organization, there are huge flaws.
Six Flaws in the Current Approach
One: state by state regulations will create a compliance cost that goes beyond the actual cost of the improvements to packaging. And small brands will face greater impact than large holding companies with larger margins to adjust.
Two: states legally can’t impede interstate commerce, so something California does can’t require all other states (and corporations within) to comply with burdensome regulations. Which should incentivize a national look at this movement and laws to nationalize a proper plan.
Three: compliance fees can be too simple, like all plastics are bad which reduces innovation incentives to create more bio plastics like some derived from waste from other manufacturing. This is a great example of unintended consequences often unseen by bureaucrats..
Four: recyclable is nowhere near the same as recycled, which can incentivize “label games” instead of creating new behaviors at all levels of the system.
Five: The Producer Responsibility Organizations will need extreme transparency on who is getting paid, how fees are set, where the fees are spent and who is making decisions. And, generally speaking, governing organizations are not known for opacity.
Six: This is a tax on the corporation, and by extension a tax on the citizens who buy packaged goods (everyone except your homesteader friend). And, it is an obscure tax that shows up in higher priced goods and inflationary outcomes. Yup, they’ll do it again.
Many of these flaws are obvious at first glance if you know anything about human behavior, incentives, economics and government systems. Then, there are the unintended consequences we can’t see and how this might impact corporate innovation in packaging, municipal systems for recycling, disposal, and small businesses.
While the flaws are more bountiful than influencers in the beauty industry, the idea needs attention. Because it will continue to gain momentum because states are always looking for new creative ways to tax. It also needs attention because packaging is what fills our landfills, ends up in the ocean and pollutes our air.
What's the Answer?
Design a better system of incentives. Incentives that reduce the use of packaging, increase the use of better materials and increase the investment in the waste stream innovations. Consider the real cost of materials, not the perceived cost (not all plastics are bad). Consider what happens if you give incentives to scale better materials. Consider using the economic system of capitalism vs just taxing it. Consider reducing the friction for corporations and consumers by standardizing the laws across states. Work with other states to standardize reporting, expectations, fees, and the system of regulation. Look to the EU because they’ve made greater strides in this area and would likely share the painful things to avoid.
While the concept makes sense, the execution looks clumsy and appears to be a state tariff to raise funds and make it more expensive to innovate. My hope is Minnesota can be a leading, positive example for how to work with the economic engine of business vs applying steam punk like regulators to slow the engine down.
Let’s be known for something we can all be proud of as Minnesotans.
