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Within Ethical Investing and ESG, Morphic has been a long-time proponent of capitalism as the solution for some of the environmental challenges the world faces. Because capitalism, for all of its faults and flaws, is undoubtedly the most efficient way to solve these problems. Rather than appealing to the good nature of people, appeal to their hip-pocket. It is why government policy and the fight to change government policy is so important, as they set the pricing in many sectors.
In this context, the front-page story of the Sydney Morning Herald this week is about the success of the container deposit recycling scheme introduced 19 months ago in New South Wales (NSW). In this period, 2 billion (yes, billion not million) bottles and containers have been returned for recycling, with currently 4 million containers coming in each day. The 10-cent collection scheme took a year to reach 1 billion containers and just seven months to add another. Instead of bringing in 1.2-1.3 billion units in 2019 alone, the figure is likely to be closer to 1.8 billion containers.
The scheme is in many respects “back to the future” – returning glass bottles predated the rise of plastics – where the purchase price of your disposable drink includes a 10c levy, which can be redeemed on return. Now, for most people, 10c hardly seems worth it, but for quite a few or even children saving for pocket money, it can quickly add up to large amounts of money.
After less than two years, there has been a reduction of 60% in amounts reaching a landfill.
It is easy to forget just how opposed this initiative was. Coca Cola, along with Schweppes, fought in the courts to stop these recycling projects, arguing it raised the cost of living (wrong – the 10c is refundable on return if you choose to return). The industry has not been a leader in the sustainability space and has been dragged kicking and screaming into the 21st century despite what management says. Despite assertions of this being socialism (it’s not – it’s capitalism) and the world falling in, neither happened.
The key in this change has been government policy putting a price on the externality – that is the cost not borne by consumer or producer – of waste plastic. Waste plastic in our oceans and food chain has reached epidemic proportions and as time goes by, society is starting to understand and fear the deeper ramifications of microplastic ingested into our bodies. We have little research on the long-term impacts, as the surge in plastic usage has been only over the last 30 years.
Whilst the collection is excellent, the outcomes could be improved further if the Australian government put policies in place to increase demand for recycled aluminium and plastic in Australia by mandating the use of recycled plastic by taxing “virgin” plastic at a higher rate. Currently, there is little manufactured recycled plastic in Australia, so a lot is forced to be exported.
Which brings us to the other area of public policy in relations to beverages crying out for a public health solution: taxing of sugar. This is yet another area that beverage companies have fought against. And is another one they are wrong on. Whilst obesity garners the lions share of news on sugar externalities, we would direct readers to a more insidious area: Alzheimer’s. Already some in the medical profession refer to Alzheimer’s as “type 3 diabetes”. The health costs associated with this are huge and a cost the producers of this should be made to bear, in the same way tobacco is taxed.
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When I was a child in Victoria in the late 1960’s we went around to our neighbours collecting used long neck beer bottles. We were paid 8 cents per dozen by the recyclers. The rise of inflation in the 1970’s destroyed the incentive to recycle because the collection depots did not increase the amount they paid per dozen bottles and the kids no longer felt it was worthwhile collecting beer bottles for pocket money. By then CUB did not want to go to the trouble of recycling old bottles anyway. It was not surprising that you saw far more broken bottles and other rubbish on the streets, waterways etc when the incentive to recycle is not there. The recycle scheme is nothing new, it worked well up until the early 1970’s.
P.S By the way, the migrant communities also collected beer bottles, but we used them to bottle our home made pasta sauce, not to sell back to CUB. @ 8 cents per dozen.