Big grocers, retailers want Ontario's recycling plan changed

Premier Doug Ford's gov‐ ernment is facing corpo‐ rate pressure to change Ontario's plan that sees in‐ dustry taking on the full cost of blue box recycling programs, CBC News has learned.

Two organizations led by some of Canada's biggest su‐ permarket chains, retailers and consumer goods com‐ panies want Ontario's blue box regulations amended, just as the industry faces a sharp rise in expenses under the transition.

While the two corporate groups insist the changes they want would not weaken Ontario's recycling program or slow down the cost shift to companies, the push is rais‐ ing alarm bells among mu‐ nicipalities and environmen‐ tal groups.

The industry is "trying to shirk its environmental re‐ sponsibilities," said Ashley Wallis, associate director for Environmental Defence.

"If producers are not pay‐ ing for this packaging, it's going to be taxpayers, it's going to be the environment or it's going to be human health, and that would be a massive step backwards," Wallis said in an interview.

Municipal governments fear the changes could sad‐ dle them with higher costs, more waste in landfills and more litter on the streets.

Ontario's plan to shift recycling costs

Ontario is in the process of shifting the cost burden of trash away from municipali‐ ties and onto companies that make and sell products that generate waste.

With this shift - called "ex‐ tended producer responsibil‐ ity" - industry now bears the full costs of recycling or re‐ covering such items as tires, batteries, light bulbs and electronics.

Under the system, com‐ panies pay fees, based on the amount of waste materi‐ al they create, to businesses that manage recycling pro‐ grams, known as producer responsibility organizations (PROs).

It's up to the companies to choose whether to pass those fees on to consumers or to absorb them as a cost of doing business. The theory is that the fees provide the companies with an incentive to reduce their packaging and other waste.

For material that fills up blue boxes - including bever‐ age containers, paper, plas‐ tic, glass and metal - the tran‐ sition to industry paying the full costs only began last year and is to complete by 2026.

Right now, companies are seeing their blue box fees shoot upward exponentially.

What industry wants changed

The biggest producer respon‐ sibility organization in the blue box sector, Circular Ma‐ terials, is actively lobbying the government for changes that it says would save com‐ panies upwards of $100 mil‐ lion in running the blue box system, according to a March 21 document labelled "confi‐ dential" obtained by CBC News.

The board of directors of Circular Materials includes executives from Loblaws, Costco, Coca-Cola, Maple Leaf Foods, Procter & Gam‐ ble and a dozen other major companies.

In its confidential docu‐ ment - a 38-page slide deck Circular Materials urges the companies that pay its fees to pressure the government on the issue of costs.

On a page headlined "Next Steps," a sentence in bold reads: "Recommend producers reach out to their government representatives to share their concerns on the impact of fees in Ontario as a result of the current Blue Box Regulation."

Meanwhile, the Retail Council of Canada, which represents many of the same big retail and grocery players, has written to Ontario's envi‐ ronment minister calling for similar reforms.

Multiple retailers believe Ontario's recycling legisla‐ tion, originally introduced by the then-Liberal government in 2016, "represents the single greatest source of red tape in Canada," said Retail Council vice-president Michael Zabaneh in a written submission from November.

Companies say changes would save $100M

Allen Langdon, the chief ex‐ ecutive of Circular Materials, says companies were expect‐ ing fees to double in the tran‐ sition to taking over blue box costs but are "incredibly con‐ cerned" that the increases are turning out to be even larger.

"We meet with them on a monthly basis and the over‐ riding topic that we're dis‐ cussing is just the enormous increase in fees over the last couple of years," Langdon said in an interview.

"What we're seeing are in‐ creases of four to six times what they used to pay and we're not even halfway through the transition," he said.

The solution that Circular Materials is pushing: it wants the government to give it a monopoly as the only pro‐ ducer responsibility organiza‐ tion for blue box materials.

"In the current frame‐ work, there are multiple or‐ ganizations involved in man‐ aging the system, which leads to a lot of duplication and inefficiencies," said Lang‐ don. "Where you've got one organization overseeing things, we'll have a much more efficient system."

Langdon says the change would save companies $100 million.

Doubt cast on industry's claims

However, other players in the sector question whether du‐ plication is really to blame for the sharp rise in fees and warn against giving a monop‐ oly to an organization that's led by the biggest corpora‐ tions in the industry. "Eliminating competi‐ tion is not typically the answer for controlling costs," said Gordon Day, vice president of Ryse Solutions, a smaller pro‐ ducer responsibility or‐ ganization that com‐ petes with Circular Ma‐ terials. Day says admin‐ istration is not the most significant factor driving waste management fees upward. Instead, he says it's the rising cost of labour, trucks, fuel and insurance. The Canadian Federation of Independent Grocers has concerns about the push. "Red flags go up for us when we hear somebody talking about efficiencies and having everything in the hands of one company," said Gary Sands. The umbrel‐ la group representing municipal governments says it's concerned about the industry's ef‐ fort to change what it calls Ontario's "strong action" on waste reduc‐ tion. "This approach shifts the burden from taxpayers to polluters, incentivizing them to re‐ duce waste at the source during produc‐ tion," said Brian Rosbor‐ ough, executive director of the Association of Municipalities of On‐ tario, in an email. "Com‐ panies can reduce costs by reducing waste."

Wallis, of Environmental De‐ fence, says big supermarket companies have for years been sending customers home with too much "garbage packaging" without any consequences.

"Now that they're the ones who are financially re‐

sponsible for collecting and managing the waste, they have issues with how expen‐ sive it is," she said.

What retailers want changed

The Retail Council's submis‐ sion to the government lists nine changes it wants made to the province's blue box regulations.

The most significant in‐ volves Ontario's recycling tar‐ gets, which are currently set by cabinet. For instance, the industry is mandated to re‐ cover 60 per cent of all rigid plastics by 2030. Companies that don't meet the targets face fines.

Instead, the retailers want to shift to a model where tar‐ gets are laid out in an indus‐ try-wide recycling plan sub‐ mitted to the province for ap‐ proval, as is the case in sever‐ al other provinces, including British Columbia.

"In its current form, On‐ tario's legislative and regula‐ tory framework is the least efficient in Canada in terms of driving environmental ob‐ jectives," said Michelle Wa‐ sylyshen, spokesperson for the Retail Council, in an email.

However, according to En‐ vironmental Defence, the model in those other provinces has failed to boost recycling rates and the tar‐ gets are nearly impossible to enforce.

Where Ford government stands

The government is not ruling out making the changes that industry wants.

A spokesperson for Envi‐ ronment Minister Andrea Khanjin says the government is working with producer re‐ sponsibility organizations as well as retailers on the transi‐ tion to a fully producer-run blue box system.

"Last year, we held con‐ sultations to be responsive to industry feedback and identi‐ fy ways the government can minimize administrative bur‐ den and maintain program continuity," said Khanjin's press secretary Alex Cather‐ wood in an email. "We will continue working with the sector on these priorities as the transition continues."

Drink cans, bottles and cartons

Parallel to all this, the govern‐ ment is consulting with in‐ dustry stakeholders specifi‐ cally about ways to recover and recycle non-alcoholic beverage containers, includ‐ ing soft drink cans, water bottles and juice cartons.

The beverage container industry group initially plan‐ ned to fund the program by slapping non-refundable fees on every packaged drink pur‐ chased by Ontario con‐ sumers.

The government pushed back against that plan, and launched consultations on creating a deposit-return sys‐ tem for non-alcoholic drink containers, just like the Beer Store runs for cans and bot‐ tles of alcoholic beverages.

Provincial regulations mandate the industry to re‐ cover 75 per cent of all nonalcoholic beverage contain‐ ers by 2026 and 80 per cent by 2030.

Various insiders say the only way the industry can hit those targets is through a de‐ posit-return system, such as in Quebec, which last fall doubled the deposit on cans to 10 cents.