Product Care Recycling is a Canadian not-for-profit association that was created by manufacturers, distributors and retailers (collectively called “producers”) to develop and operate recycling programs, as required by regulations in various provinces, for the products they produce and market.

No, it is a not-for-profit association, created and funded by its industry producer members like paint and lighting manufacturers and retailers, to implement and operate recycling programs.

In the old days, industry manufactured and sold products, but provincial and local governments looked after the “end of life” of those products.  However, starting almost 30 years ago, Canadian provinces began passing “extended producer responsibility” (“EPR”) laws and regulations that require the industry that manufactures, distributes or sells the designated products, to provide a  collection system for consumers to return their “end of life” products, and to manage the products by recycling where possible, otherwise managing the product responsibly, to reduce waste and protect the environment.

While BC paint was the first EPR program in Canada, now every province has implemented EPR regulations for an increasingly broad range of products including beverage containers, printed paper and packaging, electronics, appliances, batteries, medications, automotive products, household hazardous products etc.  There are also EPR regulations and programs in the US and many other countries.

Depending on the regulations, which differ among provinces, every producer is responsible for all products of the same type, even if it is a competitor’s product, or if the original producer is no longer in business.  In some cases, it is generally more effective and efficient for a company to operate its own EPR program, but because it is a common obligation for all producers, it is more effective and efficient for producers of a particular product category to work together through a non-profit organization that devotes 100% of its revenue to program operations and environmental benefit.  That way even if a producer goes out of business, the EPR program will be there to look after the end-of-life products.

Basically, the cost of managing the “end of life” of a product that is in an EPR program, is now part of the purchase price of the product. Product Care Recycling producers are required to regularly report to Product Care Recycling the quantity of EPR products sold, and then remit a fee per unit sold to Product Care Recycling. Those fees are used to fund the Product Care Recycling EPR programs. So when a consumer buys an “EPR product”, part of the price will be used to manage the product at end of life, even if the “end of life” is years later.  Sometimes the EPR program cost is integrated in the product price, sometimes it is shown as a separate part of the price and referred to on the receipt as an “eco fee” or similar.

The cost of operating the EPR programs is paid by the obligated producers of the product to the recycling program, such as Product Care Recycling.  Product Care develops long-term budgets for each program, and establishes Environmental Handling Fee rates for each type of product in each program. For example, see productcare.org/products/paint/british-columbia/funding/

The EHF rates are set based on program budgeting, taking into account expected changes in the quantity sold, the quantity returned, and the cost of operating the EPR program which consists mainly of payments to service providers including collection sites, transporters and processors.  Product Care Recycling tries to keep rates stable for the benefit of both producers and consumers, but, when necessary, EHF rates are increased or decreased, depending on the program’s financial performance.

EPR regulations require that consumers can drop off the unwanted products without a charge.  If the recycling cost was charged at the time of disposal, there would be more products put into the garbage or abandoned.  The basic concept of EPR is that the producer and consumer are responsible for the end-of-life of the product, not local governments and taxpayers.

It is up to the producer as to how they manage the cost. As the fees vary by product and province and change from time to time, many producers find it easier to show it as a separate part of the price, whether at wholesale or retail. This also informs the consumer, at the time they purchase the product, that there is a recycling program for that product.  Both Product Care Recycling and producers provide information to inform consumers of the programs and the funding.

The lifespan of a product varies greatly depending on the product, from the day of purchase to weeks/months/years or even decades.  Product Care Recycling program products: paint, lighting and other products, generally have long lifespans, typically years or even decades. The variations in a product’s lifecycle as well as changes in technology and consumer preferences and behaviour, and other factors, are challenges an EPR program must take into account, to make sure that there is sufficient funding to manage the product at end-of-life.

All of the products Product Care Recycling manages in its EPR programs have a long lifespan, so Product Care Recycling has to plan financially as well as possible to make sure it can cover the cost of recycling the product at its end-of-life.  One important example for Product Care Recycling is fluorescent light bulbs and tubes.  They have been marketed for decades, long before they were designated for EPR programs, and they have a long lifespan.  However, sales have been steadily declining for many years, as consumers choose other lighting technologies, mainly LEDs.  The Environmental Handling Fee revenue Product Care Recycling receives from its member producers is steadily declining, but the responsibility of producers/Product Care Recycling, and the cost to manage the end of life of fluorescent lamps will continue indefinitely.

Accordingly, it is important for the program to establish a reserve fund at the time that the product is sold, to and maintain the reserve funds to ensure that the funds needed to manage the product are available when the product is returned to the program at the end-of-life of that product.

It is like establishing a pension plan for a product. It involves financial budgeting and planning over an extended period of time. If a product has a short lifespan and steady sales, there is much less risk and planning required.

If a product has a long lifespan and declining sales, it is important to make sure that the expected end-of-life cost is recovered at the time of sale, as part of the sale price, and then held in a reserve fund until needed at the end-of-life.  The budgeting process takes into account a number of factors including:

• Cost to manage product at end of life, being primarily payments to service providers for collection, transportation and processing including expected cost increases over time
• Sales trend for the product – if sales are expected to be stable or increasing over time, then current period sales should generate enough income to manage end of life products returned over the same time period. For products with declining sales, eg fluorescent lamps, it is important to build a substantial reserve from current period sales as the program revenue will steadily decline, and then the reserve funds will be needed to cover program costs.

As with any pension plan the “product end-of-life reserve funds” are carefully invested in order to offset inflation/increases in program costs and minimize the need to increase the Environmental Handling Fee rates charged by the program to producers.

Product Care Recycling publishes an annual report which includes financial statements and product management information for each of its programs, showing the surplus or loss for each program for the current year, as well as a consolidated audited financial statement which includes a statement of financial position including reserve funds. Product Care Recycling reports its net assets in its audited consolidated financial statements but tracks separately the “reserves” related to each program.  A program’s reserves are increased or decreased annually, based on the specific surplus or deficit for that program which is separately reported and audited.

The purpose of the reserve funds is to cover future costs of managing products that have were previously sold.  Occasionally reserve funds from an existing program are used to implement a program for the same product in another province, which helps reduce startup costs and fee rates, and then the funds are repaid after the new program is underway.

Product Care Recycling’s consolidated financial statements are audited by a qualified third party financial auditor in accordance with Canadian accounting standards for not-for-profit organizations and can be viewed in the annual report for each year.  Depending on the program requirements there may also be audits of individual program financial statements as well as non-financial audits to verify the collection system and quantities managed and recycled.