JOHN SHEGERIAN: Welcome back to Green is Good, and we’re so excited to have on the phone with us today Michael Washburn. He’s the Vice President of Sustainability for Néstle Waters of North America. Welcome to Green is Good, Michael. MICHAEL WASHBURN: John, thanks a lot. It’s really a pleasure to talk with you. I’m looking forward to it. JOHN SHEGERIAN: Hey, we’ve had Nestlé on before. You guys are some of the biggest sustainability superstars in the world. Before we go back and talk about all the great things you’re doing at Nestlé Waters, talk a little bit about Michael Washburn. How did you even get to this position? Was this a dream when you were growing up? Is this something that happened along the way? How did you end up here? MICHAEL WASHBURN: Yeah, that’s a great question, John. Well first of all, thanks to you for all the good work that you’ve done around electronics recycling. It’s a very important piece of our puzzle as we all try to get our heads around a sustainable future. To your question, yeah, I guess this sort of happened along the way. I’m a career environmentalist. I spent a couple decades before coming here working on issues from sustainable forestry to land conservation and over the years, increasingly understood that water was really the key environmental issue going forward. We talk about climate change and climate risk. The social issue, the economic issue that we’re all really confronting is ultimately water. How do we use it? How do we treat it responsibly? So when this opportunity came forward for me, it was kind of a no-brainer to join a leading company that’s so committed to making a difference on these issues. JOHN SHEGERIAN: For our listeners out there, if you have your laptop or your tablet in front of you or any sort of computer device, while we talk with Michael, follow alongl. I’m on his website right now. It is amazing. Nestle-WatersNA.com. It’s so full of information, important information going to the issues that Michael is going to be discussing around water and producer responsibility and things of that such. You mentioned the word responsibility and how important water is to all of us, not only here in the United States but around the world. Can you talk a little bit about this critical issue called EPR that most people don’t even understand what that stands for, extended producer responsibility, what that means to us here? MICHAEL WASHBURN: Yeah, I’m happy to do that. So, extended producer responsibility is actually a global phenomenon. It’s applied to all different kinds of what other would call waste. That can be e-waste. It can be tires. It can be paint and in 46 countries around the world, it’s applied to packaging. It’s basically a model where the industries, the companies that manufacture, in terms of what we’re talking about, the consumer packaging. The companies actually pay the cost and participate in developing the system that makes sure that those materials are captured and recycled after they’re used by the consumer. JOHN SHEGERIAN: From your perspective and Nestlé’s perspective, what’s currently not perfect, let me say in a nice way, with the recycling programs that we have in our system and ecosystem here in the United States right now and actually, around the world? MICHAEL WASHBURN: Not perfect is being polite, I think, John. Look. Right now, depending on whose numbers you want to look at. The recycling rate for beverage containers is hovering between 40 and 30% and that gets people’s attention. Said differently, 60%-plus of beverage containers are going to waste. They’re going into landfills and that’s unacceptable for a company like us but step back from that for a minute because beverage containers interestingly make up about 4% of the solid waste stream in the United States. JOHN SHEGERIAN: Wow. MICHAEL WASHBURN: So, if you think about municipal solid waste at large and packaging as a component of that, you gotta take a walk with me through the supermarket, right? You’ve got cereal boxes. You’ve got laundry detergent bottles, shampoo bottles, little boxes and plastic bottles for medicine, tuna cans, soup cans, all of that material, even a polypropylene dog food bag, is eminently recyclable material. Now, let’s leave the grocery store. Let’s go to a community. Around 50% of Americans have a residential curbside recycling program. You take it out every Tuesday. It gets picked up, no problem. Well, not everybody participates in those programs so that’s a challenge, right? We need more education. It’s also the case though that not everybody has access so how do we solve for access? How do we get so that everybody has an efficient low cost accessible convenient way to recycle? And now here’s the really tricky one if we go back to beverage containers. It’s called public space recycling. You live in the city in New York. You know that array when you come off the Metro North train in Grand Central, right? All the bins. That doesn’t exist everywhere. That should be in every airport. That should be in every park. That should be in every public space. How about a gas station? And the reason that the access is limited by the way, the public space recycling accessibility is about 12 to 15% around the United States so we’re missing opportunities to capture those packages. Now, it’s not happening because it’s on the backs of municipal governments and taxpayers to pay for that and the system has evolved over decades. It’s fragmented. Adjacent communities don’t collect the same materials so you can’t develop economies of scale so what Nestlé Waters came to in this was first of all, we wanted to get our containers back because we know how to recycle that material and put it back into productive use. Ideally, it goes back into our bottles. We have the technology to do that but we’ve gotta get that material back so when we started the campaign to push EPR, it was with the intention of increasing those recycling rights, getting that material back because look, we’re part of a global company. We’re going to need that material in the future and if it’s going to waste, we’re missing the opportunity and, by the way, we’re missing the opportunity to create jobs and do some local development so this is a really huge agenda that we’ve taken on here. JOHN SHEGERIAN: Well, by promoting, like you say, accessible and appropriate recycling, what Nestlé is promoting is closing the accessibility stakeholder loop in that you’re producing. You want to get it back and you’re going to put it back into new products. MICHAEL WASHBURN: That’s right but you can go out and beat a drum and that does not a band make, right? JOHN SHEGERIAN: Yeah. Well put. MICHAEL WASHBURN: As a single company, we can’t do this alone. We need a lot of help. We need other companies to come with us. We need to work with municipal governments. The model that we’ve chosen is to try to implement this through state level legislation so we’ve got a lot of government engagement going on. There’s a lot of environmental NGOs out there. You think of organizations like The Natural Resources Defense Council, The Product Policy Institute, As You Sow, which is a shareholder group. There are some really strong national entities working with us on this but we can’t talk to enough people on this and then, by the way, once we get all the policy stuff in play, we still need the help from the consumer because people have to be committed to putting that package in the right place when they have the opportunity to do so. JOHN SHEGERIAN: Great points. I just want you to share one of the big wow numbers. First of all, if you’re just tuning in, we’ve got Michael Washburn on with us. He’s the Vice President of Sustainability of Nestlé Waters in North America and if you want to follow along online, they have such a great website. It’s Nestle-WatersNA.com. I’m on the website right now. I clicked on the sustainability button. Just wonderful stuff, full of information. Information is key and numbers. Data doesn’t lie. Can you share, Michael, a little bit like the 2011, and that’s still now two years back, what are we leaving behind approximately in terms of recyclable value that we’re not recycling right now in the United States? MICHAEL WASHBURN: Oh look, these numbers just make your heart hurt, John. The number that the study I think you’re looking at on the website, says $11.4 billion of recyclable packaging. Now if you go to recyclable material coming out of just municipal solid waste, this is the stuff that goes to your local landfill and so on, that number runs up to around 20 billion, and that’s a year, so flip that for a second. Set aside that that’s material waste, which means that we’re consuming additional raw materials in place of reusing that material that we could have captured. It’s also true that with due respect to the professional operators of landfills, they make some money putting that stuff in a hole but other people could be making money turning that stuff back into value and I think there was a recession and I think we’re trying to do job creation in this country. It’s a global market so fair enough that it’s also true that these materials often get collected and they go offshore but if we addressed first of all, the quantity issue, get more of it back, secondly, if we got back in better condition, we improve the quality, you’d find that U.S. processors could actually take in more of this material. There’s a lot of pent up demand. If you go to plastics manufacturers, if you go talk to the aluminum industry, talk to the glass guys, everybody wants this material but what is stuck between the companies that have the demands and the consumers that have the material is this sort of disconnected somewhat ineffective program of one zip code at a time recycling systems around the country not functioning as if it’s sitting in the middle of an industrial supply chain when in fact, that’s what that program is doing. It has the potential to be a key link in the supply chain and so if we think of it that way, and this is where I think industry partnership with government would be so productive, we do supply chain every day so we might be able to bring some learnings to this and keep that material, whether it needs to be kept separate or whether it needs to go through high end sorting facilities, get good clean streams coming out the other end and let’s put it back into productive use and there’s all kinds of industries out there that can use recycled material, all kinds of companies, not just beverage guys. JOHN SHEGERIAN: You know, Michael, a lot of the people you’ve mentioned have been on this show and the NRDC leadership’s been on many times and Conrad McHerron from As You Sow. Of course, Kevin Anton and the leadership from Alcoa comes on and Kevin’s message is very akin to yours but go back to what you said. There’s a hesitancy. Why is Nestlé and other great companies like Nestlé out there banging the drum and with other NGOs too for EPR but why is it so hard to get other companies to come along and as you also point out, other communities and governmental entities to work together towards an EPR solution that would be really great, not only for us as an environmental community but as you said, would be a whole new reset in terms of our green economy and in terms of jobs in this country? MICHAEL WASHBURN: Yeah. Look, it’s a fair question. I think the short answer, John, is this is a very big complex idea and it isn’t something that’s being created in a vacuum. You’re talking, not about going out into the world and creating something new. You’re talking about shifting a mindset around something that’s evolved over probably 50 years. People basically expect that the government is going to solve this problem for them and what we’re proposing is a different starting point, that government’s a partner but industry’s a partner too. That itself is a new idea. Then you talk about having industry participate in the development and administration of a recycling program and people think oh, so Nestlé’s going to drive around in a truck to pick this stuff up? Well, no, but Nestlé and other companies would pick up the tab and we might drive some efficiencies and some improvements in quality controls but probably still largely be working with the same people who are picking up the material today. Then you get into well, what kind of control do I have? If you’re Michael, you’re trying to sell me on state legislation but if you walk this great policy proposal, which by the way, you can find with our great partner, Recycling Reinvented, that’s a nonprofit that Bobby Kennedy helped us stand up that is working with us to advance this policy proposal. People say look, if you take the Recycling Reinvented proposed legislation into a legislature, how do we know we’re going to get something out the other side that looks like the dream, that you’ve created on this piece of paper? That’s a fair concern. What I would say to the corporate skeptics out there is if you look at EPR elsewhere in the world, and as I said, it’s been passed into law in over 40 countries with varying degrees, some of the programs are expensive, some of them are better, in all of those cases, government just came up with the answer, and said, ‘Here you go, industry. Here’s the rules,’ and what we’re proposing in the States is entirely different from that. Why don’t we come together as a community of interest, NGOs, private haulers, municipal governments, big brands? Let’s do this together. Let’s have a civic partnership to solve a social problem and that is simply not something that people are accustomed to doing but if we walked that coalition into a legislature and you say, ‘Look. We’ve got all the players lined up. Everybody agreed, at least in principle, to these various elements of a program. Would you, the state legislature, like to see mandate relief for your taxpayers?’ We’ll shift this cost over to industry so instead of people paying property taxes or paying a fee to their hauler, it would be covered in the cost of goods. The companies would pick up the cost here. Maybe we could pay for the municipal government to actually deliver the kinds of education they need for people to participate and maybe we could put those bins out in the park where we know they belong and pay to collect the material. That’s the value proposition and we think that Nestlé at a global level talks about this concept from Michael Porter out of Harvard called Creating Shared Value. We think this is one of the best emblematic of creating shared value you could come up with and I will say, notwithstanding some of the fuss and some of the critics, there are a lot of people out there who agree with it. JOHN SHEGERIAN: I want to talk a little bit about other countries and other paradigms that are working but I do have to give a little bit of perspective to our listeners who don’t really know how big of a platform internationally that you really have, Michael, and how many brands you represent. Just to give a little taste to our listeners and a shameless plug, your Nestlé Waters brand covers, among others; Arrowhead, Deer Park, Pure Life, Perrier, San Pellegrino, and many other waters, so this is not just one water line that you represent. You have many water brands that we all live with and enjoy and this is a core issue to you and since you are an international powerhouse company and you have great visibility, not only into what’s going on here in North America, but in Europe and beyond, what paradigms do you see internationally that you would be excited that we could adopt here that’s already in existence and successful that we should be looking to for guidance? MICHAEL WASHBURN: John, thank you. That’s a great question. Just so folks know, give it a little perspective, Nestlé Waters is the third largest on-alcoholic beverage company in America so to your point, it’s a pretty sizeable platform. Look, if you look around the world at EPR for packaging, a couple of points: First of all, the process where a provincial government in Canada or a European national government simply designs a program and then industry has to be stuck in kind of a responsive position, we’re still kind of a live free or die nation here and we place a real premium on civic engagement and having people who are affected by a policy really have a say and Nestlé Waters respects that so that’s why we started dialogue a few years ago to try to move people into this in sort of a shared membership model so the first principle is let’s all be at this table from the beginning. The next principle has to do with cost because look, back to your question about why is there pushback. A lot of companies see this and all they are hearing is Nestlé Waters is talking about adding cost to my products. Well actually, what we hope we’re talking about is putting money back in the consumers’ pockets because if we can pull off a better recycling rate at a lower cost, that’s good for everybody, right? JOHN SHEGERIAN: Right. MICHAEL WASHBURN: And, by the way, avoiding the downstream costs of landfills and all the other things that come with that waste but in the structure of the program, if you have a system where industry is held accountable by government to meeting a standard and industry has to do that on their own without government funding, just industry financing it itself, so industry raising money effectively from itself, that is going to push the prices and the cost of the system down. There’s something called shared responsibility. There’s a lot of this in Canada where you have provincial governments and industry at the same table designing a program, either a 50/50 agreement or maybe industry has 80 and government has 20. Those dynamics create more friction, more disputes, different variations in the program, and increase the cost so we’ve studied this to the point where we’ve needed quite a few bottles of Tylenol and one of the lessons is if you have a full industry program and you hold industry accountable, industry is the most capable entity to keep the costs low so again, everybody at the table, let’s have industry leadership, not industry doing this alone, and I think we can solve the problem. JOHN SHEGERIAN: Michael, we thank you for your time today. We thank you for your leadership. Again, for our listeners out there to see more of what Nestlé is doing, it’s Nestle-WatersNA.com. Michael Washburn, you are an inspiring sustainability superstar and truly living proof that green is good.