Richard Sieg | April 26, 2016

Every year more companies step up to find ways to be vigilant about the environmental impact of their business. While no one will hide the desire to avoid the multimillion-dollar fines levied for violations in recent years, doing the right thing has its own expenses.

While the principles behind compliance and environmental stewardship are important and virtuous, today's regulatory burdens bear direct and indirect costs. Addressing and averting the costs of non-compliance require the right investments in process, people and technology.

First, let's address the elephant in the room: The fines for violations can be significant. The U.S. Environmental Protection Agency (EPA) fined one retailer $110 million for violations of hazardous waste, water and pesticide laws. Since 2009 in California alone, fines against sixteen retailers for mismanagement of consumer products as waste resulted in an average of well over $10 million in penalties.

Beyond the penalties

The financial impact of non-compliance runs deeper than just the penalty assessed:

  • Legal fees: Violations will almost always involve legal costs. With investigations that can sometimes last for years, that can be a significant expense.
  • Productivity losses: The shift of focus onto process changes to address compliance issues can cause business disruption.
    • Resources may have to be diverted from production and operational needs to focus on process change, heightened sensitivity to compliance and interfacing with regulatory evaluation and reporting during that period.
    • Of course, any new processes adopted may initially be slower or less efficient. So, attention and resources may need to be devoted to evaluation for optimization to restore previous productivity levels.
  • Brand impact: Whether a consumer product or a retail chain brand, an environmental enforcement action can hurt the reputation of any brand, and efforts toward maintaining reputation and loyalty, as well as restoring consumer goodwill, can also be costly.

Regulators will often require implementation of Environmental Management Systems (EMSs) at retail locations. While not required by law, regulators like the EMS framework because it helps ensure the company invests in people and a process to plan, implement, monitor and manage compliance.

One of the best ways to manage compliant waste characterization at retail is technology. Inmar helps clients with efficient, effective compliance through our Haz App technology. Coupled with Inmar's software and database, Haz App gives any employee the ability to scan the UPC and know quickly whether a returned consumer product destined for disposal is hazardous or non-hazardous waste.

The complexities of waste characterization in the retail sector often lead retailers to err on the side of caution. This "when in doubt, throw it out" approach may technically be compliant, but it increases the cost of disposal because more items go into hazardous disposal process.

A proactive compliance program is the best way to avert the negative impacts that come with agency enforcement. Investing in people, process and technology before a violation is far more cost-effective than making that investment on top of the penalties, legal fees and productivity losses possible with violations.

Retailers should consider these best practices for the right investments in people, process and technology:

  • Develop a robust waste management program tooled to assist hourly workers with compliant handling of returns (technology)
  • Develop a thorough employee training program to ensure the right things are done, the right ways (process)
  • Ensure you have experts in place (people) for the following needs:
    • Evaluation of products for proper management
    • Know when something is a waste and what to do with it
    • Compliant hazardous waste program
    • Keep up with the regulations for the jurisdictions applicable to your operations
  • Corporate-level ownership of compliance (people and process)
  • Evaluate whether to restrict items that customers may return to your stores (process)
  • Assign a designated regulatory coordinator for each facility (people)
  • Ensure waste characterization information is readily available (technology)
  • Monitor and manage the causes of breakage, etc. (process)
  • Engage an experienced, licensed reverse distributor (people and process).

Questions or comments? Contact Richard Sieg.