Profits For The Planet: Materials Exchanges Supercharge Business Recycling

 

Most communities have consumer-level recycling programs; several states have bottle and aluminum can taxes. Both types of programs seem to combat the “disposable” culture that Western economies use, where the cost of manufacturing something like an aluminum can is passed on to the consumer, but the cost of disposing or recycling it generally isn’t.

These programs rely on consumer goodwill and community virtue for recycling, or simply putting a cost (not getting the deposit back) for deposit laws. Given that corporations aren’t just unlikely to have community virtue, but can actively be sued by their shareholders for not maximizing share value, the Gedankenexperiment is obvious:

What would happen if you harnessed the profit motive to environmentalism in a way that made getting recycled raw materials less expensive for manufacturers?

The end result is something called a used materials exchange, and it’s a type of business (and business model) that acts like a brokerage house for companies to purchase raw materials that they can recycle and re-use in house, or to sell off their recyclable materials left over from packaging and manufacturing. These exchange brokerages coordinate with each other, their sellers and their buyers through print catalogs, and, increasingly, through the web. They’re also forming networks to broaden their geographical reach, and setting up arbitrage-style efficiency for certain materials, notably copper and polystyrene.

Materials exchanges vary from state-to-state. Some are managed as state agencies, others are licensed subcontractors for state environmental review boards, and others are flagrantly for-profit businesses. Exchanges also vary widely in what they handle – some do transactions in hazardous materials, others in industrial process waste or construction waste.

Using exchanges works like most other business transactions:

 

People with waste to remove post what they’ve got that might represent a market, other firms will post lists of materials that might show up in waste streams that they’re interested in purchasing. Commodity focused exchanges are targeting their advertising and membership drives at specific industries, using professional and certification associations as part of their outreach strategies. For state-based exchanges, there may also be notifications from certification or bonding agencies promoting exchanges in specific materials or focusing on specific waste streams; construction, plumbing and electrical contractors, for example, are often told to look for exchanges in left-over lumber, pipe, and unused electrical conduit.

Exchanges are in the “Wild West” phase of new business development, and while actively encouraged by the EPA, they’re popping up with different specializations and regional variations. This means that a lot of exchanges are going to fail – failure is part of business – and some are going to become very efficient. As an investment opportunity, materials exchanges are a bit premature unless you’re planning on running one yourself.

If you’re looking at having an exchange pick up your materials, or if you’re looking to use them to purchase materials for your own operations, comparison shop. Exchanges typically have a gazetteer listing the services they offer. Before contacting an exchange, gather your current acquisition costs for raw materials, or, if you’re disposing of materials through an exchange, your current regulatory costs for waste removal and environmental remediation.

To find out more about exchanges, check out the website of the Environmental Protection Agency, which maintains a reasonably up-to-date listing of national and regional exchanges, or contact your state agency connected with waste management and hazardous material removal.