Are you incentivising the right people?
I was at the North East Recycling Forum yesterday, one of the very few events I go to as a punter as it really punches above its weight when it comes to speakers and content.
I brought two big thoughts away from me, one I’ll blog about on Monday as it requires some stats to make my point, but a qualitative one arose from a presentation on Deposit Return Schemes (DRSs). These are the automatic reverse vending machines which accept glass and plastic waste and pay out cash in return. I’ve seen this work in action a decade ago in Cologne, not only do people tend to return their bottles, but there is a whole grey economy around homeless and kids collecting litter to make a few shekels.
The problem with this is that these very materials are the ones which make cash for local authorities through existing recycling channels. So by moving to DRS, more material would get recycled, but it would shift the direct economic benefit from local authorities to private companies. The aim of yesterday’s talk was to persuade the Council waste officers in the room that the economic benefits from reduced collection costs, reduced litter etc, made up from the lost income from selling materials. They didn’t look terribly convinced.
This made me think more generally about the alignment of incentives, beneficiaries and decision-makers. To take an example I’ve come up against a few times, if you rent a building, either for living or working, then you usually pay the energy bills, but the landlord owns the heating system. Therefore there is no incentive for the landlord to install an efficient heating system as the benefit will go to you, not them.
But you can fix some of these disconnects. If you use activity based accounting, then all overheads are attributed to each activity – so, say, each production manager is responsible for the whole cost of energy, waste etc for their production line, rather than the whole lot being lumped together. You can write contracts to incentivise contractors and suppliers to solve your problems.
You really need to be conscious of this problem or it could jump up and bite your Sustainability efforts on the backside.