How São Paulo State Bill can be a turning point for Brazil’s waste management policies

How São Paulo State Bill can be a turning point for Brazil’s waste management policies

As Brazil struggles to balance environmental leadership and economic growth, São Paulo State took an important step towards shifting the burden of post-consumer waste management from taxpayers to manufacturers. This could be a watershed moment for expanding infrastructure for post-consumer recycling in Brazil.

Starting this week, manufacturers located in São Paulo that don’t incorporate post-consumer recycling through “take-back” policies could be punished with heavy fines and even have their operation suspended. For example, if LG produces smartphones in São Paulo and the company fails to create a system to collect part of the discarded smartphones from consumers — and then recycle or dispose of them — the whole LG plant could be shut down in São Paulo State. This becomes relevant as not only is the state the biggest consumer market in Brazil but, boasting 45 million people and one-third of Brazil’s GDP, it’s larger than most European countries.

Such “take-back” obligations are part of a broader concept referred to as Extended-Producer Responsibility (EPR), and several countries and regions apply it as an environmental policy tool to improve recycling rates and reduce landfilling of valuable and hazardous materials, such as electronics, pesticides, batteries, and tires. The most important feature in an EPR policy is that it shifts the responsibility for end-of-life management of products and packages from municipalities — and therefore taxpayers — to producers. By requiring producers to internalize end-of-life management costs, such policies can also create incentives for eco-design towards more durable, more recyclable, less resource-intensive products.

The first EPR policies were enacted in Germany in the 1990s, but Brazil’s EPR requirement was only put into law in 2010, as part of its National Solid Waste Policy. Since then, Brazil has struggled to enforce it through voluntary agreements by sector. One of the main challenges is to ensure that all manufacturers participate — the only way to prevent competition externalities that would benefit free-riders.

And that’s exactly the gap the State of São Paulo can now overcome by enforcing EPR through the new bill. Now that EPR is a prerequisite to new and ongoing environmental permits, all companies that are operating in São Paulo State — not only those who signed the voluntary agreements — will have to report how they comply with the law. If they don’t, they will be punished. The implementation of the bill will be gradual, starting specific sectors that are already regulated, as well as large corporations, and then move to smaller manufacturers. The bill also established that until 2021, companies will have to gradually increase their performance targets regarding the quantities of products they recover from consumers.

The new EPR rule represents a landmark for Brazil’s waste policies and it’s expected that other Brazilian states will follow São Paulo’s model. The implementation of EPR systems, although representing an increase in expenses for some segments, also opens opportunities for creating and expanding infrastructure for post-consumer recycling and consequently reducing the amounts of valuable materials that end up buried in landfills.