Product Stewardship  

Product Stewardship is an environmental management strategy that holds producers, importers, retailers, and sometimes consumers responsible for the negative environmental and health impacts that arise from the entire lifecycle of the product in question. This management strategy attempts to give effect to the Polluter Pays principle, a principle of international environmental law which dictates that producers of environmentally damaging goods ought to bear the cost to address those resulting harms. 1

The federal government has recognised product stewardship as a central mechanism for achieving Australia’s recycling and resource recovery objectives and contributing to the development of a Circular Economy. At the federal level in Australia, the Recycling and Waste Reduction Act 2020 (the RAWR Act) sets out three models that benefit from government direction:

  • Voluntary stewardship – Government accreditation of a voluntary scheme under the RAWR Act allows private administrators to use government product stewardship logos in their voluntary scheme, intended to bring credibility and consumer confidence to their products. Administrators may seek approval from the Australian Competition and Consumer Commission (the ACCC) to engage in behaviour that might otherwise constitute cartel behaviour, or substantially lessen competition in breach of the Competition and Consumer Act (2010). Administrators seek voluntary contributions from importers or producers to fund their activities. There are no enforceable penalties on producers who fail to meet targets or reduce environmental impacts.
  • Co-regulatory stewardship – Government defines liable producers, importers, retailers or users, and establishes penalties if they don’t engage in co-regulatory arrangements with an approved administrator. Reporting rules may be established with penalties. Government sets outcomes, including targets, and administrators determine how those objectives are met.
  • Mandatory product stewardship – Government may make rules for one or more persons regarding actions to take, or not take, in relation to a specified product. This can cover all aspects of the product stewardship, from durability, repairability and re-usability, to product return payments. Penalties exist for failing to report, or meet relevant targets.

While in principle, all schemes should be capable of achieving significant reductions in environmental harms however in practice voluntary schemes are largely ineffective.2 Across the OECD, most stewardship schemes have been mandatory rather than voluntary,3 and for good reason. Voluntary schemes provide the appearance of action, without truly giving effect to the polluter pays principle. Voluntary schemes face three primary hurdles that detract from their ability to reduce the negative environmental impacts of targeted products:

  • Voluntary schemes target finite aspects of their environmental impact, ignoring impacts of production, transport, use and disposal out of scheme. The cost associated with those environmental impacts unaddressed is passed to the community and future generations, while businesses within the scheme reap the benefit of advertising “green” credentials. 
  • Being voluntary, conscientious businesses wishing to participate risk competitive disadvantage, while less reputable businesses avoid additional cost by not participating. While voluntary schemes are in place, the political impetus for effective government regulation is reduced, allowing non-participant producers, importers and retailers to obtain a “free ride”.
  • Voluntary schemes are directed by industry, who propose, implement and monitor their own solutions, often favouring cheaper less effective solutions. These schemes rarely focus on steps in the top half of the Waste Management Hierarchy, as reducing consumption and promoting re-use often conflicts with vested interests. 

The waste management hierarchy (abridged version below) represents a central policy framework in sustainable waste management, ranking interventions from top to bottom, from most to least effective in reducing the environmental impact of consumerism. These interventions regularly include items like: avoidance, reduction, reuse, recycling, and finally disposal.

Waste Management hierarchy

In short, under a voluntary scheme, it’s only a portion of the polluters contribute a portion of the cost to mitigate a portion of the adverse environmental impacts they create. Under co-regulatory arrangements, administrators may compete against each other risking a race to the bottom in terms of providing the cheapest (and often least ambitious) scheme. While often involving a greater up front cost, we favour mandatory schemes, as capable (with sufficient targets and penalties) of ensuring the highest environmental outcomes, avoiding free riders, and avoiding unnecessary duplication of administrative costs.

For Industries looking to explore stewardship opportunities further, you may wish to visit The Product Stewardship Centre of Excellence for inspiration and guidance.

Related Posts

  1. Paragraph 4 of the OECD’s (1972) Guiding Principles concerning International Economic Aspects of Environmental Policies. This principle is also enshrined
    in Principle 16 of the UN (1992) Rio Declaration. ↩︎
  2. Almost all voluntary, industry-led product stewardship schemes have been unable to deliver the rates of recycling and resource recovery needed. See: UNSW SMaRT Centre (2023) Submission to the DCCEEW Regulation of e-products consultation. ↩︎
  3. OECD (2016) Extended Producer Responsibility: Guidance for efficient Waste Management. p3. ↩︎