Best Buy E-cycle program is ambitious, successful and financially unsustainable

BY Alison Moodie
In 2009, Best Buy began an electronics recycling program that has since become the centerpiece of the retail giant’s sustainability effort. To date, the retailer has accepted junky gadgets and appliances from anyone – not just customers – for free. But it now appears the popular program isn’t as profitable as Best Buy would like it to be.

Earlier this month, the retailer announced it would start charging customers $25 for every television and computer monitor dropped off at a retail outlet as part of its in-store recycling program. Because of this, Best Buy will no longer accept television and computer monitors from customers in Pennsylvania and Illinois, as both states prohibit companies from collecting fees to help defray recycling costs. It will still recycle hundreds of other items for free.

“Our goal has always been to simply break even on our recycling program, and we’re not there today,” wrote Laura Bishop, vice president of public affair and sustainability at Best Buy, when announcing the new recycling fee. “The new fee will help cover the increasing cost of managing television and monitor disposal through our network of stores, distribution centers and recycling partners.”

Bishop’s words highlight the challenge of treating a corporate environmental program not as a charity but as part of business that requires balancing cost with benefit. The retailer has tinkered with the financial model of its recycling program before. When it launched seven years ago, Best Buy required customers to purchase a $10 store card when dropping off items to be recycled. But it scrapped that fee in 2011 when it started to turn a small profit.

Then, Best Buy realized that turning a profit from recycling would remain challenging. A hint of what was to come was revealed last year, when a company executive told the Guardian that the program was “not quite break-even”.

The program cost will likely grow. Consumers are buying a greater variety of gadgets, from tablets to wearable devices like as health-monitoring wristbands.Retail sales of consumer electronics jumped from $252bn in 2011 to $283bn in 2015, according to Consumer Technology Association, which represents electronic designers, manufacturers and retailers. The US generates an estimated 7m tons of unwanted electronics each year, and 4.5m tons of them are collected for recycling, said Eric Harris, assistant vice president of government relations at the trade group Institute of Scrap Recycling Industries.

While Best Buy is counting on the recycling program to lure shoppers into its stores – no easy feat these days with the popularity of online shopping – that benefit may not be significant enough to offset the expenses of running the recycling program. Best Buy declined a request to be interviewed, but Bishop has previously talked about the growing financial burden of the recycling program.

“E-waste volume is rising, commodity prices are falling and global outlets for recycled glass, a key component of TVs televisions and monitors, have dramatically declined,” she wrote. “More and more cities and counties have cut their recycling programs for budget reasons, limiting consumer options even further. While providing recycling solutions for our customers is a priority, Best Buy should not be the sole e-cycling provider in any given area, nor should we assume the entire cost.”

Despite the expenses, it’s clear Best Buy still wants to be known as a champion of electronics recycling. In its annual report last year, the retailer said it had collected more than 126m pounds of consumer electronics and 110m pounds of appliances during that fiscal year, helping it meet its goal of collecting 1bn pounds of electronic waste. The company has since vowed to double that number by 2020.

Many of Best Buy’s biggest competitors, such as Amazon and Walmart, don’t offer recycling, or their programs don’t cover nearly as many personal gadgets and household items. Staples runs a similar recycling program to Best Buy, but it has amore modest goal of recycling 40m pounds of e-waste by 2020.

Best Buy isn’t alone in dealing with poor recycling economics. Recyclers make money by separating and selling materials, such as copper and plastic, to different buyers. The plummeting prices for these commodities in recent years have made it tough for them to make money.

Earlier this month, California’s largest recycler, Replanet, announced it had closed more than one-third of its recycling centers across the state, following other recyclers around the country that have shut down all or part of their business due to high costs. The recovery and recycling costs of electronic waste rose to nearly $0.41 per pound in 2013, compared to $0.35 in 2012, according to the latest figures from the California Department of Resources Recycling and Recovery.

Charging a fee for recycling television and computer monitors in particular also reflects the difficulties of finding ways to reuse some of their components. Before flatscreens, monitors sported a tubby look because they contained cathode ray tubes, or CRT. The popularity of flatscreens has dramatically reduced demand for reusing the CRT in building new monitors. Plus, much of the glass in CRT contains lead, which is toxic in large amounts and requires special handling during the recycling process.

Bob Houghton, a pioneer of electronics recycling in the US and CEO at Sage Sustainable Electronics, estimates that Best Buy pays its processors between $0.18 and $0.20 per pound for every CRT monitor recycled. The cost of tearing down and recovering those parts can add up when some televisions can weigh more than 50 pounds apiece.

Lower demand for CRT glass has led to an increase in recycling fraud – recycling companies are abandoning millions of old monitors, causing large toxic stockpiles to accumulate in warehouses around the country. This, along with the growing costs associated with e-waste recycling, underscore the growing challenge for electronic retailers to do their part, voluntarily or under regulatory mandate, in preventing unwanted electronics from reaching landfills.

Houghton said Best Buy’s new fee is a good thing, as it shows the company is committed to recycling its products responsibly. “A retailer or a collector must either charge the customer, or subsidize the recycling themselves, or it won’t be properly recycled,” he said.

Source: Theguardian.com