Couertsy: hbr.org

Despite the proliferation of curbside collection bins and public awareness campaigns, recycling programs around the United States aren’t working. Modern urban recycling, which began with the passage of New Jersey’s mandatory recycling law in 1984, has successfully created a tremendous supply of recycled newspapers, glass bottles, office paper, and other materials. But when it comes to consumer and business demand for the products made from these materials, the economics of recycling falls apart. According to the press and other pundits, “recycling is a victim of its own success.”

In fact, recycling is not just a matter of recovering recyclable material; it’s a total economic system. Few people realize that their local curbside collection program is only the beginning of a recycling loop. At present, the cost of collecting and processing recyclable materials far outweighs their value as a commodity that can be sold back to industry. Unless consumers buy recycled products, the markets for the material they put out at the curb or into their office white-paper bin will remain depressed.

However, precisely because of this market uncertainty, companies can turn building demand for recycled products into a competitive advantage. In the 1990s, those companies that act quickly will exploit new product niches and manufacturing technologies. Farsighted players have already found profitable openings. There’s clearly consumer demand for green products, and Rubbermaid, Moore Business Forms, and International Paper, to name but a few, have dramatically increased market share with appropriate offerings. These companies have also anticipated the tighter environmental regulations that are sure to come. Rather than simply fighting government and community groups, corporations can now form strategic alliances with public organizations and other business interests.

While public policymakers are still trying to assess what’s wrong with recycling programs, large corporations and small entrepreneurs alike are in the best position to take the lead. More important, it’s in their economic interest to do so. Certainly, U.S. corporations shouldn’t start running local collection programs or taking government’s place in implementing policies that encompass many communities or an entire state. But business leaders can challenge current recycling myths, including the supposed high price and low quality of products. Top managers of companies like American Airlines, Bell Atlantic, and Coca-Cola have made buying recycled products and investing in green R&D part of their overall business strategies. They’ve cut down on waste, increased profit margins, and, in some cases, truly closed the recycling loop.