If you are reading this publication, you know the ins and outs of the two certifying organizations in our industry, R2 and e-Stewards. We have had years of these opposing camps and it has been confusing, with more than a little mud-slinging.
I’ve always thought it was a waste for our industry to have two certifications driving a wedge in our community by fighting for the same market. It is difficult enough to sell a prospect on your services. Add in a competitor with a different certification, and now you have to sell your services, cost structure AND your certification choice.
I started in the e-scrap industry before there were any certifications. Eventually, our organization became e-Stewards pledged and then e-Stewards certified. After my departure from recycling operations, I took a shot at working for e-Stewards on the certification side of the fence. Now, semi-retired, I can observe the industry from a nearly neutral position (I say “nearly” because I am firmly on the side of the recyclers, regardless of which certification they hold).
Recently, much of my thinking on the R2 versus e-Stewards topic has been a “What would I do?” exercise. And many times my conclusion has been that the sector should dump the existing certifications and start fresh with a new one.
A look at the finances
I’ve looked at the IRS 990 filings for both Basel Action Network (BAN), the owner of the e-Stewards standard, and Sustainable Electronics Recycling International (SERI), the owner of R2. The most recent filings publicly available online for both organizations cover 2019.
BAN’s filing shows gross revenue of $838,358 with total expenses of $817,088 for a net gain of $21,270 (the year prior, BAN had a net loss of $77,785). The organization reported only $83,351 in grant revenue, meaning the bulk of the revenue is from e-Stewards. The executive director was paid $133,741. Spending on travel totaled $39,234 and spending for advertising was $7,514. Another $314,701 was spent on other salaries.
The SERI filing shows gross revenue at $1,746,118, salaries of $508,775 and a net revenue of $742,097. The executive director was paid $159,650. Certification fees brought in $1,689,774 in revenue.
Both filings raise some questions. For BAN: Is this program sustainable? What happens to my e-Stewards certification if BAN folds? BAN is mostly a one-man show. What happens if that individual retires or becomes ill? Is there a business-continuation plan to protect my investment in an e-Stewards certification? Was any money spent on advertising to help drive business to e-Stewards or just to recruit more companies into the certification pipeline?
For SERI, the main question is: Is any of its revenue spent to help drive business to R2 recyclers?
Now it’s certainly true R2 and e-Stewards have served us and helped the industry grow to be better educated and more professional. But the cost to stay in those two clubs is high. Both organizations need revenue. Both have budgets and goals they need to meet. You, the recyclers, are paying the freight for these initiatives.
If you spend $50,000-$90,000 on your certification, are you getting value? Are you booking business strictly based on the certifications to cover those costs every year? Are you booking business that actually doubles your certification investment? Would that $50,000-$90,000 be better spent investing in equipment or employee retention? Or setting up a system to get more information to clients?
The main question really is: How much of those membership fees are being spent to aid the certified recyclers in the marketplace?
From looking at the 990 filings, the answer is not much.
Are e-Stewards and R2 still relevant?
I would argue that neither organization has shown much interest in listening to you, the certification buyer.
R2 has become more complicated and expensive, adding an endorsement system that has angered some R2-certified companies. Meanwhile, e-Stewards has been told for years that its fee structure is a hurdle many companies just don’t want to jump and many find to be intrusive.
Of course, at their core, these certifications exist to help ensure processing companies do the right thing inside their facilities and when it comes to chain of custody. But the truth is that neither standard sets a high bar. Being required to provide safe work conditions, to be honest with your customers and to follow the law are not difficult thresholds for any business that wants to be around for the long run. If you have unsafe work conditions and mislead your clients, word will get out in the community and kill your reputation.
Also, both certifications seem to be stuck in the past in how they relate to the realities of e-scrap management. True, they have kept up with some new materials and changes in battery technology, but they do not seem to be aware of how the industry has changed operationally, and what is economically feasible in an increasingly competitive marketplace. In fact, they are now requiring additional certifications in order to qualify for theirs, increasing your costs and workload.
While legal issues concerning improper handling of CRTs have dominated industry news, this material is a shrinking portion of the material we deal with today, and it will continue to shrink. At the same time, OEMs have put efforts into reducing toxic materials in new products. We need to be looking forward and planning on dealing with the stream of material heading to facilities in the coming years while making sure we don’t do anything unethical or illegal with the dwindling CRT products.
Time to “scrap” and reboot
I am, by nature, pro-certification. I hold or have held certifications in athletics, aviation, disaster response, first aid and nonprofit leadership. I favor certifications that provide education and training and open doors to excel at reasonable costs. These other types of certifications I have engaged in have included training by individuals who themselves are certified. They give real-life knowledge on the topic at hand – a real return on investment.
However, the R2 and e-Stewards organizations are not run by teams with extensive practical operational knowledge in your industry. While both lean heavily on industry leaders to help write revisions and updates to their standards, the final copy comes down mostly to people who have not walked in your shoes.
It’s now time to scrap the existing certifications and start over with something that addresses today’s world. The industry doesn’t need two warring certifications that continue to pile on layers and costs. We don’t know how safe our investments are – or if they will even have value in five or 10 years. We need to know short-run and long-run plans for any certification, and we need a business-continuation plan for any certification we choose.
Perhaps there’s a better way
A clean, cost-effective certification that maintains the touch points set forth by R2 and e-Stewards and is accepted by the industry is possible.
ISO 9001 is an interesting option. Over 1 million organizations in 170 countries are certified to ISO 9001, numbers that underscore its scope and stability. It’s designed to ensure that customers get consistent, quality products and services.
If your business is focused on end-of-life recycling, there could be ISO systems in place to address both customer needs, environmental safeguards and potential problem areas. If your business is ITAD, you could address more service and product quality issues. Our services must include data security, so that could be addressed too. All would have to be auditable and meet the ISO standard of constant improvement. This approach would likely be much less expensive than the existing options.
Furthermore, thanks to advances in technology, audits could be both more cost efficient and more comprehensive. We have the ability to track pick-up and shipment data, for instance. That information could be shared with an auditor, allowing them to take a random sampling of shipments and assess the downstream, as well as the control of material as it moves through company processes.
Finally, any new certification framework should be active in marketing to our potential customers and aid us in opening new markets. Marketing to/through associations that serve other industries would be an easy starting target. Yes, the Fortune 500s probably know about R2 and e-Stewards, but to be a healthy industry we need the next 5,000 companies to be aware of our services. Our customers need to be educated on just what we do, how difficult it can be and the great value we provide both as environmental organizations and as organizations that can provide quality reconditioned products at fair prices.
Is this the time to throw more money at e-Stewards and R2, or is it a time to demand something more logical? We need systems that help us meet strict environmental standards without driving up the cost floor, and we need assistance marketing the good that electronics recycling and reuse enterprises bring to communities.
Ultimately, it’s up to you. If everything is working great for you on the certification front, continue on.
But if you’re dissatisfied and want change, be vocal. There are others in this industry ready to listen.
Bob Akers is former executive director of the Kansas City processor The Surplus Exchange and former enterprise director at e-Stewards.
The views and opinions expressed are those of the author and do not imply endorsement by Resource Recycling, Inc. If you have a subject you wish to cover in an op-ed, please send a short proposal to news@resource-recycling.com for consideration.
