Extended Producer Responsibility

The notion of extended producer responsibility makes producers retain some degree of responsibility for their products long after they have left the factory gate. It has also become the subject of regulation in a number of jurisdictions—for example, the European Union's (EU's) End-of-life Vehicle Directive—though the precise way the concept is implemented still varies, with the concept of product-service systems perhaps a logical outcome.

The notion of sustainable consumption and production (SCP) is attracting the interest of government and industry in the context of moves toward more sustainable societies. The SCP concept featured prominently at the United Nations’ Johannesburg Summit and is part of the subsequent United Nations Environment Programme–driven Marrakech Process. Industry is consistently seen as a key player in this. Although it has traditionally blamed consumers for unsustainable product choices, arguing that there is no consumer demand for greener products, this view has now largely been discredited. American academic Stuart Hart wrote an influential article on this notion in Harvard Business Review in 1997 in which he put the responsibility firmly back in industry's court. Even prior to this, society increasingly considered industry responsible for its products long after they left the factory gate.

The notion of extended producer responsibility thus grew out of the concept of corporate social responsibility (CSR) and corporate environmental responsibility (CER), a concept also known as social “license to operate.” It has become increasingly important and has begun to inform government regulation in a number of jurisdictions. One such example is the EU's End-of-life Vehicle Directive and also the similar Waste Electrical and Electronic Equipment (WEEE) Directive for electronic products. These EU directives required member states to introduce legislation requiring carefully controlled take-back and processing of products that have reached the end of their useful lives. The original manufacturer or its agents—such as importers in some cases—have to meet the cost of this process as it is deemed they were responsible for creating the product in the first place and therefore also for creating the potential waste problem resulting from this. A growing number of countries impose a take-back levy on new products at the point of sale, administered by the retailer on behalf of the manufacturer.

Extended producer responsibility appears to move away from the pure concept of “the business of business is business;” in reality, a number of successful companies have created [Page 254]profitable business models around this concept. Few would challenge the Rank Xerox product stewardship model as an example of a successful business model. This firm decided to move away from a model whereby it sold its photocopiers to the end user to a model whereby the copiers are instead leased under a full maintenance contract; the end user is simply billed for the number of copies made. The copier remains the property of Rank Xerox, which is therefore responsible not only for its production, but also for its maintenance, repair, and refurbishment, as well as end-of-life processing, recycling, and reuse. The firm determined that its customers do not necessarily want to own the machine; instead, they merely want the use of the machine for the service it provides. This business model has since been copied in a number of other areas and has become known as a product-service system, whereby the product itself becomes merely a means of delivering a service to the customer.

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