Campaigners say companies should take more responsibility for recycling materials they put into the hands of consumers. Taking the issue to shareholders is paying dividends

Far too much consumer packaging in the US ends up in the garbage. Just 12% of plastics is recycled, and $11.4bn worth reusable materials is put into landfill every year.

Prindiville says companies have a moral obligation to re-collect what they put into circulation, and that they could benefit from doing so. At present, “they’re getting a free ride on the municipal waste management system”, he says.

Local governments are unlikely to substantially increase recycling rates, he adds, because they tend to “look at waste as a line item on the budget” – in other words, as a problem, not an opportunity.

Campaigners such as Prindiville want companies to consider “extended producer responsibility” (EPR) schemes, which shift the onus for recycling from municipalities to companies. And to try to sway management, they are increasingly turning to shareholder resolutions.

During the recent results season, As You Sow, a San Francisco group, tabled proposals with Procter & Gamble, Kraft Foods, and supermarket chain Kroger, requesting that managers conduct EPR feasibility studies, and make greater disclosure about recycling activities.

This shareholder resolution tactic “can be very effective in persuading companies to take issues seriously, especially if they get a substantial amount of support”, says Heidi Welsh, director of the Maryland-based Sustainable Investments Institute, which tracks such resolutions.

“It’s a formal mechanism that brings the issue before all the shareholders. And if the company is not able to effectively to respond to the substance of the motion, there is a reputational risk issue, particularly with consumer-facing companies.”

The As You Sow resolutions got mixed results: 5.8% of votes at P&G, 25.6% at Kraft, and 12.8% at Kroger. Welsh says the average across 275 resolutions filed this year – concerning everything from human rights and supply chain issues to corporate political spending – was about 20%.

Drawn-out process

But the actual number may be less important than the process it sets in train, according to Conrad MacKerron, senior programme director at As You Sow. As long as the resolution gets 3% in its first year, it can be refiled next year, helping to keep the issue on the agenda and build support among shareholders and managers. Coca-Cola and Pepsi both changed their recycling policies despite resolutions receiving less than 10% of votes.

MacKerron says resolutions can help bring managers to the table. Before filing a resolution a second year, he sometimes tells companies he “would rather not file. Why don’t you give us a proposal?” At this point, they sometimes respond.

Welsh says sustainability-themed resolutions have doubled in the past 10 years, and that the most successful tend to ask for disclosure, rather than specific policy action. US regulators can throw out resolutions that seek to “micro-manage” companies. And, in any case, MacKerron says investors usually feel more comfortable with requests to study something. He is already planning more proposals for 2013.