Yes, I think there is, and unfortunately it is rarely discussed. First let me say that I love S.F. and the Zero Waste work they are doing, and that I am writing this to share my opinion about what their “secret ingredient” is so that other cities can better understand what they DON’T have but might want to pursue locally, even if in an altered form.
On March 25th, 2016, the New York Times wrote another admiring media piece about the San Francisco Zero Waste program. And again, the reporter missed asking the logical question “why S.F.?” What is different about S.F. that makes it such a star when it comes to progressive waste management systems? It clearly isn’t any kind of unique technology, as Jack Macy even admits in the article, and that is an important point considering all the sketchy “new tech, One- Bin” proposals we’ve been seeing lately as the way to achieve Zero Waste.
I know there is more than just one reason that S.F. is successful, but I am going to focus on the one thing that is really special, and it’s the relationship between the S.F. government and the private sector service provider Recology. The working relationship between these two entities is very unique and and I think is the key to enabling their soaring success. So why are they such good buddies in pursuit of a common goal when elsewhere we see conflict and struggle, such as the recent Houston-Waste Management Inc. contract tussle?
I didn’t want to misspeak here, so I ran this article past a S.F. insider to make sure I got this right. The company known as Recology is in fact a very old company that has roots that go back in the S.F. waste business since early 1920’s, and they did something unique and remarkable many years ago: as two local hauling companies, Scavenger’s Protective Association and Sunset Scavenger Company, the Recology predecessors got written into the City Charter – through a voter initiative ordinance – as the exclusive official haulers of refuse all of the city. Now these exclusive refuse collection licenses they were given could be overturned by the voters, but as long as voters were kept happy enough about the deal, it was forever. In Italy, this is called an “inside company” and is actually accepted as an option for providing public service. No surprise then that the original Recology was started by an Italian family.
This has created a sweet deal for Recology and they knew it. When the City staff approached the company in the 1990’s and told them S.F. wanted to become a Zero Waste City, Recology was in a good position to fight it, or join them. I don’t know what was said exactly, but I do remember having a personal discussion with a Recology manager back in the 90’s (they were called Norcal then and I don’t remember the guy’s name but he was high up in the company) and he told me that the behind-the-curtain informal agreement was that the City would share the risk of this new ZW path for long-enough for Recology to learn how to transform their existing business model, that at the time was based upon landfilling primarily, into a business plan that was based upon landfill diversion but still allowed them to make equal profits. Sounded fair to me at the time, and it has proven to be a wise move.
But the remarkable part that I want to highlight here is that this sort of cooperation and planning between government and the private sector rarely happens in America. I think it must be due to Recology’s legally-protected status of being written into the City Charter that enables them to have a unique power within the relationship that can be used in partnership with the City to achieve community benefit and ensure a certain level of private sector profit.
I think this close relationship is similar to how my town “coordinates and plans the future” with our electric utility provider. This “public utility monopoly” approach for electricity exists in nearly every town in America. So in some ways this special relationship that S.F. and Recology have isn’t that unique, it’s just that other cities don’t use the public utility approach in the waste management industry – and I think we should start doing so! I don’t think the S.F. “city charter” approach is really replicable across America for many reasons, but I do think that many of the working elements that make their approach successful are replicable. At its core, the S.F. Zero Waste Program is run like a social enterprise, meaning that its primary purpose for being is to fulfill a mission (i.e. Zero Waste) and that the program is expected to make a profit while doing so. I know a lot about this approach since I created the nation’s largest nonprofit Zero Waste Social Enterprise here in Boulder, Colorado, where our partnership success with the City came not from a legal protection like Recology’s, but from a civic mandate delivered to the City by a citizens army organized by Eco-Cycle.
This “double bottom-line (DBL) approach” to creating value for the community is an exciting new way of using the power of the marketplace in partnership with local government. The place to watch to see how far it can go is the U.K. right now, especially Scotland. We are watching new “legal vehicles” for the creation of DBL enterprises emerge with names such as “the CIC” (community interest company), or the “B” Corp (the for-benefit corporation), and my favorite, the “the L3C” (low-profit limited liability company LLC).
In the last few years we’ve heard the giants of industry, like Bill Gates and others, call for a more “compassionate capitalism”. The reason this topic is up for discussion is because there is a growing recognition that the current form of free market capitalism isn’t capable of addressing the serious social and environmental problems of our times. On top of that, our local, state and national government entities can’t do it either as their funding and public support is shrinking.
I say don’t mess with the existing single bottom-line capitalism – it has brought us Apple and Amazon – but that it is time for a new addition to the national economic operating system which I’ll call Capitalism 2.0, (as in two bottom lines), and that there are special needs in our world today, like clean energy and Zero Waste, that need a new marketplace approach that combines the leadership of government with the horsepower of business. When more cities step forward and support the social enterprise approach, then maybe San Francisco won’t stand so alone as a national star in the race to Zero Waste.
Eric Lombardi is the Director of Eco-Cycle Solutions.
This blog originally ran on Waste360.com.