2 March 2015

What Might Russia’s New Recycling Rules Mean for Business?

The Russian authorities, after many years of delay, have finally passed legislation that should improve waste management in the country and encourage recycling. But at what cost for business, asks PBN H+K Strategies’ Associate Account Manager Vladimir Trofimchuk.
What Might Russia’s New Recycling Rules Mean for Business?
Last December, major changes were made to Federal Law 89 On Industrial and Consumer Waste, introducing new waste management and recycling standards for producers and importers.
Companies have three options for recycling: do it themselves; reach an agreement with a recycling firm; or hand over recycling duties to a specially created producers’ union. Otherwise they will be charged with paying an “environmental fee” to the government.
At first glance, this law appears to be a positive move, with Russia progressing towards a greener economy and more prudent approach to the environment.
However, closer inspection of the law and its supporting bylaws reveals a multitude of contradictions and pitfalls, placing an extra burden on the shoulders of business.
What’s more important to the Russian government – fee collections or the environment?
Problems with the bylaws include the wide assortment of goods liable for recycling; extremely ambitious recycling targets (as high as 80% for paper and 50% for electrical goods); and unclear reporting and oversight procedures. When taken together, the question has to be asked: can the government meet these overambitious targets? Another major point of contention is whether the environmental fee will be based on actual recycling costs or set as a percentage of production costs.

What does this mean for companies?
  • Extra costs
Irrespective of how the law and supporting bylaws are amended, companies will face extra expenses to cover recycling costs or the environmental fee. The time and resources required to calculate their responsibilities may also be cumbersome to smaller operations. And this extra spending will come soon; the government already expects to have collected its first round of environmental fees for 2015 by October 15.
  • An opportunity to demonstrate green credentials
For companies with a strong green and sustainability agenda, the new law will provide the opportunity and perhaps the impetus to bring Russian operations in line with global policies, particularly given that it promises (still undefined) preferential treatment for companies that produce recycled or biodegradable goods. 
In the meantime, companies should pay close attention to news, amendments and fresh regulations coming from the Natural Resources Ministry. With the first environmental fee payments due by October, businesses in Russia must coalesce to ensure that best global practices are considered in the country’s new chapter for recycling and waste management.
Vladimir Trofimchuk is an associate account manager in the government and public affairs practice at PBN Hill+Knowlton Strategies in Moscow.