Northwest Hazardous Materials Management Conference June 8, 2010 Stewardship Ontario – Partnering with stewards to build sustainable communities

Agenda 1. EPR in Canada 2. Focus on Ontario 3. Stewardship Ontario: who & what? 4. Blue Box Program – quick facts 5. Municipal Hazardous and Special Waste Program 6. What’s next in Ontario & how will it impact industry? 7. Industry challenges 2

Canada moving towards EPR Canada, shifting from “product stewardship” to “extended producer responsibility” (EPR) which requires industry to cover 100% of the costs to manage products at their end-of- life Canada-wide Action Plan for EPR Initiatives transforming "product stewardship" into full EPR programs have already begun 3

65 programs 4

More to come PLASTIC / ALUMINUM GLASS ELECTRONICS PROPANE OIL PHARMA TIRES AUTO BATTERIES MILK CONST/RENO/DEMO BLUE BOX SHARPS AEROSOLS PAINT MERCURY EXTINGUISHERS FLAMMABLES SERVICE PACKAGING 5

How stewardship works in Ontario Waste Diversion Act (WDA), 2002 Ministry of the Environment Regulates materials that must be “stewarded” & sets targets and other requirements industry must meet Waste Diversion Ontario (WDO) Ensures regulations & requirements are fulfilled; oversees industry programs Stewardship Ontario Develops and operates diversion programs for printed paper & packaging and household hazardous & special wastes 6

Who are we? Ontario, Canada based not-for-profit industry-managed organization Driven by legislation (WDA) Funded by stewards, governed by stewards A steward is a company that makes and/or markets products and/or packaging that is managed in either of our programs: Blue Box or Municipal Hazardous & Special Waste Program (MHSW) Brand owner/first importer of designated material Party responsible for putting the designated material into the marketplace 7

Government mandate To create and run cost effective stewardship programs that: Divert household printed paper & packaging from landfill (Blue Box ) Responsible for 50% of program cost; full EPR within 3 years Provide environmentally responsible end-of-life management for familiar consumer products requiring special care e.g., fertilizers, pesticides, batteries, paint, solvents, automotive products (MHSW) Responsible for 100% of program costs 8

Blue Box Program – a success story Diversion targets met & exceeded year after year (50% - 60% -70%) Blue Box Program runs in over 209 municipalities across Ontario Over 65% of printed paper and packaging waste is diverted from landfill Blue Box Stewardship Program 9

Recycling up 20% over 6 years 10 Blue Box Program – exceeding expectations

Key accomplishments 11 Nearly $1/2 billion provided to the Blue Box Program since 2004 $61M for system optimization $14M for market development Approximately 1500 stewards currently contribute fees to the Blue Box Program

Challenges – aggressive targets 2012 TARGETS 2008 PERFORMANCE 12

Market Development - challenges Ensuring end markets for hard to recycle materials eg. Rigid plastics and laminants Requires aggressive action to construct complete supply chain: Secure supply Proved technology Manufacturing capability Market demand Scale & Throughput Reliable, Consistent Just-in-Time 13

The rapidly changing landscape A lot of packaging innovations in the bio space Pressure to keep ahead of innovation Two systems to fund Fossil fuel based Bio based 14

Municipal Hazardous & Special Waste Program (MHSW) 15

Program purpose To collect designated materials so they can be managed at end of life in environmentally appropriate ways” Promote 3Rs (reduce, reuse, recycle) options for many materials (e.g., paint) and safe handling and disposal where 3Rs are not feasible (e.g., pharmaceuticals) Operate reverse logistics supply chain 16

Legislative foundation Build a consolidated program for the 22 wastes designated under Ontario Regulation 542/06 Full EPR Incent 3Rs Stimulate markets to maximize MHSW management Expand collection infrastructure Promote recycling best practices & innovation Drive changes to consumer behaviours 17

Step 1 – How is the plan built? What materials? How much? What’s available? Collection? Targets? R&D? Consumer education? Consumer education? Cost$ Who pays what? Cost$ Who pays what? Performance measures? Performance measures? The Plan 18

Materials included? Phase 1 - launched in July 2008 and included nine material categories: Paint/coatings, solvents, batteries, pressurized containers, fertilizers, pesticides, antifreeze, oil filters and oil containers Phase 2 – Launches July 1, 2010 with 13 new material categories: Aerosols, Batteries, corrosives (including irritants), fire extinguishers (portable), flammables (including solvents), fluorescents, pharmaceuticals, sharps and toxics 19

How it works Stewards pay fees based on type and quantity of material they supply for sale or use in Ontario The fees are then used to operate the MHSW program, including collection, transportation and processing (or safe disposal) of all designated materials 20

Program infrastructure Three collection streams developed Municipal-based depots and collection events Retail-based collection of paints and batteries Incentive-based system for automotive materials Collection network consists of 91 permanent municipal depots which sponsor collection events 51 municipalities with temporary depots & 127 collection events 4,249 retail collection locations for paints, batteries and pharmaceuticals 106 collection locations for automotive MHSW Post-collection network consists of 40 approved transporters & processors 26 approved material processors 21

Multi-material collection channel Specialty channel Post-collection strategy Procurement & contracts team Steward & materials stream Stakeholders Events Return to Retail Househol d Collection Depot Depot in a Box Stewards Quantities Household & Small IC&I Consumption ProductProduct Container Transfer StationTransportation ProcessingDisposal Intermediate Processor SSC Toxic Taxi MHSW Program on a page 22

Our customers 23 Over 2,036 stewards registered (funders) producing a diverse range of materials Manufacturers of home improvement and other consumer products Retailer-owned brands Automotive product manufacturers

85¢ of every dollar goes to diversion 24

Role of SO in establishing fees for stewards SO determines cost to manage program and sets fees based on market share Pay to pollute program Each steward decides how to manage cost: Within their business Within their supply chain With their customers Products often bear visible eco fees at point-of- sale Stewards who fail to pay fees on time will be subject to penalties 25

Assessing costs to stewards Determine material management costs Consider investments needed to reach targets … and promotion & education … like research & development Calculate share of common costs Define contingency for forecast risk 6 Divide cost by sales 26

Targets & performance – year 1 27

28 Targets & performance – year 1

29 Targets & performance – year 1

30 Targets & performance – year 1

31 Targets & performance – year 1

What’s on the horizon? 32 New waste diversion legislation is expected from Ontario’s Ministry of the Environment – fall 2010

How will it impact MHSW stewards? 33

Impact Steep monetary penalties for non-performance Individual companies exposed to risk Stewardship organizations will be held to higher standards 34

Industry challenges Establishing targets that are reasonable but ambitious Balancing 3Rs requirements Sustainability V. EPR Plethora of disparate programs across Canada No harmonization in legislation or regulation re: definitions of materials, definitions of stewards/obligated parties Administrative overkill for Canadian CPG companies who must discharge obligations differently in every jurisdiction 35

Questions? THANK YOU!

Contact Gemma Zecchini, CEO