March/April 2014
Yes, third-party certification takes time, effort, and money. But recyclers who have done it say the benefits far outweigh the costs, and academic research on the subject supports those contentions.
By Theodore Fischer
When you buy a power tool, do you look for the UL label? When you need a car repair, do you search for a AAA-approved auto repair shop? And when you need someone to keep your company’s books or file its taxes, do you hire a certified public accountant? If you answered yes to any of those questions, you’ve made a buying decision based on third-party certification. You have decided that you would prefer a product, company, or service provider that has been independently verified to operate according to an established set of values or principles. Increasingly, scrap suppliers and consumers can make that choice as well.
Customer demand is not the only reason for a scrap company to seek third-party certification, however, recyclers say. It can help a company move beyond the industry’s Sanford and Son image. The 1970s TV sitcom about a father-and-son salvage company—its motto was “We Buy & Sell Junk”—still taints the reputation of the recycling industry today.
Many certifications can improve a company’s operations, environmental performance, and—most important—safety.Safety has been a real challenge for the scrap recycling industry, says Gary Champlin, general manager of Champlin Tire Recycling (Concordia, Kan.). “The more facilities that work toward safety certification, the better our industry’s safety record will become.”
Certification also makes a good impression on government regulators and enforcement authorities, recyclers say, proving to the U.S. Occupational Safety and Health Administration (Washington, D.C.) and a state’s department of environmental protection “that we’re responsible businesspeople,” says John Bianculli, manager of special projects for Trademark Metals Recycling (Tampa, Fla.). “When they come into a scrapyard, sometimes they come ‘loaded for bear,’” he says. Their perception changes, he notes, when they see the company’s certification, housekeeping, records, and processes. At that point, “they’re talking to you like a partner instead of a judge,” which is “a big shift,” he says.
But perhaps the most important reason to get certified, recyclers say, is to assure customers of your product or service’s quality. “If you say you’re certified, and you’ve tied your specifications on material processing into that certification, then this customer can [believe] ‘the load I get today will be the load I’ll get tomorrow,’” Champlin says. “There won’t be variance.”
Thirty Years of Standards
The oldest certification standard relevant to the recycling industry might be the ISO 9001 standard for quality management, which the International Organization for Standardization (Geneva) first introduced in 1987. It added the ISO 14001 standard for environmental management in 1996. Great Britain’s Occupational Health and Safety Advisory Services created the OHSAS 18001 standard to govern occupational health and safety in 1999.
As those three standards began to find wide acceptance, ReMA saw the value of integrating them into a single standard specifically for the quality, environmental protection, and health and safety needs of scrap recycling operations. Work on this integrated standard, originally named SCRAP3 and now called the Recycling Industry Operating Standard™, began in 2002; the standard launched in late 2005. To date 10 facilities that recycle materials other than electronics are RIOS™-certified.
For electronics recyclers, market demand for standards drove their development. Electronics manufacturers, large institutional customers, and others were demanding that recyclers spell out their plans for handling “focus materials” in the products, which can pose harm to human health or the environment when they’re not handled, recycled, or disposed of properly, explains Bianculli, who is on the board of ReMA Services Corp., which oversees RIOS. In 2006, ReMA worked with the U.S. Environmental Protection Agency (Washington, D.C.) and other government agencies; electronics manufacturers, recyclers, and refurbishers; other trade associations; and nongovernmental organizations to create the Responsible Recycling Practices for Use in Accredited Certification Programs for Electronics Recyclers, or R2. The R2 practices became a standard to which companies can be certified in 2009. R2 provides “a set of best practices that certifying bodies [can] use to assess electronics recyclers’ environmental and health and safety efforts,” explains John Lingelbach, executive director of R2 Solutions (Boulder, Colo.), which administers and promotes the standard. More than 500 electronics recycling facilities worldwide, including about 320 in the United States, have been certified to the R2 standard; approximately 80 recycling facilities in North America have met the combined R2/RIOS™ standard.
Other third-party-certified standards include e-Stewards®, a project of the Seattle-based Basel Action Network, for electronics recyclers, and the Phoenix-based National Association for Information Destruction’s AAA certification for data destruction, for both paper and electronics recyclers. Many recycling firms around the world still seek ISO 9001, ISO 14001, and OHSAS 18001 certification as well.
The Road to Certification
The process of achieving certification will be roughly similar regardless of which certifications you seek. First, you must ensure your company has systems in place to meet the chosen standard; second is one or more audits by the third-party certifying body; and third, recertification in subsequent years.
The first order of business for many companies is to decide whether to hire a consultant to shepherd the company through the process or take the do-it-yourself path. Those who seek RIOS certification, for example, can do it themselves once they receive the implementation guide, “which I jokingly refer to as the 10-day MBA for the scrap industry,” says Darrell Kendall, ISRI’s RIOS program director. “It’s a giant manual, pretty technical, and sometimes a little dense, but if you go through and do what it tells you to do, your business is going to be stronger as a result. It puts in a management system that, for the most part, recyclers don’t have in place.”
Some recyclers insist DIY is the best way to go. “There’s a tremendous advantage [to] going through the process yourself,” says Bianculli, a director of Ocala Recycling, the first company to achieve RIOS certification, before Trademark Metals acquired it. “You don’t want a consultant to just drop a book on your desk and say, ‘There you go.’” Champlin agrees that doing it yourself is a good idea. “The consultant is going to charge you a fee and leave,” he says. Doing it yourself, “maybe it will take longer, maybe you might use more of your company assets to get certified … but by going through the process, you’re going to have a more positive outcome.”
That said, companies that hired consultants are glad they did. The consultant “took us through the process, which saved us money and time,” says Bruce Loeb, president of Loeb-Lorman Metals (Fort Atkinson, Wis.), which has been certified to meet the ISO 9001, ISO 14001, and OHSAS 18001 standards. “Our vice president took charge of the project and kept it moving.”
Once a facility has made the changes its needs to make to meet the standard, it hires an accredited certifying body to perform its audit. The online Certification Bodies Directory of the Milwaukee-based ANSI-ASQ National Accreditation Board (anabdirectory.remoteauditor.com) lists companies accredited to certify a facility to the RIOS, R2, ISO 9001 and 14001, OHSAS 18001, and e-Stewards standards. For NAID AAA certification, NAID assigns a regional auditor to the firm seeking certification. Its auditors all meet the certified protection professional standard of the American Society for Industrial Security (Alexandria, Va.), it reports.
For some certifications, the first part of the audit is a paperwork review: Companies submit their paperwork to the auditor, who scrutinizes it in search of any holes. “It’s sort of a beta test before the real audit,” Kendall says. The second part is an on-site visit by the auditing body, which could take several days. For RIOS, for example, “one of our mantras is, ‘Say what you do, do what you say, and prove it,’ and that’s exactly what the auditor looks for,” Kendall says. Auditors will examine the documentation and then inspect the facility to make sure it’s following the procedures listed in the documentation. If they observe any failures or omissions, they’ll recommend a corrective action plan.
After a company has done the (sometimes substantial) work to meet the standard and completed the paperwork review, it’s rare for it to fail the in-person audit, Kendall says. In most cases, auditors will determine that, though they might require the company to make certain changes, it would qualify for certification. “Once they get their thumbs-up from the auditor, they can fly the flag, put the certification certificate on the wall, [and] advertise that they are, in fact, certified,” he says.
That’s not the end, of course. A certification is good for a limited amount of time, typically one year, and to maintain it the company must submit to interim or full audits in subsequent years. To retain RIOS certification, for example, a company must undergo a surveillance audit every year to ensure it’s complying with the procedures it has established. Every third year it must go through a recertification process that’s estimated to be about three-quarters as demanding as the initial certification audit. “Over the course of the three years, there should be continual improvement,” Kendall says, “so by the time they’re going through their second or third complete certification, [the company should be] an example of what to do right in the recycling industry.”
Certification Costs
Several separate costs are involved in implementing any form of certification. The first is that of accessing the standard—the text that spells out the standard’s requirements—or paying the initial fee. NAID AAA and R2 standards are free to download; ISO, OHSAS, and e-Stewards standards must be purchased. For RIOS, ReMA members pay $1,250 for the first enrolled facility plus $1,200 for each additional facility. Nonprofit or government recycling facilities, which are ineligible for ReMA membership, pay a $1,000 for the first facility, $1,350 for each additional facility. For ISRI-eligible nonmembers, the fees are $4,200 for the first facility and $3,500 for each additional facility. The ISO 9001 standard, priced in Swiss francs, is about $140; the ISO 14001 standard is about $123; and the e-Stewards standard is $195.
The largest expense for most facilities is implementing the standard. This cost will vary greatly according to the type and size of the business, number of employees, materials handled, and—most notably—how closely the operation already conforms to the standard’s requirements. Implementation might require adding training programs, upgrading equipment or computer systems, changing how the facility handles specific materials, and more. Implementation costs can vary by location as well. Kendall says he has seen the total cost of RIOS implementation range from $2,000 to $20,000 depending on the size of the company and how advanced its current systems are.
The third expense is hiring the auditor. Multiple companies are accredited to perform audits to the ISO, OHSAS, RIOS, R2, and e-Stewards standards; the company seeking certification can comparison-shop to see what each auditor provides, though the cost of the audit itself is unlikely to vary much from auditor to auditor as it’s based on the number of days required to conduct the audit. RIOS audits start at a few thousand dollars and rise based on the size and complexity of the organization, Kendall says. A company that already holds one certification (such as ISO 9001 or 14001) might find that it lowers the cost of implementing and getting audited to another standard. For example, for e-Stewards certification, a company must also meet the ISO 14001 standard. For NAID AAA certification, the company must join NAID and submit an application fee from $715 to $995 based on its type of facility; the fee covers the audit.
The final cost is that of maintaining the certification or getting recertified. For RIOS, the annual fee is the same as the initial fee. R2-certified companies pay a licensing fee of $1,500 a year after they’ve been certified; the certification is good for three years with annual audits. Those who get certified to the e-Stewards standard pay an annual marketing and licensing fee based on the company’s total annual revenue derived from electronics processing; BAN reports the average annual fee is between $3,000 and $6,000.
Kendall estimates that, not including implementation, it will cost a small firm $8,000 to $10,000 to get RIOS-certified; the largest firms will spend about $20,000 to $25,000. He considers it not an expense, however, but an investment. “What’s the cost of one EPA violation?” he asks. “What’s the cost of a major health and safety incident?”
Is It Worth It?
Several academic studies of companies that have adopted or been certified to standards for quality or environmental protection have shown certification produces impressive results. A 2010 Harvard Business School (Cambridge, Mass.) study of California-based companies that have adopted the ISO 9001 quality standard compared them with similar companies that had not adopted that standard, matching their industry, location, size, and injury rates prior to certification. The researchers found that ISO 9001-compliant companies had “higher rates of corporate survival, sales and employment growth, and wage increases” and they were “more likely to report no injuries (as measured by workers’ compensation claims) in the years following adoption” than the firms they were matched with. Further, “some benefits of ISO 9001 adoption were much more pronounced in smaller firms than in larger firms,” they noted.
A 2007 study from the Wharton Risk Management and Decision Processes Center at the University of Pennsylvania (Philadelphia) asks, “Does ISO 14001 Certification Enhance Environmental Performance?” The answer is yes, according to the study, which the ANSI-ASQ National Accreditation Board and QSU Publishing Co. (Fairfax, Va.) conducted in cooperation with Wharton. The researchers found that “ISO certification is an effective tool for promoting [environmental management systems] and therefore improving facilities’ environmental performance.” Further, “the introduction of third party audits brings extra environmental benefits beyond an EMS by adding the pressure of external scrutiny and questioning by independent professionals.” The authors suggest that regulators offer special benefits to ISO 14001-certified companies, such as reduced reporting, to encourage the adoption of the standard.
Though there has been no academic study of the value of certification specifically within the scrap recycling industry, scrap companies that have become certified say they’re pleased with the results. Bruce Loeb credits certification with permanently instituting improvements in all of his company’s processes and establishing “a set of procedures and making all of us aware of the steps we want to be taking throughout our company on safety and quality, and environmentally,” he says. “We always want to be proactive with OSHA and believe [certification] has helped us to do that.”
Sarah Cade Commes, president of PC Rebuilders & Recyclers (Chicago), credits R2/RIOS certification—which the company achieved in 2011 mainly in response to customer demand—for forcing the company to put beneficial structures in place. “We have a formal management system now, and we’ve taken the time to document our processes and procedures and have all our management review them at least annually to make sure we’re continually improving,” she says. “You do have to spend the money to get certified, but, that being said, it’s been well worth the investment for the structure of our company, and—based on the number of new customers and RFPs we are able to bid on based on the fact that we’re certified—we have seen a return on our investment.”
Bianculli can understand—if not condone—recyclers who shun certification. “You can do it the wrong way and get no value out of it,” he says. “And it’s an older industry, on the traditional side, so the thinking is, ‘You’re going to tell me how to run my scrapyard? I don’t think so.’ But [certification] isn’t to tell you how to run your scrapyard; this is so that when you want to do something in your scrapyard, it actually happens.”
As beneficial as certification might be for individual companies, its value for the recycling industry as a whole might be even greater. Champlin, who also serves on the ReMA Services Corp. board, would like ISRI’s Scrap Tire Processors Chapter to look at RIOS certification as a way to improve tire processors’ safety record. “How do you address safety in this industry? It’s one company at a time,” he says.
Kendall believes certification is essential for improving not just the scrap industry’s reputation, but also its culture. “Certification is not a stamp of approval; it’s not just somebody giving you an ‘Attaboy,’” he says. “It’s a management system that makes you a more functional, operationally compliant, outstanding professional organization that has employees who appreciate what you’re doing for them and customers who recognize that you’re doing the right thing.”
Theodore Fischer is a Silver Spring, Md.-based freelance writer.
Advice From the Trenches
Recyclers who have successfully run the certification gauntlet offer the following tips for those just embarking on or contemplating certification:
- “Do as many certifications [as you want] at the same time, on the single form,” advises Bruce Loeb, president of Loeb-Lorman Metals (Fort Atkinson, Wis.). “Streamline your system to fit your organization, and don’t make it complicated.”
- “Both R2 and RIOS have extensive boards and great staff people who are always willing to answer questions,” says Sarah Cade Commes, president of PC Rebuilders & Recyclers (Chicago). “I would urge people to use the resources of the R2/RIOS community and staff to make it easier for [their] company.”
- Seek out a mentor, says John Bianculli, manager of special projects for Trademark Metals Recycling (Tampa, Fla.)—find a company that’s not a direct competitor that has already gone through the certification process. “I’m [mentoring] a company right now,” he says. “We talk once a week, they let me know where they are in the process, and if they have a question or get stuck, I help them get started again.” Having a mentor should help you reduce the cost of certification by at least 25 percent, he adds. “Then you have to pay it forward when you become certified and be a mentor for somebody else.”
Yes, third-party certification takes time, effort, and money. But recyclers who have done it say the benefits far outweigh the costs, and academic research on the subject supports those contentions.