ERI’s John Shegerian: Recycling E-waste & Enabling a Circular Economy

John Shegerian

Although digital technologies play a crucial role in reducing carbon emissions, the world’s growing demand for electronic devices is also creating another environmental challenge in the form of resource extraction and ‘e-waste’ generation. With the UN predicting 74 million tonnes of e-waste will be generated every year by 2030, E-waste is the fastest-growing solid waste stream in the world. VX News interviewed ERI Executive Chairman, John Shegerian, on  how ERI has evolved to be a global leader in responsible e-waste recycling by realizing the opportunities and global partnerships to be found in the transition from a take, make, and dispose linear model of extractive consumption, to one based on the principles of a circular economy.

John, begin by sharing what ERI, the nation's largest e-waste recycler, does and the market size of the waste stream that ERI has targeted?

We take in electronic waste and responsibly recycle it from two points of view. First, the environment. In terms of e-Stewards and R2, which are the two highest environmental certifications, we're cert ified by the highest certifications at all of our 10 facilities across America. We cover every zip code, including Hawaii and Alaska. Also cybersecurity has become a huge problem along the way during this 17 year journey.  So, we make sure all the data that's contained in all the e-waste is responsibly destroyed as well.

When we started ERI, Al Gore had not yet won a Nobel Peace Prize or an Academy Award for Inconvenient Truth, nor was there an iPhone or an iPad yet. It was the truly the beginning of these modern sustainability times. E-waste back then was the fastest growing solid waste stream in the world. Fast forward 17 years, e-waste continues to be the fastest growing solid waste stream in the world by an order of magnitude of five times the number two growing waste stream. So, it's grown massively and steadily.

 Why? Electronics have become ubiquitous to us as a society. Look on my wrist here, I'm wearing a Garmin watch, on my desk is one of these Amazon Echoes, our cars have become computers on wheels, and the internet of things with Nest and Ring and our smart appliances in our home are all around us. Everything has an electronic component now, which means it needs to be responsibly recycled, and the data needs to be either wiped or destroyed along the way.

So, when you look at the volume of electronic waste that we take in on a monthly basis, for this discussion, let's just call it 20 million pounds a month—20 million pounds! What does that e-waste become? It becomes zero waste, zero landfill, and zero emissions.  It becomes crushed clean glass, and then in order of volume, it becomes steel, plastic, aluminum, copper, gold, silver, palladium and lead. All of those materials get shipped to smelters in the United States and around the world for beneficial reuse. Everything.

It is the greatest untold ESG story out there in that everything gets put back into the marketplace, and here's why. According to the UN, in terms of all the electronics that are produced and used every day annually in the world, only about 17 percent of it is recycled responsibly when it comes to its end of life.

So, we at ERI feel like it's still the top of the first inning, because the delta that we can help collapse in the years to come is still approximately 83 percent. Shame on us as a country—as a world economy—that we’re only responsibly recycling 17 percent of these electronics that make our personal and our professional lives more connected, and that we’ve failed to recognize the opportunity to do the right thing with them when they come to their end of life.

How has China's “national sword” policy, which banned the importation of certain types of post-consumer waste in 2017, impacted both ERI and e-waste markets domestically?

The problem is that the plastic pollution problem that is real and is worldwide has never been parsed out from post-consumer plastic, which of course is horribly polluting emerging economies such as China and India, the oceans the lakes around the world,  and our ecosystem as a whole.

For this specific example of electronic waste plastic, I have been to facilities in China who used to buy our electronic waste plastic, clean it responsibly, shred it, pelletize it, and, and then sell it back to the greatest OEMs on the planet: Samsung, LG, and dozens of OEMs who wanted to put that recycled plastic back into their new electronics because they know their constituents care about that. So, the wholesale Green Sword cutting off of all plastics going to China destroyed part of a very vibrant trade of electronic waste plastic going to responsible recyclers,

So yes, unfortunately, there were negative outcomes to that wholesale cutting off of US plastic supplies.

When VX News last spoke to you in 2014, you anticipated that “by the end of the decade, there would be three to five brand names for recycling, with locations in every state and drop off points in every city across the United States, throughout Canada, and many other foreign locations, including China, Singapore, Hong Kong and Mexico”. Well, has the market met or exceeded your expectations?

The fun part about what we do is that e-waste is a problem not just in California or Los Angeles or Fresno, it's the fastest growing solid waste stream around the world in every city in every state and every country, and the opportunity to capture it is something that our people understand. Everyone has old electronics in their desk drawer, closet, garage, attic, or somewhere laying around. Whether it's cables or old cell phones, they just don't know what to do with these items, so it’s an education process first. Whether it's with policymakers, government leaders, leadership from huge corporations or small corporations, it's education first.  And that then creates the motivation to do the right thing.

The solution is there, and we can make it localized, because real responsible electronic waste recycling should be done within a 300 to 500 mile radius of where those products are used. So, it creates jobs in the cities and countries that we can convince leadership to put this in, and then it also creates beneficial reuse for all these materials instead of polluting our ecosystem and putting it in our landfills, which typically leach back into the ground and water supply and eventually make it back into our plants, animals and people. It's great to just keep this stuff out of landfills and get all the metal, plastic, and glass back into beneficial reuse. Everybody wins; there's no loser, and jobs are created to boot.

Elaborate on how ERI has evolved to be a leader in responsible e-waste recycling? What confluence of market opportunities have led to ERI’s growth?

We evolved the company from being what was a glorified commodity-based company to a service-based model. For example, in June of 2014, 52 percent of our revenue was derived from commodity sales, but in the first quarter of 2020, just 17.5 percent of our revenue was derived from commodity sales. We switched the model from a commodity-based model to a service-based model.

So, think about what Shred-It does; it shreds data on paper. In 2008, they almost went away as a company because pulp went to zero value in terms of pricing. But they realized they provide a valuable service and have to charge for that service of destroying data on paper. The ex-CEO of Shred-It, Vince De Palma, is a good friend of mine, and his mantra to me was the same: “You’ve got to switch your model.”  It's okay to make money from commodities, but you don't want to be tied to the vicissitudes of the commodity markets around the world, which you don't control.

And so, we put it back in our control and made sure we'd survive and thrive in the years to come by creating a platform for people to pay for responsible recycling and responsible data destruction. If they don't want to pay up, we wish them well and typically know where they're going to end up after that, and it's not going to be on the right side of the cover of the NYT or the WSJ. It's a punishing society when you have a data breach because you failed to understand the gravity of misappropriating old electronics, and you're a big brand or a government entity. The results can be disastrous both for your constituents and for the goodwill of your brand.

Address how ERI's network of relationships with both OEMs and local recyclers has evolved.

It's a network of collaboration that people were a little bit shocked by when we started. It started with LS-Nikko Copper, which is actually a combination of two very huge entities out of South Korea and Japan. It's those fascinating countries around the world that have ESG and circular economy as part of their culture and DNA decades before us in America. One of the reasons I've seen is just geographic.

The geography and the size of these countries demanded that they get on the right side of ESG, circular economy, and sustainability very early in this process, decades ago. LS-Nikko Copper is the LG family, the Koo family from South Korea, in combination with Mico, which was the predecessor company for what became JX in Japan. JX is the Exxon Mobil of Japan, and also the largest metal mining company in Japan. Though that entity invested in us in 2010 for circular economy behavior, they were very early in the process because they wanted to do an offtake agreement exclusively for our printed circuit boards, which meant all the copper, precious metals, and lead.  Ours has been one of the most successful international relationships ever.

Soon thereafter, Alcoa’s Klaus Kleinfeld, who was then the CEO, and Kevin Anton, its first Chief Sustainability Officer, came to us on behalf of the iconic brand that we all grew up with invested in us similarly, took a minority stake, and a board position as well, to do the same thing with aluminum. Those collaborations were the bellwether moments that showed how the more we collaborate, the more successful we can be and grow.

We've made a network across America with small and large recyclers who are more regional based and want to provide their customers with our services but don't want to invest in the kind of technology, proprietary shredding technology, robots or AI, or even our tracking technology that we've invested tens of millions in over the last 17 years.  They want to be able to offer their constituency responsible recycling. We became the recyclers’ recycler, the back end for so many others all across America and that model works really well.

We also work hand in glove with the OEMs, and not only do we keep them on the right side of the EPR laws in 24 states across America, but we manage those programs for them. We also invite them into our facilities when they want to send their engineers in to see how to make their products more recyclable.  Sometimes they give us specific smelters to send metals or plastics to so they can specifically put these materials back into their new products. HP has done that with us, as well as Dell, Lenovo, and dozens of other OEMs. So, it's a very intimate relationship and partnership with these OEMs, on the EPR side to keep them on the right side of those laws across the United States, on the R&D side in terms of how to make products more recyclable, and then on the buyback side to put these back into the marketplace.

Elaborate on the recyclers’-recycler relationship with the smaller recyclers in localities in metropolitan Los Angeles, like Homeboy Recycling, and throughout the United States.

You and I both know Father Greg Boyle and the wonderful and great people from Homeboy Industries quite well, we're both very familiar with that story. We handle their back end here in California. They handle a lot of their remarketing and their resales of services right in Downtown LA, but their end-of-life stuff—the stuff that needs to be shredded and commoditized—they send to us. We're proud of those relationships, and those collaborations work.

You can't go it alone in this and think you're going to win the race anymore. You need to leave a seat at the table for all sorts of new collaborations, because you just don't know what's coming next, and you want to keep an open heart and an open perspective to all sorts of collaborations that weren't necessarily considered when we started this company in 2004. That's our culture—that's our DNA— the openness and willingness to bring new people and new partners on board so we create more transparency in our downstream. We provide the only collaboration opportunities that we know of in the world of electronic waste recycling, where the downstream is collapsed like we collapse it, and with the radical transparency we've created.

You've  been embraced by a number of national and international elected offficials, governors and others—you traveled with Gov. Schwarzenegger around the world. Elaborate on those collaborations and how some have evolved, both for ERI and for the countries, and sub-nationals that collaborate with you.

The truth is, the more we get the message out, the more we can change hearts and minds. The bottom line is that most people want to do the right thing, but they don't know what the right thing is until they're educated. People hold onto their electronics for self-preservation reasons because they don't want their search records or their own personal data or their banking records or Social Security records or HIPAA records to be breached and shared online, number one. So, it can be for personal preservation, but they also care about doing the right thing for the planet.

It doesn't matter what side of the aisle you sit in terms of Republican and Democrat or any other affiliation or party, we can all agree that we all want to drink clean water, breathe clean air and leave the world a better place than we were born into. So, once they understand the problem of e-waste and the arsenic, beryllium, lead, cadmium, mercury and other elements that can get into landfills and get into our ecosystem if mismanaged at products’ end of life, then they realize that all of it can be kept above ground and made into new commodities and put into beneficial reuse. Once people understand that, they become more proactive about doing the right thing. It truly comes from education. Some great people like Arnold Schwarzenegger, back then Governor Schwarzenegger, who gave me a platform to travel with him, and other leaders across the world who invited me to come speak on these issues, have created wonderful platforms so we could share this message of hope and of good practice and that we can leave the world a better place than we found it.

Pivoting to national policy, what should be the federal government’s role in regulating e-waste? And in California, what should policymakers consider to assist California in achieving its goals for e-waste diversion and recycling?

On a federal level, we've got to make it illegal to ship our old e-waste off our shores. Because without creating structure like that, these practices are still going to be done over and over again. Even though we're handling 20 million pounds or so a month, it's only the tip of the iceberg in this great country. And what's happened, and what we've learned from our friends and actually some of our clients at Homeland Security and the FBI is that back in 2001-2003, this e-waste was being shipped off our shores in containers to developing nations, such as Hong Kong, China, India. It was being done mostly for the recovery of precious metals in copper, which of course was bad because the carcasses were being burned there which was throwing off toxic and noxious fumes, and also human rights were being violated because children were being employed in this process, and they didn't have the right tools or protective equipment. That's a bad enough part of the story and that still goes on.

But switch over to 2012-13, when the FBI and Homeland Security started tracking these containers of e-waste and they no longer were just going to these nations. The highest bidders on these containers were now coming from the Middle East, and people who had adverse interests for data mining and compromising our Homeland Security were purchasing these containers, pulling the hard drives out and mining it for its data – including national security data. And then they were destroying the carcasses by throwing them into rivers, lakes, the desert, or whatever was closest to just destroy the carcasses that way. So this has become an issue not only for the environment, but a massive Homeland Security issue and so making it a crime to ship our old electronics off of our shores is essential.

Another solution would be banning batteries, solar panels and electronics from landfills on a national basis, because like I said only 25 states have some form of EPR landfill ban. Shame on us as a country in 2021 not to be banning this stuff from landfills all across the nation, number one, and then banning it from being shipped off our shores number two.

Going back to California, as imperfect as we are, California’s done electronics right. What was originally SB20 and then became morphed into SB20/SB50 has become one of the most successful, and I would argue probably the most successful, e-waste recycling program in the nation. California banned electronics from landfills here and created a marketplace system where the State manages the program out of the Department of Toxic Substances Control (DTSC) hybrid organization out of Sacramento, including the DTSC where every recycler and also every collector had to make a claim to the State as to what they were doing on a monthly basis, and they would get paid for the work that was approved by the State as deemed credible and legitimate recycling of these materials.

What came next was an advanced recycling fee model that charges consumers at the point of purchase a small fee for responsible recycling. The State collects the fees and then disperses the funds. Originally retailers argued that this was going to force out-of-state purchases to happen and make the consumers in California very disgruntled. But honestly, none of that ever materialized and it became a very successful program. And kudos to the state of California for managing the program in such a successful way. And in many ways, this could be used as a national paradigm that could have been followed.

 Next in line is “the last mile” of electroncs recycling: batteries and solar. The next thing they should do is ban lithium-ion batteries and batteries as a whole from ending up in landfills…and also solar panels. There's no reason this material should be going into landfills. There are credible recyclers that could recover the lithium-ion, cobalt, nickel and other precious materials out of these batteries when done correctly. I’d like to see these materials banned from landfills here in California. We can lead the way on this, because as California goes, so goes the nation.

Lastly, there's been much discussion globally, nationally, and in California about passing legislation that would extend producer responsibility to help close the e-waste loop. What are your thoughts on its necessity and value?

Well, it's either one or the other. It’s either advanced recycling fees or EPR (Extended Producer Responsibility). Either one is fine. We're successfully doing EPR in 23 or 24 states, and managing 80 OEM’s business in those states as well. We're happy to do it in California too, but it seems as though the advanced recycling fee model has also been effective. If they're going to add that on for other materials that aren't covered in the advanced recycling fee, that would be brilliant because the more stuff we keep above ground and responsibly recycle, the cleaner theour environment, and who doesn't want to leave the world a better place?

“Shame on us as a country—as a world economy—that we’re only responsibly recycling 17 percent of these electronics that make our personal and our professional lives more connected, and that we’ve failed to recognize the opportunity to do the right thing with them when they come to their end of life.”—John Shegerian