Retailers threaten to remove products from shops over recycling scheme

Retailers have told the Scottish Government they may remove some of their products from shops if Scotland introduces a scheme for recycling drinks containers.

Internal emails obtained by The Ferret reveal that the Scottish Retail Consortium warned ministers that the costs of implementing a scheme in Scotland without the rest of the UK would make certain goods “unviable”.

The revelation has prompted accusations that retailers were trying to dodge responsibility for what they sell. Ministers were urged to “stand strong” and press ahead with the scheme despite industry objections.

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The Scottish Government is currently consulting on how to implement a deposit return scheme (DRS) in which consumers would pay a 20p deposit on drinks in metal cans as well as in plastic and glass bottles.

After using the product, customers would be able to get their 2op deposit back by returning the can or bottle to the till, or into a reverse vending machine.

These machines will be placed in shops, schools and community hubs and the government hopes the scheme will be up and running by 2021.

Retailers like Asda and drinks producers such as AG Barr and Highland Spring have lobbied against the scheme for some time, as has the Federation of Small Businesses and the Scottish Retail Consortium (SRC).

Emails released under freedom of information law show the SRC’s head of policy and external affairs, Ewan Macdonald-Russell, told Scottish civil servants in December 2018 that his members may withdraw their products from Scottish shop shelves if the DRS went ahead.

Macdonald-Russell said SRC’s members were “very concerned” that a Scotland-only scheme would increase the costs of labelling and impact on warehouse space and staff time. Members include nine of the ten biggest supermarkets – all but Tesco.

He added: “A number of members suggested the costs would make a number of product ranges unviable in Scotland – with the extra costs far outweighing any profits. Consequently some ranges would continue, some would be removed, and other materials might also be considered.”

In May 2019 the SRC made a similar statement publicly, claiming a Scotland-only scheme “will impose enormous costs on retailers and producers, and could even place a question mark over the economic viability of selling some products north and south of the border”.

The Scottish Greens criticised big business for continuing to lobby against the deposit return scheme. “They see it as an inconvenience that will eat away at their vast profit margins,” said the party’s environment spokesperson, Mark Ruskell MSP.

He called on the government to resist the lobbying. “Plastic is choking the planet and even making its way into our food chain,” he added.

“Scotland can lead the way on tackling this, but we can’t afford to wait for industry to come round to the idea. We need courage not capitulation.”

John Mayhew, director of the Association for the Protection of Rural Scotland, which campaigns in favour of the DRS, said: “It’s no surprise to see that, while the Scottish Government were finalising the shape of our future deposit return system, some industry voices were still trying to argue against producers taking responsibility for what they sell.”

Deposit return schemes are already in place in countries like Germany, the Netherlands, Iceland, Croatia, Israel Lithuania, Estonia and parts of the US, Australia and Canada.

Kerttu-Lina Urke is a spokesperson for Eesti Pandapakend, which implements Estonia’s DRS. She said that, before the scheme was introduced in 2005, Estonian industry lobbied against it.

“There were a lot of fights between the politicians who made the law and the producers. We even had some problems with the retailers, but in the end they just got the agreement and they started to co-operate with each other,” she told The Ferret.

Urke argued that in Estonia the scheme increased costs for retailers and producers but the environmental benefits outweighed the costs. “When we sell ten bottles, nine will come back through the system because the money motivates people to return their bottles,” she said.

According to Urke, no products ceased being sold in Estonia because of the scheme. Estonia’s population is four times smaller than Scotland’s and its neighbours, Latvia and Russia, do not have deposit return schemes.

Ewan MacDonald-Russell said that as a member of the government’s implementation advisory group, the SRC’s role is to “explain the impact” of the DRS design to the government.

“Retailers are very concerned about the consequences of the system design proposed by the Scottish Government,” he told The Ferret.

“The decision to include glass will add an estimated £50 million per year, whilst we know that running a separate Scottish system will add immense cost and complexity – costs which ultimately will be paid by for by consumers through higher prices.”

MacDonald-Russell added: “Those decisions will force retailers to carefully consider their Scottish operations. It’s quite conceivable one response by retailers could be to consider product range if the system incentivises that approach.

“However, it’s far too early for us to understand what decisions retailers will take, not least as the Scottish Government is yet to publish the draft regulations.”

Environmentalists have welcomed the Scottish Government’s decision to include glass in the scheme. “We were pleased that ministers decided that industry, rather than taxpayers, should pick up the cost of collecting and recycling glass drinks containers,” said Mayhew from the Association for the Protection of Rural Scotland.

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A Scottish Government spokesperson said: “We believe Scotland’s deposit return scheme can help us recycle more than 90 per cent of single-use drinks containers placed on the market, which is well in excess of what is being recovered through existing collection arrangements.

“Deposit return is not only an effective way of increasing recycling rates and preventing drinks containers from ending up as litter, but it is also an economic opportunity to secure a new source of high quality material, develop our recycling infrastructure, increase the prospect of people returning to stores – and thereby increasing trade and creating jobs.