Strengthening Recycling Value Chains: Petco’s Inclusive Employment Practices Support Environmental & Social Goals Corporate priorities, government policies, and public demand are driving companies across the world to improve their environmental and social footprint. In South Africa, the Petco Producer Responsibility Organisation NPC is scaling up the recycling of plastics, while improving livelihoods for waste pickers and reducing stigma. The Challenge Benefits for Business Petco is a collective organization set up and owned by members, such as Coca-Cola, Unilever, and PepsiCo, to fulfill their extended producer responsibility (EPR) obligations in South Africa, by taking From 2004 to 2021, volumes of accountability for their products throughout their entire life cycle. collected PET waste rose 1700%. EPR schemes are becoming common worldwide, and South Africa’s At the individual level, collection Human Capital grew three-fold. scheme is mandated by legislation. However, in the early 2000s, low Performance prices, insufficient market demand, and limited consumer interest in recycling provided little incentive for waste pickers to collect PET waste. Additionally, waste picking was—and remains—heavily Labor supply and stigmatized. collection capacity increased. In 2022, Inclusive Employment Solutions 66% of PET from Petco members Supply in South Africa was collected for Chain Resilience recycling. Participation Provision of gloves, safety glasses, and protective equipment. Training on safe collection methods. Petco members can better meet Targeted recruitment to identify candidates with sustainability and recycling targets. Reputation & Risk disabilities for ‘learnerships’ at Petco’s recycling Management partners. Advancement Training and capacity building to help self- Benefits for workers employed waste pickers build their own buy- back centers and small businesses. While very few waste pickers were collecting PET in the early 2000s, this now provides livelihoods for an estimated Resilience 52,000 people in South Africa and generated over $186,000 in earnings for waste pickers in 2021. Increased demand Raises awareness on how to access state contributed to a nine-fold rise in payments per kilogram benefits. Supported waste pickers during of waste. After training, several individuals who ran home- COVID-19 lockdowns. based collections now manage large warehouses. Empowerment Public campaigns on the value of waste picking. Provision of unforms and badges to build recognition. Transparent payments. Supports self-organization of informal workers. 1 Strengthening Recycling Value Chains: Petco’s Inclusive Employment Practices Support Environmental & Social Goals Industry: Collection and recycling Structure: A Producer Responsibility Organisation (PRO) operating in a mandatory extended producer responsibility environment with 28 members, including Coca-Cola, Unilever, PepsiCo, plastics manufacturer Safripol, and retailer Pick n Pay. Petco is committed to driving change towards a circular economy in South Africa’s packaging industry. Petco drives recycling activities, unlocking the collection and recycling value chain, guiding product design, stimulating end-use markets for recycled material, carrying out education and awareness initiatives and building local infrastructure and capacity. Base of the pyramid workforce: Petco uses member funds to invest in recycling infrastructure and pay recyclers who purchase post-consumer polyethylene terephthalate (PET) typically used in plastic bottles and containers and Liquid Board Packaging (LBP) from waste pickers and buy-back centres. Petco estimates around 52,600 informal waste pickers supply South African recyclers, of which 38% are women. 2 Strengthening Recycling Value Chains: Petco’s Inclusive Employment Practices Support Environmental & Social Goals How Petco Puts Inclusive Employment Solutions into Practice Petco took a value chain approach to make PET collection more attractive by developing the consumer market for recycled content and improving recycling infrastructure, while also supporting fairer prices and better working conditions for waste pickers. Participation: Reduce entry barriers Petco learned that waste pickers were reluctant to spend their mobile data consulting websites, so in 2020 it built a free WhatsApp platform to provide access to crucial industry information, to enable more efficient collection, and to promote knowledge sharing among these informal workers (see Figure 1). The platform also serves as a communication tool for Petco, and it can also use data generated from the quiz function to identify knowledge gaps among waste pickers and tailor training. The total number of users of Petco’s WhatsApp for Business platform grew from just 48 in 2020 to 9,189 in 2022. Over 60,000 interactions were recorded in 2021, with waste pickers most often requesting information on starting a recycling business and locations of nearby buy-back centers. Participation: Ensure safe working conditions Improving safety for workers at the base of the pyramid not only supports workers’ health and well-being, it also Figure 1: Petco WhatsApp for Business platform enables their ongoing participation in employment. Recognizing the hazards involved in waste picking, Petco provides basic protective equipment such as bags, gloves, safety glasses, and masks, as well Advancement: Build capacity for as training for informal waste pickers on safe collection methods. self-employment Petco also conducts site visits to identify ways to grow the collector Petco works with local authorities and stakeholders, base and volume of material collected. It sponsors the provision of including buy-back centers, recyclers, and waste pickers’ organizations, infrastructure and equipment to support individual waste pickers, to identify and invite waste pickers to recycling workshops that as well as micro, small and medium-sized enterprises (MSMEs), provide basic training on sorting and separation. A total of 77 recycling co-operatives and community-based organizations.2 The company workshops were conducted from 2019 to 2021, reaching 3,446 attendees, provided 182 collection projects with bailing, weighing, storage, at least 37 percent of whom were women. transportation, protection, and other equipment in 2019-2021. Following recycling workshops, waste pickers may be invited to A third of these projects were led by women. attend further accredited training organized and sponsored by Petco, with a view to helping them build sustainable small businesses, such as buy-back centers. Courses run for one to three days and include business training and basic mathematics. A total of 486 waste pickers have taken part in 14 accredited training sessions over the past three years, of which 53 percent were women and 6 percent were persons with disabilities. 3 Strengthening Recycling Value Chains: Petco’s Inclusive Employment Practices Support Environmental & Social Goals Supporting and monitoring inclusion Empowerment: Recognize value of work Petco supports skills development for youth with intellectual Petco supports initiatives that raise awareness of disabilities who face particular barriers in accessing education the value of waste pickers work in order to address social stigma and employment. It does this by sponsoring year-long disability that acts as a barrier to recycling. In 2019, Petco and other private learnerships with its recycling partners. Beneficiaries of these sector actors partnered with the African Reclaimers Organization work-based learning programs are identified by a specialist (ARO) to pilot a recycling program connecting consumers and service provider. So far five of seven participants secured waste pickers in two Johannesburg suburbs. Residents were permanent employment with Petco member companies. encouraged to separate their recyclables, which were subsequently Petco collects gender, age and disability-disaggregated data collected by ARO’s waste pickers. on beneficiaries of training and other support to ensure the The project contributed to greater community support for inclusion of particularly marginalised groups. recycling, with 66 percent of participating waste pickers reporting an increase in the number of households they collect from. Greater household participation in recycling enabled greater earnings as waste pickers were able to collect from more households per visit, as well as more frequently. There was also a positive impact on Resilience: Improve access to benefits community attitudes towards waste pickers, with over 90 percent of participating residents stating they supported allowing waste Petco collaborated with its recycling partners and pickers to collect recyclables, and more than 80 percent believed other producer responsibility organizations to support waste pickers waste pickers should be paid for their work.3 Petco also provides who were unable to work during COVID-19 lockdowns. It distributed waste pickers with branded bags, bins, uniforms, and equipment, food vouchers to almost 4,000 collectors and their families, and and supports the provision of identity cards for ARO members. donated face shields, N95 masks, hand sanitizer, and blankets to waste This helps waste pickers access local neighborhoods. In addition, pickers. The company also shared information about how to access state awareness-raising campaigns are conducted via billboards social support with informal sector stakeholders and small to medium sized media to educate consumers about the value of waste pickers’ enterprises (SMEs). work and to inspire others to start their own collection businesses. Empowerment: Provide fair and clear terms of work Empowerment: Support self-organization of informal workers To promote transparency in the sector, Petco Waste picker organizations such as ARO and the works with buy-back centers to support the adoption of the BanQu South African Waste Pickers Association (SAWPA) have been tech platform. The platform allows centers to record and track instrumental in educating consumers about recycling, as well their recycling transactions with waste pickers. At the same time, as in advocating for better working conditions for waste pickers individual waste pickers are provided with a permanent digital through local-level engagement with municipalities. Petco assists record of their earnings which can be used to access credit, which ARO by providing enterprise development support and paying for is particularly important given that informal workers are largely mobile data to enable ARO representatives to join online meetings. unbanked. The platform has been introduced at 38 buy-back centers, covering over 2,400 waste pickers, with Petco aiming to register 100 centers and 10,000 waste pickers by the end of 2022. “Petco’s contributions have absolutely had an impact on the destigmatization of reclaimers. Just wearing a recognizable uniform makes a world of difference in terms of how people view you. Uniforms help identify reclaimers as people who are at work, as opposed to criminals.” Eli Kodisang, African Reclaimers Organization 4 Strengthening Recycling Value Chains: Petco’s Inclusive Employment Practices Support Environmental & Social Goals The Benefits for Business: Petco’s Experience Petco’s efforts to expand collection and advance better working conditions have increased the quantity and quality of material “To succeed as a company, we need to address the supplied to its recycling partners, thereby helping to meet its whole value chain, including collectors working at collection and recycling goals and ensure members’ compliance with the very beginning of the value chain. They collect South African legislation. 60 to 70 percent of recyclables, so, as a company, we cannot grow if we leave them out.” Supply Chain Resilience Belinda Booker, Collections and Training Manager, Petco Petco’s use of inclusive employment practices helped to increase collection capacity across South Africa, a key challenge for the PET industry, particularly in rural areas where collections are limited. While few waste pickers were collecting post-consumer PET Reputation and risk management material in the early 2000s, it is estimated that the informal collection Petco’s practices to support waste pickers enable of PET material now provides livelihoods for over 52,000 people.4 its members to meet their sustainability and recycling goals, As demand for recycled products increased, so did prices. Petco says helping mitigate the reputational risks associated with PET the average price per kilogram of collected PET waste rose nine-fold, production. For numerous members like Safripol, supporting from $0.03 per kilogram in 2004 to $0.30 in 2020. In turn, higher under-served communities within the recycling value chain aligns prices incentivized more waste pickers to engage in PET collection, with their corporate values.5 Another member, Coca-Cola, has and the volume of PET material collected rose from less than 5,000 sought to replicate Petco’s model beyond South Africa as part tons in 2004 to over 83,000 tons in 2022. In addition, the share of of its corporate sustainability strategy, World Without Waste.6 PET material collected for recycling grew from 16 percent in 2005 to Petco’s members are now particularly well-placed to comply with 69 percent in 2022, while 66 percent of PET packaging placed on the South Africa’s new mandatory EPR requirements, and to integrate South African market by Petco members was collected for recycling. informal waste pickers into the post-consumer collection value chain. Human capital performance Waste picker training and consumer education campaigns have resulted in greater separation of recyclables at the source, including at the household level. This allows waste pickers to spend less time separating and more time collecting, positively impacting their earnings. In addition, work to de-stigmatize waste picking means that waste pickers are increasingly allowed to access gated communities for collection. Some communities have even allocated specific days for collection, meaning that waste pickers who previously may have had only 30 minutes to sort recyclables can now do so over two days. As a result of these efforts Petco reports collection rates have grown threefold at the individual level. 5 Strengthening Recycling Value Chains: Petco’s Inclusive Employment Practices Support Environmental & Social Goals Endnotes & Sources Company data was provided by Petco, and interviews conducted with company representatives in February and March 2022, and with the South African Waste Pickers Association (SAWPA) and African Reclaimers Organization (ARO) in March 2022. Additional sources include: 1 Petco. nd. How Is PET Recycled? What Does the Growth of PET Recycling in South Africa Look Like? https://Petco.co.za/how-is-pet-recycled/ 2 Petco. 2020a. Review of Petco Activities 2019. https://Petco.co.za/wp-content/uploads/2020/07/Petco-2019-Annual-Review_FINAL.pdf 3 Petco. 2020b. Unique Pilot Programme Boost for Recycling Sector Reeling From the Covid-19 Lockdown. (1 June 2020). https://Petco.co.za/unique-recycling-programme-a-boost-for-informal-sector/ 4 Petco. 2021. Review of Petco Activities 2020. https://Petco.co.za/wp-content/uploads/2021/07/Petco-2020-Annual-Review_FINAL.pdf 5 Naik, Sameer. 2020. “SA waste picker’s recycling project receives national acclaim” (20 December 2020). IOL. https://www.iol.co.za/saturday-star/news/sa-waste-pickers-recycling-project-receives- national-acclaim-0903b58e-7ab4-4a06-ae5f-102ccaaa83e8 6 The Coca-Cola Company. 2018. “Progress Against a World Without Waste” (10 September 2018). https://www.coca-colacompany.com/news/progress-against-a-world-without-waste IN PARTNERSHIP WITH 6 Strengthening Recycling Value Chains: Petco’s Inclusive Employment Practices Support Environmental & Social Goals