Setting a Fiscal Baseline for Regulatory Compliance

November 5, 2018 by Comerica Bank

Environmental regulatory compliance is both a challenge and opportunity for environmental services businesses. On one hand, organizations in the various segments of the waste management industry must be especially cautious about following best practices in how they handle and dispose of materials at all times or be at risk of significant negative attention. On the other hand, environmental standards also offer waste management businesses an opportunity to provide new services focused on making compliance easier for other businesses.

For example, a waste management organization operating in a region with many data centers may want to open a specialized e-waste management service to take advantage of the market opportunity. Similarly, a business in an industrial region may want to offer specialized solutions for chemical and industrial waste removal. These services can be invaluable, especially as the cost of non-compliance with environmental laws can be high.

Considering the costs of failure to maintain environmental compliance

Non-compliance with environmental standards can be personally costly, not just impactful at the business level. The Environmental Protection Agency has the power to enforce regulatory standards by punishing offenders in the form of civil and/or criminal trials. In major breach incidents, a business may be fined heavily for the incident, and leaders could be either fined or face criminal charges. These aren't just nominal charges either. The EPA recently released the results of its enforcement activities for the fiscal year 2017. During that period, the agency required environmental criminals to pay out $2.98 billion. This came in the form of fines, restitution, and mitigation. Total criminal sentencing during the year amounted to more than 150 years in jail.

Investing in the equipment, staff or technology you need to maintain compliance may seem expensive, but this move may pay off. The EPA isn't just interested in recouping funds based on damages and using criminal punishment as a deterrent. Instead, the agency is also committed to creating a level fiscal playing field as businesses strive for compliance. As such, the EPA searches for situations in which organizations may be failing to comply in order to gain a financial advantage and levy penalties accordingly.

Environmental services businesses can't afford to cut regulatory corners. They can capitalize on the scrutiny facing businesses across just about every sector to offer services that solve specific pain points. For example, proper disposal of hazardous waste materials represents a growing challenge as the EPA works to monitor safe handling across a material's entire lifecycle.

Looking at hazardous waste as an example of regulatory challenges

The Resource Conservation and Recovery Act covers the majority of hazardous waste issues, and any compliance audits will usually be performed by either the EPA or a state authority that works with the EPA. Inspections can involve anything from asking for material manifests to visiting a work site and evaluating the environment for signs of contamination or malpractice. For environmental services firms, it's important to recognize that the EPA inspects processes regarding handling, transportation, storage and disposal of hazardous materials.

Preparing to ramp up regulatory compliance

Building stronger environmental regulatory compliance practices can require significant financial investments. An environmental services firm could enact a variety of strategies, including:

  • Investing in state-of-the-art trucks and waste management equipment.
  • Purchasing real estate, constructing new facilities or renovating outdated buildings to support modernized operations.
  • Deploying modern information technology systems, including internet-of-things devices, to track materials and improve documentation.

These types of investments can dramatically improve compliance, but they come with costs. Comerica Bank can help. We're the Leading Bank for Business1 and will work closely with you to help you identify the best strategies and financing opportunities for your organization.

 

1Comerica ranks first nationally among the top 25 U.S. financial holding companies, based on commercial and industrial loans outstanding as a percentage of assets, as of June 30, 2018. Data provided by S&P Global Market Intelligence.

This information is provided for general awareness purposes only and is not intended to be relied upon as legal or compliance advice for your business.
 

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Waste Management Financial Planning for Commodity Risk

October 29, 2018 by Comerica Bank

Commodity prices can fluctuate substantially on an annual basis, making it difficult for waste management and recycling companies to accurately project revenues related to commodities and plan accordingly. The inherent risk in the commodity market can be a stumbling block to business growth and sustained innovation as a decline in a key commodity can severely reduce cash available to spend on equipment, facilities or workforce improvements. Managing risk is critical when engaging in the commodities market, and strong relationships with stakeholders, particularly public sector agencies, can be instrumental in weathering fluctuations in the sector.

The commodity risk situation

Commodity pricing is extremely dependent on supply and demand, and the rise in recycling can lead to a decline in demand for raw materials. As more environmental services firms have goods to sell to processing plants, the market value of those materials will decline. The U.S. Environmental Protection Agency performed a landmark study in 2015, covering historic costs of commodities across a variety of sectors. In general, the average cost of commodity declined substantially per ton over the research period. Significant annual fluctuations were common in the study. For example, HDPE, PET, and aluminum cans all experienced major price increases in 1995 and 2011 but then declined quickly from 1995 to 1996 and again from 2008 to 2009. These kinds of rapid changes must be accounted for in waste management and environmental services business models, especially as political decisions and similar macroeconomic issues can also have a major impact on the market.

For example, a Seeking Alpha report explained that a ban on importing 24 types of recyclables and solid waste in China led to lower commodity prices throughout 2018. The rule went into effect in January 2018 and was specifically aimed at limiting paper and plastic importation from North America, though the legislation had a global impact. This type of measure led to significant changes in commodity pricing and can be disruptive in the sector, leading businesses to rethink their export strategies, invest in local recycling facilities or otherwise adapt to the new industry dynamics.

Responding to commodity risk

Preparing for cost fluctuation is critical when it comes to commodities, and many recycling companies have stayed afloat by strengthening their position in the broad waste management landscape. According to IbisWorld, revenues in the recycling facilities market have been tepid, with revenue only increased slightly in 2018, reaching $6 billion. Declining commodity prices have been a primary limiting factor to growth. However, public interest in recycling has led to significant investment in the practice among state and local governments, creating stability at a time when commodity prices are proving problematic.

Fostering stronger relationships with key stakeholders can go a long way in dealing with commodity risk. To illustrate this, a Let's Recycle report detailed how a workshop held by industry leader SUEZ addressed commodity risk. The workshop was held largely in response to the new policies out of China. While the waste management firm itself was prepared to deal with the change in prices, it realized that its public sector partners wouldn't necessarily handle the situation as smoothly and held the small conference specifically to inform agencies it works with on how to tackle the commodity situation effectively.

While SUEZ was tackling this issue from a UK-focused perspective, its activities serve as a key example of how to handle commodities risk. With the public sector embracing recycling in response to consumer demand, service advances aimed at municipal markets can go a long way in fostering value creation.

Enacting new strategies to withstand commodity risk requires capital, and that's where Comerica Bank can help. We offer specialized lending options aimed at environmental services and can support organizations as they work to adapt to the ever-changing market while sustaining innovation.

 

Comerica ranks first nationally among the top 25 U.S. financial holding companies, based on commercial and industrial loans outstanding as a percentage of assets, as of June 30, 2018. Data provided by S&P Global Market Intelligence.

This information is provided for general awareness purposes only and is not intended to be relied upon as legal or compliance advice for your business.

 

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Environmental Service Innovation: Equipment Leasing and Financing

October 23, 2018 by Comerica Bank

Environmental services businesses are facing a period of tumultuous growth as emerging technologies and a widespread move to sustainability create demand for innovation. Waste management and recycling organizations trying to adapt to emerging requirements often find themselves in a difficult position as significant changes require new equipment, vehicles, and even facility investments. Mid-sized businesses hoping to keep up with larger competitors have an opportunity to use innovative equipment to stand apart, and strategic funding can go a long way in making that possible.

While spending heavily on new equipment can seem daunting, organizations can't afford to miss out on the opportunity to advance their capabilities as the industry goes through a period of rapid change.

Innovation ahead in environmental services

Change is afoot for environmental services firms, as even public sector groups are prioritizing spending in the sector to drive progress. According to an Onvia study on state and local government procurement, year-over-year spending increased 5.5 percent during the fourth quarter of 2017. While a variety of operational areas benefited from this increase, the environmental services segment experienced some of the fastest spending growth.
Investing in waste management and environmental services is occurring at a time when many organizations are facing demand to become more sustainable and efficient in how they operate. With commercial, industrial and consumer groups embracing green practices, waste management companies have an opportunity to expand their service offerings. In practical terms, this puts pressure on environmental services businesses to:

  • Become more efficient and sustainable in their own practices.
  • Expand services to incorporate handling a wider range of waste types.
  • Deploy equipment designed to process varied materials and support emerging operational strategies.

Smart solutions, dubbed as intelligent because of their ability to connect to networks, allow environmental services businesses to modernize their operations around data-driven processes. As such, organizations increasingly find themselves blending equipment investments that promote sustainability with those that allow for smart solution use, bringing about rapid change. In fact, the market for smart equipment is gaining momentum quickly.

Smart equipment in environmental services

A Technavio study found that the global smart waste management market will expand quickly, achieving a compound annual growth rate of 18 percent for the 2018 to 2022 period. Key factors shaping the industry include:

  • Rapid innovation in waste collection, which took 62 percent of the smart equipment market share in 2017.
  • A move into waste processing, as investments in this segment will outpace those in landfills.
  • A growing emphasis on operational efficiency across the entire waste management life cycle.

Key technologies emerging as firms embrace smart equipment include driver-assistance solutions and autonomous vehicles, embedded systems focused on real-time data delivery, artificial intelligence and the industrial internet of things.
Environmental services firms are embracing new technologies and equipment, and funding can help mid-sized firms advance their initiatives and fuel industry progress.

Using financing to bolster equipment innovation

Smart equipment is designed to fuel efficiency and sustainability gains, creating opportunities to drive return on investment from strategic spending. As such, finding initial capital to support equipment purchases can go a long way toward creating consistent profitability. Comerica can position organizations to take advantage of this opportunity through financing that emphasizes lending for equipment leasing and specialized options for environmental services firms.

With change happening quickly in the sector, organizations can't afford to sit back and wait to see how the market unfolds. At Comerica Bank, we work closely with our clients to understand their business needs and become a key part in their growth. Our loan options can help you position your business for the future, and it’s a big reason why we're considered the Leading Bank for Business1.

 

1Comerica ranks first nationally among the top 25 U.S. financial holding companies, based on commercial and industrial loans outstanding as a percentage of assets, as of June 30, 2018. Data provided by S&P Global Market Intelligence.

This information is provided for general awareness purposes only and is not intended to be relied upon as legal or compliance advice for your business.
 

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How IoT is Leading the Way in Smart Recycling and Waste Management

October 22, 2018 by Comerica Bank

Internet of things technologies promise a transformative impact on a wide range of industries, and the recycling and waste management sectors won't be left out. Widespread access to connected sensors, monitoring devices and similar solutions can empower organizations to gather more information from real-world environments and develop new operational strategies that drive efficiency and position organizations to enact more sustainable, cost-effective practices. However, transitioning to a smart recycling or waste management operation relies on strategic IT investments that lay the groundwork for far-reaching progress.

How IoT is disrupting recycling and waste management

Consider typical operating procedures in recycling and waste management. Organizations track consumption patterns in their service areas based on historical patterns, identify their availability to collect materials and schedule their operations accordingly. This general practice follows across the industry, from municipal waste management teams to specialized companies that focus on commercial and industrial markets. Smart recycling and waste management could turn this model on its head, giving organizations real-time visibility into the status of collection receptacles so they can avoid unnecessary pickups and optimize operations. IoT solutions are making this possible.

According to a Waste360 report, IoT projects are already taking shape in the form of waste and recycling containers that use radio-frequency identification technology to allow haulers to track assets in the field. This ensures that garbage and recycling bins don't go missing. The news source also highlighted sensors that alert teams to how full containers are, and even vehicles that connect to the internet to access and transmit telematics data are becoming popular.

When combined, these types of technologies add a critical layer of intelligence to operations, giving organizations real-time data updates that allow them to become more responsive to the needs of their customers and less reliant on projections and similar estimates.

Operational gains aren't the only advantage of IoT-enabled recycling and waste management solutions. The ability to embed connected technologies into receptacles is also allowing for the use of artificial intelligence, machine learning, and cameras to eliminate some long-standing problems in the recycling industry. Smithsonian reported that emerging recycling bins using computer vision can process the type of material placed in the container and automatically sort it. This simultaneously eliminates human error and makes it much easier for downstream recycling centers to process goods.

Connected technologies hold a great deal of potential for the recycling and waste management sectors, but organizations must also weigh the costs of adopting such a program.

Considering costs, benefits of smart recycling and waste management

Deploying an IoT-based recycling and waste management strategy can come with significant upfront costs, including:

  • New vehicles or significant equipment to enable telematics in vehicles.
  • Replacement bins and containers across the service area.
  • Software and mobile apps to support end-user operations.
  • Wireless network access points, RFID scanners or similar solutions to provide connectivity in key locations.
  • Customer-facing applications and services that allow them to interact with systems when appropriate.

The costs can add up quickly when rolling out new solutions, and many organizations will take a piecemeal approach to IoT projects, deploying specific solutions when operational pain points and budget availability happen to align. However, waste management ecosystems that employ fully intelligent recycling present opportunities for large investments to pay off. Smart technologies allow organizations to:

  • Optimize the workforce by ensuring employees are working on the best tasks possible at a given time.
  • Eliminate unnecessary trash and recycling collection.
  • Improve routing for vehicles.
  • Respond to unexpected needs with less disruption.
  • Develop a stronger awareness of community needs to better align day-to-day strategies with operational realities.

The recycling industry is changing, and environmental services firms can use strategic funding to keep up. As the Leading Bank for Business1, Comerica Bank is committed to connecting clients with the best loan options for their needs, helping them drive growth while minimizing risk.

1Comerica ranks first nationally among the top 25 U.S. financial holding companies, based on commercial and industrial loans outstanding as a percentage of assets, as of June 30, 2018. Data provided by S&P Global Market Intelligence.

This information is provided for general awareness purposes only and is not intended to be relied upon as legal or compliance advice for your business.
 

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How to Capitalize on the Integrated Waste Management Model

October 15, 2018 by Comerica Bank

Integrated waste management solutions are designed to take a holistic approach to handle a wide range of waste types within a community. These strategies have emerged in response to sustainability strategies focused on handling waste disposal, recycling and similar processes in the most efficient, environmentally friendly way possible. While sustainability has served as a catalyst for integrated waste management, the practice has become a key component in modernizing waste management business models.

What is integrated waste management?

Integrated waste management programs are designed to account for the wide range of waste materials created within a service area and develop strategies to properly collect and dispose of such items. In practice, this often means developing tactics to blend traditional trash collection with recycling, disposal of large household goods, handling of e-waste and managing hazardous material collection. Organizations taking on such a broad strategy must carefully define how they will serve their operational areas and invest in the equipment, personnel and business partnerships needed to support best practices.

For example, a large waste management business with multiple landfills may need to partner with both a recycling facility and an e-waste disposal specialist and will probably need new collection vehicles to handle those forms of waste.
The importance of a holistic approach to waste management is particularly evident when it comes to industrial waste, as the EPA emphasizes the need to properly manage a variety of material types and ensure regulatory compliance. This involves establishing an integrated model of handling waste in a variety of settings, ensuring proper collection, transportation, and storage across the entire waste life cycle. These strategies are designed to protect human health, adapt management practices relative to the risk of the materials and safeguard the environment.

An integrated waste management process requires a blend of holistic processes and strategic partnerships that allow stakeholders to work closely in providing a wide range of services needed to handle waste effectively.

This isn't a comprehensive look at what the EPA advises, but it highlights just how large-scale and disruptive integrated waste management can be. The practice is redefining modern waste management capabilities, but it comes with the significant demand for change.

What does integrated waste management look like?

In practice, an integrated waste management program will often incorporate discrete disposal services combined with strategic partnerships that allow an organization to handle a wide range of procedures that it may not be equipped to support on its own. Regardless of these details, however, programs will almost universally take a holistic approach to handling as many types of waste as possible. For example, The Ventura County Public Works Department provided a detailed look at its dedicated Integrated Waste Management Division and showcased the group's goal of reducing waste and promoting sustainability. Services offered by this municipal division include:

  • Residential trash collection.
  • Residential recycling reaching unincorporated areas.
  • Household and business hazardous waste disposal.
  • Management for construction and demolition debris.
  • Used oil recycling.
  • Business recycling and waste management.
  • Development of the local recycling market.

These tactics show a mix of general waste management services and a move to improve best practices in the region through development and reaching unincorporated regions. Applying this type of strategy in a municipal or private waste management setup requires a combination of well-defined strategy and adequate support via funding.

Funding an integrated waste management plan

Corporate sustainability is a major component of an integrated waste management strategy, but sustaining innovation isn't just about environmental goals; it also involves finding capital to support new projects that empower organizations to consistently operate at their best. In waste management, this often means developing funding strategies for everything from new equipment and facilities to strategic business partnerships. As an organization committed to sustainability, we track our green loans made to inherently green companies and projects, as well as loans where the majority of the funding is being used to achieve an environmentally beneficial purpose. We have been recognized as the Leading Bank for Business1 and would love to meet with you to discuss how we can help your organization ramp up its integrated waste management plans.

 

1Comerica ranks first nationally among the top 25 U.S. financial holding companies, based on commercial and industrial loans outstanding as a percentage of assets, as of June 30, 2018. Data provided by S&P Global Market Intelligence.


This information is provided for general awareness purposes only and is not intended to be relied upon as legal or compliance advice for your business.

 

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