OI Glass CSO Randy Burns // Shifting to a Circular Economy in the Great Lakes Region

Thank you, Laura, and good afternoon. I'm honored to be here today, and I'm really excited to share with you some intentionally provocative thoughts about how we create circularity in this region. Now, if you're sitting there in your Zoom shirt and shorts, anxious to hear a rousing talk on environmentalism or maybe an uplifting sermon on recycling, you're probably going to get that today. Okay, this is a TED-style talk after all. Instead, I hope to keep your attention by accusing all of you, and most people in general, of having an unconscious bias that is getting in the way of our desired progress on circular economy issues. And I call this unconscious bias 'nudge blindness.' But before I get into the accusations, maybe I should soften you up first with some details about glass and my company. As Laura said, O-I is the world's largest manufacturer of glass food and beverage containers. My company invented the mass bottle-making machine over 100 years ago, so we have a lot of expertise in this space. Glass is made of four natural, virtually inert ingredients: sand, soda ash, limestone, and of course, recycled glass. It doesn't affect the taste of what's put inside, and it's impermeable. Glass is also infinitely recyclable. The same bottle can be remade into itself indefinitely without a loss of material or quality. And even if it's not recycled, it won't hurt the environment. Mother Nature, while it may take time, will eventually recycle it. Recycled glass is also not sent overseas and never has been. It is not impacted by any of the Chinese decisions about our recycled products that we were shipping over. It is a domestic resource that's used for domestic uses right here, and it's also used close to where it's recycled to make new containers. And that's true right here in the Great Lakes region, where my company makes bottles in Indiana, Ohio, Pennsylvania, New York, Quebec, and Ontario. Around 80% of containers that are recycled are used to make new glass containers, not some other down-cycle product. So with that, didn't I just describe an already very circular product with circularity potential that's really unmatched by practically any other container that is also widely made right here in the Great Lakes region? Well, I think I did. Well, if that's true, why are we not doubling down on this potential? And instead, why are we removing it from recycling systems, undermining its current circularity and the potential future circularity that it has? Why? It's the same reason we can't recycle plastic efficiently. It's the same reason we landfill enormous quantities of all kinds of recyclables. And it's actually the same reason you probably did not unsubscribe from your free 30-day trial of Netflix at the end of the trial period. It's because we all suffer from the unconscious bias I mentioned at the start, which I said is nudge blindness. And if you think you missed something or maybe think you had a Rick Perry moment because you have no idea what a nudge is or what I'm talking about, don't worry. I've told you, but I'm about to, because that's what the rest of my comments are about. Nudge is a term coined by a Nobel Prize-winning behavioral economist named Richard Thaler from the University of Chicago. He won this prize for writing a book that identified and described a powerful and effective force on human decision-making, one that is largely unconscious and unseen. And he called this force a nudge. And if you'll allow me a minute, I need to give you a little bit more background. Thaler's work shows that humans love the status quo. We're hardwired that way. We value avoiding loss, risk, or effort more than we value an equally sized benefit that requires a risk of loss or effort as part of the decision, especially when that benefit is a long-term one like saving for retirement. Because of our status quo wiring, if the mind sees effort, cost, or loss associated with the decision, it usually defaults to an action. The breakthrough that won Thaler the Nobel Prize is the observation that if you construct a decision-making architecture that camouflages from the mind the cost, risk, or effort associated with the choice, people are vastly more likely to make the choice. He called these powerful invisible motivators 'nudges.' Now you probably want some examples, don't you? Well, the best and the most powerful one is participation by default. The example I gave you to lead off: by default, you start paying for Netflix after the free trial. It requires no action. Or Apple News for that matter, or Amazon Prime. The reality is, because of our hardwiring for the status quo, we are far less likely to unsubscribe if it requires effort. Similarly, we are far less likely to affirmatively act to sign up after the trial period if that requires effort. The nudge therefore is sign up by default, with unsubscribing requiring the effort. And as you all are probably thinking, boy, that works like a charm, because it does. Some of your employers probably use this to cause you to opt into the savings. You're saving your cost-of-living raises for retirement. If you're in that program by default, it's very unlikely you'll opt out for reasons I just described. However, the participation rate will be considerably lower if you're required to opt in. And this is where Thaler's work has the most impact: encouraging retirement savings. Imagine how this plays in healthcare or the things that we're trying to encourage here in circular economy discussions. You want some more examples? How about rebates that you have to apply for to get them? That nudge, of course, is not to apply, right? And you'll love this: on Facebook, right? So Facebook, for free, you receive the service, but it requires you to fill out an enormous amount of personal information to do that. You'd never do that if it required the effort, right? Another example: how about the arrangement of the grocery store? You ever wonder why meat, dairy, and bread are always on opposite sides and in the back? What about those displays you encounter along the way? You think more of the high-margin stuff is on the inside of the store or the outside of the store? Let's talk about that $4.99 pre-cooked Costco chicken that's all the way in the back with the meat and the dairy. And what about all those free samples that you get walking to and from that? These are all nudges to get you to walk through the entire grocery store and buy things that you didn't intend to buy, and preferably the high-margin ones. And let's not forget the National Enquirer magazine rack, ChapStick, and beef jerky at the checkout. All nudges. Grocery store coupons? You decide. These nudges, whether placed there intentionally or not, are all over our society. Thaler did not create them; he just described them. And one of the reasons they work is because most of us are, as I said, nudge blind. We don't see or understand them, and that's particularly true of their effect. But once you do, their existence and effects are obvious. And here's the kicker: even when you do see them and understand them, they are so powerful sometimes they're impossible to resist. Go see the Netflix example. And that's undoubtedly why Thaler won the Nobel Prize for this work. So lesson number one: if we want to create and encourage circularity in something, we need to understand the existing nudges, and we need to understand if they nudge away from circularity. And if they do, we need to do something about that, either by removing them or by removing and replacing them with circularity nudges. So let's drill down on this and talk about some of the existing nudges that I propose are present in our recycling systems, because that's what a lot of us are here to think and talk about. At some level, let's take single-stream household recycling. By encouraging co-mingling and encouraging the view that everything is of the same value, and by the way, right next to the garbage can, are we nudging towards creating valuable streams of commodities that we can take back and reuse easily? Or are we nudging for more convenience and difference or single use? Our national recycling rate in the US has hovered in the mid-30% for years, including glass. Why? Single stream nudges for convenience, co-mingling, and contamination, not source separation or value preservation. In the consumer's eye, using a single-stream bin is closer to using the garbage than sorting for reuse and recovery. And we have hard evidence that this co-mingling and source contamination nudge undermines recovery rates and circularity. We have hard evidence. There's a place in a system that recovers beverage containers at the rate of 90%. Where is that? You're probably thinking, 'Oh Lord, here we go, a speech about Stockholm or Brussels or somewhere in the EU.' Nope. I'm talking about the Great Lakes state of Michigan. That's because most beverage containers in Michigan are under a deposit return scheme. You pay 10 cents and you get it back when you return the container, and that results in recovery rates that are more than double our national average. Now let me ask you: you think that's a nudge for circularity? Of course it is. These deposit return systems were first developed to stop a very linear behavior, right? Use it and toss it. And unfortunately, people were tossing it a lot on the side of the road. And the nudge in the deposit system is used to get those things back to prevent littering, and it worked like a charm. Now, whether you like deposit systems or how they work or not, we're not here to debate that, and that's not my point. The point is they're undeniably an effective nudge for circularity and are vastly more effective than circular nudges for consumers that we have in the single-stream system. Want another example? There's a reason there's not a big blue dumpster behind car dealers and repair shops with this recycling symbol on it that says 'Single-stream recycling for batteries, tires, and scrap metal, commingle here.' Because we know co-mingling will not result in those things being recovered, unless of them going into a landfill or worse. Instead, at least in the US, there are deposit fees of sorts on these batteries and tires to nudge for their return. And notice this: those deposits nudge at the right place in the value chain to promote recovery and circularity. That's what they're there for, and they work. The thing about nudges is they're all over, and you need to see and account for all of them in the value chain when you're analyzing for this. So let's drill down a little bit more. What about the waste industry, at least in the US? Are we nudging the waste industry to recover materials for value and reuse for circularity? Are we nudging them to bury things? Well, if the recycling rate is around 35% on average in the US, when I look at Chapter 10, Page 300 of 'Burns on the Obvious,' that means we are landfilling 65% of our recyclables, which is far more than we were covering. These rates have been flat for years. If you think about it, when landfill fees are an order of magnitude lower than the cost of un-commingling dozens of different types of plastic, different types of papers, paperboard, corrugated, metals, glass, and other materials from our single-stream system, maybe it's not crazy to apply that we aren't nudging for circularity in how we do this. We actually might even be nudge deniers on this point, denying the power of the nudges that we are creating with circularity having our behavior throughout the whole value chain. Let's take one more example: state-level policy. Do you know what the definition of recycling is in your state? Well, you might want to look into it, because it's full of nudges. Take Ohio. State law defines grinding up glass to sprinkle it on a landfill as alternative daily cover as recycling. Part of the 35% rate I just told you. Is that nudging for circularity or linearness? I suppose it's possible that during the legislative debate, somebody raised the issue that Mother Nature will recycle it eventually if you put it on a landfill, but I seriously doubt that's what the objective was or that appears in the legislative transcript. So lesson number two: it doesn't matter what you think of them. These nudges exist. Whether we intentionally put them there or not, they are powerful influences on our behavior. If we want circularity in something, we cannot be blind to them or their effects, let alone deny. So if my company wants or needs circularity in glass containers, and if your community wants circularity in anything from plastic containers to batteries or tires, and of course we all do, the fundamental starting point to successfully changing anything or anybody's behavior in this area is to look for the existing nudges and make sure they are not working against our desired outcome. I've just illustrated how I think nudges work against glass in the recycling systems we have, based on the experience we've had in trying to influence circularity here. Nudges are too powerful shape-shifters of our behavior to ignore. They should be the starting point of any analysis when we're trying to create circularity. So look, let me just bring this home on a couple of nudges that I think exist in the recycling system now. To make this really obvious, glass is being removed from single-stream recycling all over the place. It's being replaced with drop-offs. Drop-offs are great, okay, but with no nudges to leave the house, like to reclaim a deposit, it's a nudge the wrong way. Some people will do it, just like they'll sign up for voluntary retirement savings, but if they're opted in, it's far greater participation. So it's far more likely they're not going to leave their house and just throw out the garbage. Dual-stream recycling: does that nudge for separation and treatment of different things as if they're valued? Of course it does. That's why we have a different stream for tire recovery, batteries, and other things that we really want to get back because they harm the environment and/or they're more valuable when they're recycled. What about the notion of charging for garbage in single-stream recycling? How about charging for convenience and nudging for value creation in dual-stream of things? Okay, that's one of the nudges we could create in any system. And what about talking about landfill bans or fees to change that nudge? Right, as long as it's cheaper to bury it, it will be no surprise that we're going to have a hard time creating circularity. So let me recap. If you want a circular economy in something in this region, you need to do four things in some order: find nudges, understand their effect, change or eliminate the linear ones, and ideally replace them with circular ones, and do this for the whole value chain, not just in one place. And my guess is, if you're a member of the Flat Earth Society and prefer linear outcomes, you're probably not buying into this and maybe stopped listening 10 minutes ago. However, if you're a fan of circumnavigation, you will not be nudge blind and certainly won't be a nudge denier after this talk. And maybe if I've done my job right, you'll even develop the opinion that to create the circularity we want in this region, it starts with seeing, understanding, and effectively using nudges. And I commend the inquiry to all. Thanks.