The Brazilian Solid Waste Legislation (“ PNRS ”, from the Portuguese Política Nacional de Resíduos Sólidos) is a federal law approved in 2010 with the aim of creating solutions to the challenge of solid waste generation and disposal in Brazil. The law paved the road for the development of Extended Producer Responsibility schemes in the country, as it establishes shared responsibility for the product life cycle (Art. 30) and determines the obligation of reverse logistics for generating companies (Article 33).
The law, consequently, creates legal obligations on solid waste collection and appropriate destination (i.e., reverse logistics) that apply to producers, importers, retailers and distributors from seven industrial sectors (tyres, lubricating oils, batteries, pesticides, fluorescent lamps, electric and electronic products) and packaging in general (which may involve different sectors and approaches).
Furthermore, the PNRS requires the integration of waste pickers in the process (Art. 7), as this informal sector has a key role in waste management in the Brazilian scenario (as in development countries in general).
Waste pickers in Brazil are known as “catadores”, low-income groups that make a living by collecting recyclable materials in the streets, rubbish dumps and landfills. There are close to one million catadores in the country, many of which organized into hundreds of co-operatives and associations.
While in the past, the remuneration of catadores was derived only from the sale of the recyclable materials collected, the PNRS established the basis for the remuneration for the environmental services of reverse logistics. Given the above, the PNRS is considered here as a standard in itself for the Waste Management Sector in Brazil, complemented by specific state and municipal regulations.
The PNRS provides flexibility as to how companies can demonstrate compliance, and different approaches have been proposed and adopted by industry, including the use of reverse logistics credits.
REVERSE LOGISTICS CREDITS FOR COMPLIANCE WITH THE PNRS
In order to facilitate compliance with the PNRS, BVRio in collaboration with the National Association of Catadores, developed in 2012 a Reverse Logistics Credits Mechanism to assist companies to meet their obligations under the law while rewarding Catadores for their role.
Reverse Logistics Credits are certificates that confirm that reverse logistics services were provided to ensure that a certain amount of waste was responsibly disposed of. These credits are issued and sold by cooperatives of Catadores and purchased by producers and/or importers who need to comply with the solid waste legislation. Through the purchase of credits, companies effectively subcontract cooperatives of Catadores to provide reverse logistics services. The sale of Reverse Logistics Credits does not affect the ability of the Catadores to sell the physical material to be recycled and, indeed, these are often sold to different parties and create an additional revenue stream to them (see more info in the Knowledge Hub).
In order to monitor the performance of the operations of these cooperatives, BVRio developed a system to collect and store the electronic invoices/receipts associated with all transactions involving recyclable waste materials. Such invoices (called ‘Nota Fiscal Eletrônica’ – “NFs”) are linked to the Brazilian Tax & Revenue system and therefore difficult to forge, and contain all information related to a transaction, including the names of buyer and seller, the types of material, quantities and price. Associated with other checks and balances, these provide an effective framework for a reverse logistics credit system.
NFS AS PROTO-CREDITS
Since this approach was developed and adopted by BVRio, there has been a vibrant market for NFs, that act as proto-credits for solid waste recycling. Market participants using solely NFs, however, lack additional safeguards and verifications, making the system potentially open for abuse.
While Circular Action Hub accepts this compliance mechanism as a tool for meeting the objectives of the Brazilian legislation, it recommends that buyers certify their activities to one the voluntary credit systems recognised by the Hub so to add extra layers of social and environmental robustness to their transactions.