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1 2015 Business Plan 4711 Yonge Street, Suite 1102, Toronto ON M2N 6K8, t: , f: ,

2 WDO Business Plan 2015 Table of Contents EXECUTIVE SUMMARY Waste Diversion Ontario Overview A Review of Strategic Approach WDO Core Business Activities Financial Plan and Operations... 7 Appendix A: Core Business Activities... 10

3 EXECUTIVE SUMMARY The 2015 Waste Diversion Ontario (WDO) Business Plan presents WDO s priorities, strategies and budget has been another year of significant changes in the waste diversion sector: the end of Bill 91, as the government called an election; the reelection of the government; the appointment of a new Minister; and the Minister s announcement that new legislation will be introduced in As a result, stakeholders will be advocating for their interests to be addressed in the new legislation, including the nature and role of any oversight function. As this discussion unfolds, WDO must continue to manage its obligations under the Waste Diversion Act (WDA), while ensuring it maintains the flexibility needed in its planning so that it can address the requirements of any new legislation that may be approved by Ontario s legislature. For these reasons, this plan must remain flexible, and reviewed on a regular basis as 2015 unfolds. Highlights of 2014 In 2014, WDO continued to face many challenges, including the need to undertake significant unplanned work. Consultations on the Industry Stewardship Plans (ISPs) submitted to WDO required more consultation and analyses than anticipated; the Minister directed WDO to complete a review of the Off-The-Road tire program ; the Minister also directed WDO to undertake additional consultation and analyses on the battery and paints ISPs ; WDO prepared and participated in the arbitration between Stewardship Ontario (SO) and AMO and the City of Toronto on the 2014 Blue Box (BB) steward obligation; and WDO worked with SO to develop an agreement concerning WDO approval of the SO/Canadian Stewardship Services Alliance (CSSA) Management Services Agreement. Other major activities in 2014 included: Stewardship Ontario (SO) and Association of Municipalities of Ontario (AMO) and the City of Toronto completed an arbitration process to determine the calculation of the 2014 Blue Box steward obligation; Ontario Electronic Stewardship (OES) began consulting with stakeholders on amendments to their Program Plan and program operations, including new targets, outcomes, and changes to how material is collected; OES also began implementing their material tracking system (MTS) within the processor incentive program (PIP), which provides the program with greater certainty about the origin and veracity of the material entering the program; Ontario Tire Stewardship (OTS) implemented changes to incentives provided for collecting, hauling, processing and manufacturing of used tires, and completed a clean-up of known used tire stockpiles; WDO consulted on four Industry Stewardship Plans (ISPs), two of which were submitted to the Board for a decision; WDO initiated a process to review the methodology to calculate the recycling efficiency rate of single-use battery processing, in an effort to harmonize the measurement of single-use battery recycling across all programs that manage this material; 1

4 At the same time, WDO continued to work towards improving consumer information and knowledge across all programs, and assisting in resolving IFO/stakeholders disputes where appropriate. Strategic Priorities for 2015 The key determinant for WDO in 2015 will be the timing and content of any new waste management legislation introduced in the Ontario legislature, and when this legislation may be approved. The 2015 Business Plan must therefore leave significant flexibility more flexibility than it has in previous years - to alter WDO s course once more information is available, while continuing to focus on the following oversight responsibilities; 1) Maintaining WDO s ability to assess the diversion programs performance against targets and to inform new target setting 2) Examining dispute resolution best practices and modifying/improving its capacity for resolving disputes, where required. 3) Continuing with regular stakeholder communications and consultations 4) Maintaining the capacity to implement any directions from the Minister, as required. Financial Summary Even though it is forecasted that 2014 year end expenditures will be approximately $470,000 under the 2014 budget of $2.8 million, it is important to remember that WDO bills the IFOs on actual not budgeted expenditures. To ensure WDO has the flexibility needed in 2015 which could be a year of considerable change the 2015 budget is flat-lined to the 2014 budget of $2.8 million. At present, however, the 2015 plan anticipates an expenditure of $2.58 million, recognizing this will need to be monitored, and adjusted up to a maximum of $2.8 million, if this is required. This will enable WDO to return to its full complement of 11 staff positions, while maintaining some flexibility for contracted resources if needed, particularly in any new planning required that cannot be anticipated now. Table 1 provides an outline of the 2015 forecasted expenditures compared with 2014 budgeted and projected actual costs. Table 1: 2015 WDO Forecast Expenditures 2014 Budget Est Actual 2015 Forecast Expenditures Payroll $1,350,000 $1,280,000 $1,320,000 Communications & Consultations 170,000 75, ,000 Office & Other Expenses 635, , ,000 Proessional Fees 690, , ,000 Total Professional Fees $2,845,000 $2,381,000 $2,583,000 2

5 1.0 Waste Diversion Ontario Overview WDO is an industry-funded, non-crown corporation governed by an independent, skills-based Board of Directors. WDO was created under the Waste Diversion Act, 2002 (WDA), which provides our mandate and guides our activities. WDO is responsible for developing, implementing and operating/monitoring waste diversion programs for designated wastes in accordance with the Act. WDO meets this responsibility in co-operation with Industry Funding Organizations (IFOs) established by WDO under the Act. WDO is also responsible for reviewing and consulting on proposals for Industry Stewardship Plans (ISPs), and overseeing any ISPs that receive WDO s approval. WDO must seek to ensure that waste diversion programs and ISPs affect Ontario s marketplace in a fair manner. Once a program is approved by the Minister and is implemented and operated by the IFO, or an ISP is approved by WDO and implemented and operated by an Industry Stewardship Organization, WDO is responsible for monitoring the program s effectiveness and efficiency, and whether the program is operating fairly in the marketplace. The Act also requires WDO to enhance public awareness of and participation in waste diversion programs and ISPs, and conduct public consultations on any matter referred to WDO by the Minister. WDO operates a series of standing Committees comprised of selected Board members, including the: Audit, Governance & Nominations, and Finance & Human Resources Committees. In addition, there are two other non-board committees; the Municipal Industry Program Committee (MIPC) and the adhoc Stakeholder Relations group. 2.0 A Review of 2014 With regard to the waste diversion programs, this year (2014) has seen numerous changes: Stewardship Ontario (SO) and Association of Municipalities of Ontario (AMO) and the City of Toronto completed an arbitration process to determine the calculation of the 2014 Blue Box steward obligation; Ontario Electronic Stewardship (OES) began consulting with stakeholders on amendments to their Program Plan and program operations, including new targets, outcomes, and changes to how material is collected; OES also began implementing their material tracking system (MTS) within the processor incentive program (PIP), which provides the program with greater certainty about the origin and veracity of the material entering the program; Ontario Tire Stewardship (OTS) implemented a suite of incentive changes for hauling, processing and manufacturing, and completed cleaning up additional used tire stockpiles; WDO and SO negotiated an agreement that will ensure WDO maintains access to the information we require on the BB and MHSW Programs to carry out our mandate, and enable WDO to approve SO s sub-contract to Canadian Stewardship Services Alliance (CSSA). WDO consulted on four Industry Stewardship Plans (ISPs), two of which were submitted to the Board for their approval; WDO was directed by the Minister to undertake additional consultation on ISPs before making a decision on any ISPs; and WDO made decisions on two ISPs: the Paints & Coatings ISP proposed by Product Care, and denied the Single-Use Battery ISP proposed by Call2Recycle; 3

6 WDO was directed by the Minister to consider a suite of policy issues in making any future decisions; WDO was directed by the new Minister to continue with the Off-The-Road Tire review and provide him with recommendations on how to address OTR consumer concerns; and WDO initiated a project with Recycling Council of Ontario and CSA Group to develop recommendations on standardizing the reporting of recycling results for the processing of single-use batteries. Additional projects managed by WDO included: Audits of select municipal Datacall reports on their Blue Box Programs (completion of the 2012 audits and initiation of the 2013 audits); Launch of a redesigned Municipal Datacall reporting system; Managing the Municipal InKind advertising program; and Continued building and implementation of our Stakeholder Engagement Plan. At the same time WDO continued to face challenges that have affected its ability to make timely decisions and complete projects, including: Access to information - The need for additional information to improve our ability to assess fairness in the marketplace, determine relevant trends, and encourage increased diversion; Resolving disputes - Continued difficulty in facilitating parties to reach a consensus on the Blue Box Municipal InKind program; the arbitration between SO and AMO & the City of Toronto highlighted a growing tension between IFOs and municipalities; Operating under an outdated legal framework (WDA) WDO has limited tools available to enforce its mandate (e.g., WDO cannot ensure access to all the available data needed to effectively monitor performance or ensure fairness in the marketplace). WDO s tools are limited to working cooperatively with the IFOs; using complex, lengthy and expensive dispute resolution processes embedded in Program Agreements with the IFOs; establishing best practice guidance; communicating with and/or informing stakeholders; and/or reporting to the Minister. Stakeholder fatigue stakeholders told WDO in 2014 that they are consulted-out between Bill 91 consultations, WDO consultations on ISPs, the review of the Off-The-Road Used Tire Program, revised municipal Datacall, and continuing IFO consultations. 4

7 3.0 Strategic Approach The key determinant for WDO s plans for 2015 will be the timing and content of any new legislation introduced, and when this legislation may be approved by the Legislature. The 2015 Business Plan must therefore leave flexibility more flexibility than in previous years to alter WDO s course once more information is available, while continuing to maintain its oversight responsibilities PRIORITIES The 2015 business plan will focus on the four following priorities: 1) Maintaining and improving where possible WDO s ability to assess the diversion programs performance against targets and to inform new target setting 2) Examining dispute resolution best practices and modifying/improving its capacity for resolving disputes, where required. Improve WDO s ability to help resolve disputes and ensure fairness in the marketplace. 3) Continuing with regular Improve our stakeholder communications and consultations 4) Maintaining the capacity to implement directions from the Minister, as required. 1. Maintaining and improve where possible WDO s ability to assess the diversion programs performance against targets and to inform new target setting Ontario s WEEE and Used Tire Program Plans targets expire in It is time to consider opportunities to improve target setting for this program. There are many factors affecting targets and their use, including new/changing/expiring technologies, materials and products. Targets and target setting practices are changing internationally, especially in the European Union. Ontario can learn from these new target setting methods. Work with the Ministry and Municipalities The ten-year-old waste database that WDO has designed and maintains is one of the leading sources of waste and recycling information in North America. This database has provided WDO with the ability identify and assess trends for material generation, recycling and changing costs, and identify municipal leaders. The database has been recently redesigned. In light of the expectation that government will introduce a new legislative framework in 2015, and challenges faced by municipal operations, WDO will continue working with stakeholders to review the current database and determine future needs, additions and enhancements. 2. Examining dispute resolution best practices, and modifying/improving its capacity for resolving disputes, where required. Improve WDO s ability to help resolve disputes and ensure fairness in the marketplace. 5

8 Dispute resolution As part of our role in ensuring fairness in the marketplace, WDO will continue to offer guidance to facilitate the resolution of disputes between the IFOs and various stakeholders. These disputes can vary from very simple (e.g., a service provider not getting paid in reasonable time) to quite complex (e.g., tax issues). Some can be resolved quickly, while others require significant WDO staff time and/or external resources. In 2014, WDO helped to facilitate discussions on 10 simple disputes (four have been resolved) and participated in a dispute resolution process for two major disputes (the SO/AMO & City of Toronto dispute on the 2014 steward obligation, and the WDO/SO dispute concerning the SO/CSSA Management Services Agreement. Using the experience gained in 2014, WDO will: Complete a review of dispute resolution best practices; and Develop guidance for the prevention and resolution of disputes, and update WDO s Dispute Resolution Policy and Procedures, as appropriate. Fairness in the Marketplace Ensuring that waste diversion programs affect the marketplace in a fair manner are core WDO responsibilities outlined in the Waste Diversion Act. WDO staff have worked with the Competition Bureau of Canada and key stakeholder groups to better understand what fairness in the marketplace means on the ground. WDO has also updated our Code of Conduct Bylaw accordingly. Using the experience in 2014, WDO will: Work with a competition expert to develop a best practices guide for developing, implementing and operating diversion programs that operate fairly in the marketplace. Work with an expert facilitator to develop a best practices guide to help WDO and the IFOs identify and avoid potential conflicts of interest, and embed these best practices in our everyday work practices. In 2015 WDO will also work with Ontario Electronic Stewardship to better understand the amount of WEEE material entering the program, and being discarded in landfills. WDO will also continue to work with all IFOs in improving and refining where appropriate program reporting protocols. 3. Continuing with regular Improve our stakeholder communications and consultations Effective stakeholder engagement is a cornerstone of effective oversight. As a result, in 2013, WDO kicked-off the first phase of its Stakeholder Engagement Plan. In 2014, we continued to build stakeholder relationships and communications, facilitate knowledge sharing between WDO and our stakeholders, and act as a resource to help stakeholders understand and/or resolve issues related to Ontario s regulated diversion programs. In 2015, we will: Continue with stakeholder outreach including interactive discussions using social media tools (including surveys) on industry topics, trends, challenges, issues and potential solutions; and 6

9 Develop and implement web tool(s) to provide consumers with easier and faster access to waste diversion and reduction information 4. Implementing directions the Minister provides to WDO The Minister may provide direction to the WDO for additional reviews or to undertake other specific tasks. This may require the WDO to re-visit the Business Plan. 4.0 WDO Core Business Activities WDO s core business activities include: waste diversion programs development and implementation; evaluation of ISPs; program and ISP monitoring, reporting, facilitation, issues management and engagement with our stakeholders; identification of new initiatives; and advice to the Minister. These include specific actions outlined below. Developing Program Plans, Implementing Program Plans, including performing periodic program reviews, updates and approvals, and negotiating new Program Agreements and Rules. Evaluating and consulting on proposed ISPs. Engaging and communicating to/with stakeholders. Implementing design improvements to the municipal data management system, called the Municipal BB Datacall. Monitoring programs and ISPs includes reviewing regular IFO reporting. For the BB program, this includes overseeing the accuracy of the 220+ municipal BB program reports into the Datacall, and auditing 20 municipalities reports each year. Researching, analyzing and developing approaches and actions to identify and implement new initiatives, updating WDO policies, and supporting issues management. Supporting the WDO Board and its Committees Finance & HR, Governance, and Audit. Supporting the Blue Box Municipal Industry Program Committee (MIPC); Facilitating dispute resolution between IFOs and stakeholders, i.e., service providers, municipalities, and stewards. Implementing any directives provided by the Minister. Additional information on the core business activities is provided in Appendix A. 5.0 Financial Plan and Operations WDO is funded by the IFOs. Under the Act, each designated IFO is required to establish and maintain a fund to pay for the costs associated with WDO. The total cost forecasted for 2014 WDO operations is $2.38 million, a decrease of approximately $464,000 from the 2014 budget of $2.85. This is decrease is due primarily to lower staff and professional fees cost. The 2014 budget was flat-lined to 2013 actual costs. In 2015, it is proposed that the budget be flat-lined to the 2014 budget of $2.8 million. At present, however, the 2015 plan anticipates an expenditure of $2.58 million, recognizing this will need to be monitored, and adjusted up to a maximum of $2.8 million, if this is required. 7

10 An expenditure of $2.58 million reflects a reduction in oversight improvement projects, primarily field research contemplated in the 2014 budget, and a reduction in the communications and outreach budget to 2014 forecast actuals. Staff complement, currently at 10, is planned to return to the full complement of 11, once the recruitment of a new Operations Director have been completed. Table 1 summarizes this information. Table 1: 2015 WDO Forecast Expenditures 2014 Budget Est Actual 2015 Forecast Expenditures Payroll $1,350,000 $1,280,000 $1,320,000 Communications & Consultations 170,000 75, ,000 Office & Other Expenses 635, , ,000 Proessional Fees 690, , ,000 Total Professional Fees $2,845,000 $2,381,000 $2,583,000 Operations There are no new staff level additions planned. The WDO staff complement for 2015 is: Chief Executive Officer Director of Operations (March 2015) Director of Stakeholder Relations Office Manager Data Manager Manager of Policy & Planning Three Oversight Analysts Two Communications Advisors WDO will supplement its internal resources when required with Professional Services. However, estimating the level of external legal and other professional support has always been a challenging part of WDO s annual budget calculations. In 2015, these fees will depend on the need for legal review of any new program plans and agreements, disputes with the IFOs, any new Industry Stewardship Plan (ISP) proposals, disputes between the IFOs and their stakeholders, changes by the IFOs/ISOs, and any projects requested by the Minister. The implementation of the BB Datacall upgrades will be completed in the first two months of In addition to the Datacall upgrade, WDO will be looking to continue its development of consumer facing online/web assistance. The 2015 budget for Professional Service fees has been estimated conservatively and to allow for contingencies. Table 2 provides a breakdown of WDO office and administration services. 8

11 Table 2: WDO Office and Other Expenses 2014 Budget Est Actual 2015 Forecast Expenditures Payroll $1,350,000 $1,280,000 $1,320,000 Communications and Consultation $170,000 $75,000 $100,000 Communications Support 70,000 35,000 50,000 Stakeholder Engagement 100,000 40,000 50,000 Office and Other Expenses $635,000 $575,500 $588,000 Bank Service Charges 2,000 2,000 2,000 Board and Committee Expenses 50,000 35,000 36,000 Dues, Subscriptions, & Event Registrations 15,000 11,000 12,000 Insurance 8,000 6,500 7,000 Municipal Datacall 290, , ,000 Office Furnishings & Computer Hardware 6,000 2,000 3,000 Postage and Delivery 6,000 3,000 3,000 Printing and Reproduction 13,000 8,000 8,500 Office Lease 150, , ,000 Staff Expenses 40,000 22,000 22,500 Supplies 31,000 28,000 28,500 Telephone & Internet Expenses 24,000 23,000 23,500 Total WDO Office and Other Expenses $2,155,000 $1,930,500 $2,008,000 Table 3 provides an outline of the estimated projects/areas and professional fees. Table 3: Planned Professional Fees 2014 Budget Est Actual 2015 Forecast Expenditures Core Business Activities $200,000 $115,000 $280,000 Issues Management 20,000 15,000 20,000 Dispute Management 20, ,000 Program Planning & Review 110,000 50, ,000 Review of and monitor ISPs 50,000 50,000 50,000 Contingency and Evolving Priorities ,000 Strategic Priorities $230,000 $20,000 $0 BB Waste Composition & Trend Study 90, Activity Based Costing Study 70, WEEE Material Measurement Study 50, Communications Research 20,000 20,000 0 Administrative Support $260,000 $315,000 $295,000 Issue Management/Communications 20,000 15,000 20,000 Audit & Accounting Support 20,000 8,000 10,000 HR Support 15,000 1,000 40,000 IT Support 25,000 21,000 25,000 Legal Support 150, , ,000 Recruitment 30, ,000 Total Professional Fees $690,000 $450,000 $575,000 9

12 Appendix A: Core Business Activities Program Plan Development Program Plans requested by the Minister are developed by the IFOs, with support and oversight from WDO. The existing Program Plans have been approved by the Minister. WDO is considering revisions to the WEEE Program and MHSW Program Plans in 2015, depending on the progress of the new legislation. WDO reviews and evaluates ISPs as they are submitted. Program Plan Implementation Following approval by the Minister of a waste diversion program plan, WDO is responsible for overseeing implementation of the program by the IFO and for monitoring the effectiveness and efficiency of the program. The following waste diversion programs are being implemented (initial and ongoing updates): Blue Box Program Plan; MHSW Program Plan; Revised (Phase 1 and 2) WEEE Program Plan; and Used Tires Program Plan. Program Plan Monitoring With the implementation of approved programs, IFOs are responsible for compiling all of the data on which fees are set and program performance is based. This is reported quarterly to WDO and yearly to the public and the MOE through annual reports. There may be additional reporting requirements, if the need arises. In 2011, WDO introduced program performance audits. IFO performance audits consider the following aspects: governance, risk management, planning and budgeting, performance, external operations including transaction processing and communications. Research and Policy Development WDO aims to be a respected oversight agency and premium source of information on waste diversion. As a result, WDO has policy research capacity and applies it to continually improve program development, implementation, and monitoring. Municipal Data Management The Municipal Datacall is an annual survey of municipalities diversion and disposal activities. Datacall collects information on the tonnage of all diverted and disposed materials, and the financial data for Blue Box program operations. The residential Blue Box cost and revenue data compiled in the Datacall serves as the basis for determining the annual funding contribution from Blue Box stewards to municipalities under the Blue Box Program Plan. 10

13 WDO verifies the data reported by municipalities and implements a number of audits each year to confirm the accuracy of reported data. Data reported on the residential tonnes diverted and disposed serves as the basis for the Residential GAP Diversion Rate calculation (as estimate of total residential waste material diverted from landfill). WDO has verified diverted tonnes reported in the municipal Datacall since 2003; the verification was expanded to include reported disposed tonnes and the GAP calculation for WDO continues to verify disposed tonnes and the GAP calculation. Late in 2014 WDO started consultation and studies to identify and assess what changes are needed for the Datacall in order to reflect changing product, material, and recycling trends. This work will continue into Stakeholder Relations The WDO communications group plan and organize the activities for stakeholder engagement, e.g., CEO monthly Update, Annual Meeting, website(s), social media, Listen & Learn visits, conferences, and workshops. It is also responsible for monitoring external information sources, and closely monitoring issues. In addition, the group undertakes research as required. CNA/OCNA Advertising Program WDO through its communications group manages the joint Canadian Newspaper Association (CNA) and Ontario Community Newspapers Association (OCNA) Inkind advertising program under the Blue Box Program Plan. The CNA/OCNA contribution to municipal programs is in the form of newspaper advertising instead of cash. 11

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