Page intentionally left blank.

2014 Business Plan

Page intentionally left blank.

WDO Business Plan 2014 Table of Contents EXECUTIVE SUMMARY... 1 1.0 Waste Diversion Ontario Overview... 2 2.0 A Review of 2013... 3 3.0 Strategic Approach... 4 4.0 Strategic Priorities... 4 5.0 WDO Core Business Activities... 6 6.0 Financial Plan and Operations... 7 7.0 Communications Plan... 8 Appendix A: Core Business Activities... 10

EXECUTIVE SUMMARY The 2014 Waste Diversion Ontario (WDO) Business Plan presents WDO s priorities, strategies and budget. The focus of this plan is on business as usual. The implementation of this plan will need to be monitored on a regular basis, and adjusted if necessary. Current Situation WDO has worked to improve its current mandate through increased information and knowledge across all programs, the knowledge and experience of Board of Directors, staff skills and capabilities, and engagement with stakeholders. However, WDO continues to face several challenges: limited tools available to enforce our mandate; marginal increases in some of the diversion in the programs that we oversee; and some stakeholder perception that WDO is not adding value, primarily as a result of lack of teeth. With regard to the diversion programs, 2013 saw changes: Ontario Electronic Stewardship (OES) became more financially stable than in 2012. The cost recovery approach was implemented. There was an increase in compliance to standards for service providers; With the approval of WDO, OES contracted their operations management to a national electronics stewardship organisation called Electronic Products Recycling Association (EPRA); Stewardship Ontario (SO) initiated a process to contract their operations to a national multimaterial stewardship organization called Canadian Stewardship Services Alliance (CSSA); The cost recovery approach has been implemented for Ontario Tire Stewardship (OTS). Priority used tire stockpiles have been cleaned up; and WDO has received five letters of intent to submit Industry Stewardship Plans (ISPs). For four of these, ISP submissions were received by WDO. At the same time, significant challenges remain: The Blue Box Program continues to struggle under rising costs, flat-lined results, serious disputes over the In-Kind Program and the 2014 Steward Funding Obligation, and serious freerider issues, all of which remain unresolved; WDO and SO have not been able to reach an agreement on a new MHSW Program Plan and Program Agreement; major issues remain unresolved; The review of the WEEE Program continues, under a smaller, more focused direction; OTS has announced significant changes including expenditure reductions to take place over the next two years as they attempt to drive down their costs that may have significant impacts; Significant disputes continue to arise between stakeholders and the IFOs, and WDO and the IFOs. The dispute resolution processes imbedded in the diversion program agreements require improvement. 1

Strategic Priorities The 2014 business plan focuses on the four following priorities: 1) Improve WDO s ability to verify data and ensure fairness in the marketplace. 2) Improve WDO s ability to assess performance against targets and to inform new target setting. 3) Improve our stakeholder engagement. 4) Implement any directions from the Minister as required. Financial Summary The total cost planned for WDO operations for 2014 is $2,845,000. This is a slight decrease from the 2013 budget of $2,984,000. The increase over the currently projected actual costs for 2013 year end (of $2.36M) is due to higher payroll costs, projected annual increases in administration expenses, and professional fees (i.e., projects to assist with oversight and stakeholder engagement the strategic priorities). There is no increase in staff complement under this scenario. Table 1 provides an outline of the 2014 budgeted costs compared with 2013 budgeted and actual costs. Table 1: 2014 WDO Budget Summary 2013 Budget 2013 Actual 2014 Budget Payroll 1,350,000 $ 1,243,000 $ 1,350,000 Communications & Consultations $ 200,000 118,000 170,000 Office & Other Expenses 644,000 569,000 635,000 Professional Fees 790,000 540,000 690,000 Total 2,984,000 2,470,000 2,845,000 1.0 Waste Diversion Ontario Overview WDO is a not-for-profit industry-funded organization 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 2

responsible for monitoring the program s effectiveness and efficiency. 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 ad-hoc Stakeholder Relations group. 2.0 A Review of 2013 With regard to the waste diversion programs, this year (2013) has seen numerous changes: Ontario Electronic Stewardship (OES) became more financially stable than in 2012. The cost recovery approach was implemented. There was an increase in compliance activity with stewards, and standards for service providers; With the approval of WDO, OES contracted their operations management to a national electronics stewardship organisation called Electronic Products Recycling Association (EPRA); Stewardship Ontario (SO) initiated a process to contract their operations to a national multimaterial stewardship organization called Canadian Stewardship Services Alliance (CSSA); The cost recovery approach has been implemented for Ontario Tire Stewardship (OTS). Priority used tire stockpiles have been cleaned up; and WDO has received five letters of intent to submit Industry Stewardship Plans (ISPs). For four of these ISP submissions were received by WDO and have undergone public consultation. Key projects managed by WDO included: Completion of the redesign of WDO s new website; Review of the WEEE program; Audits of select municipal Datacall reports on their Blue Box Programs (completion of the 2011 audits and initiation of the 2012 audits); Initiating the redesign of the Municipal Datacall reporting system, with key improvements of Phase 1 to be implemented in time for the 2014 reporting period; Consultation and evaluation of four (4) ISPs; and Implementation of our Stakeholder Engagement Plan. WDO has continued to develop its strengths, including increased: Breadth and depth of our information and knowledge across all diversion programs through an increasing variety of sources (e.g., increased stakeholder engagement); Knowledge and experience of the skills-based Board of Directors; Skills of staff, e.g., analytical capabilities and transformation expertise, as a result of increased training and new staff; and Communications and relationships with stakeholders. 3

At the same time WDO has some key challenges including: Limited tools ( teeth ) available to enforce our mandate (e.g., fairness, information access); Marginal increases in some of our diversion programs A perception of some stakeholders that WDO is not adding value, primarily as a result of lack of enforcement authority; and Significant difficulty in facilitating parties to reach a consensus on the Blue Box InKind program, and the stewards Blue Box 2014 Obligation negotiations. 3.0 Strategic Approach WDO s strategy and 2014 planned activities focusses on improving our oversight in targeted areas to ensure that WDO has the information necessary to effectively oversee the IFOs/Industry Stewardship Plans, and to take action on under-performance and recurrent steward and stakeholder concerns. Our activities will not be business as usual in 2014. There are changes going on in all of Ontario s industries, including waste management, stewards sectors, governments, etc., and elsewhere that affects Ontario. Most stakeholders in the Ontario recycling sector are facing numerous challenges. This could place significant added strains on WDO s oversight role and relationships with the IFOs and any Industry Stewardship Organizations (ISOs). 4.0 Strategic Priorities WDO s 2014 business plan focuses on four priorities: 1) improve WDO s ability to verify data and ensure fairness in the marketplace; 2) Improve WDO s ability to assess targets and inform new target setting; 3) improve our stakeholder engagement; and 4) implement directions provided by the Minister. 1. Improve WDO s ability to verify data and ensure fairness in the marketplace In the past year, WDO faced increasing challenges in providing effective oversight for Ontario s regulated waste diversion programs. The IFOs are undergoing dynamic changes resulting from their push for national harmonization, efforts to reduce operating costs, and preparations for potential legislative changes. For example, there have been changes to the management of OES s and SO s operations by their sub-contracting to the national producer responsibility organizations Electronic Products Recycling Association (EPRA) and Canadian Stewardship Services Alliance (CSSA), respectively. Amidst this period of flux, WDO has in some instances found it especially challenging to obtain the data necessary to verify that some IFO reports are accurate and to also verify that stewards fees are fair. Monitoring and overseeing the IFOs and ensuring that waste diversion programs affect the marketplace in a fair manner are core WDO responsibilities outlined in the Waste Diversion Act. The IFOs calculate stewards fee obligations in accordance with a WDO-approved fee setting methodology and the nexus principle. Some programs need to collect the data to complete this calculation (for example, waste composition data). WDO continues to receive requests from stewards for verification of this IFO-collected data to ensure that their fees are fair; many are concerned that their 4

fees are too high. Some IFOs have composition data but consider it to be proprietary confidential business information, and have not shared this information with WDO. If necessary, WDO will undertake to obtain the field data necessary to improve our oversight, including our ability to assure stewards that their fees are reasonable and based on solid evidence. As part of our role in ensuring fairness in the marketplace, we regularly 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. We do not expect the number of disputes to decline in the future. Enhancing WDO s capacity to resolve disputes is a priority and should help reduce the time to get resolution, and improve the quality of outcomes. As a result, we will undertake a number of initiatives, including enhancing and implementing new procedures for dispute resolution and work with the IFOs and ISOs to see that they are adopted system wide. 2. Improve WDO s ability to assess performance against targets and inform new target setting WDO will work to improve access to and understanding of the data necessary to assess IFOs performance against targets or to inform recommendations about whether existing targets should be amended. This will include working with the IFOs, and ISOs, as well as obtaining information from other sources. Although overall the waste diversion programs have met their targets, there are some material categories in Ontario s waste diversion programs that have been less successful in meeting their targets, or conversely have far exceeded their targets. Where programs have been less successful, WDO needs to get better data to understand whether this is because corrective action is needed to improve program performance or whether the targets have been set at an unreasonable level. It is time to consider opportunities to improve target setting. Historically targets have been developed by the IFOs in consultation with WDO and the MOE, compared to other jurisdictions, then recommended to the Minister for approval as part of 5 year plans. There are many factors affecting targets and their use, including new/changing/expiring technologies, materials and products. Many products and their packaging change rapidly and far quicker than five year cycles, particularly in electronics and packaging. Targets and target setting practices are changing internationally, especially in the European Union. Ontario can learn from these new target setting methods. With these changes, and the Ontario targets were set roughly 5 years ago, it is now time to re-assess. As a result, WDO will be undertaking a number of projects to improve our ability to make informed recommendations to improve Ontario s target setting practices and improve the targets themselves, including: An available-for-collection study for the MHSW program (e.g., antifreeze, solvents and batteries), depending on the outcome of ISPs reviews; A material measurement study (e.g., WEEE targets and metrics); and A study to develop a baseline for consumer awareness of the programs and for diversion opportunities in Ontario. 5

3. Improve our stakeholder engagement In 2013, WDO kicked-off the first phase of its Stakeholder Engagement Plan. We set a goal to listen, learn, and enable sharing of information with stakeholders on a number of key policy and program issues. We undertook several consultations: Fairness in the Marketplace, WEEE program review, and Industry Stewardship Plans. We learned many lessons and we continue to refine our approach. In 2014, we will continue to build stakeholder relationships and communications, facilitate knowledge sharing between WDO and our stakeholders, and act as a resource to help stakeholders to understand and/or resolve issues related to Ontario s regulated diversion programs. Effective stakeholder engagement is paramount to effective oversight. Stakeholders have on-the-ground experiences and networks that can inform and benefit WDO oversight practices. Activities we will undertake include: Enhancing and targeting stakeholder outreach, including interactive discussions using social media tools on industry topics, trends, challenges, issues and potential solutions; and Continue efforts to identify and/or facilitate opportunities to harmonize aspects of Ontario s programs with those in other Canadian jurisdictions. 4. Implement directions the Minister provides to WDO The Minister has directed the WDO to review the Off-the-Road (OTR) component of the Used Tire Program (UTP). The review workplan is to be provided to the Minister by the end of January, with the final report due in September 2014. The Minister may provide direction to the WDO for additional reviews or undertake other actions that require action and resources from WDO. This would require WDO to understand the requirements, develop a plan, and implement. It may also require the WDO to re-visit the Business Plan. 5.0 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 fall under: Development of Program Plans. Implementation of Program Plans requires WDO and the IFOs negotiate new Program Agreements and Rules, and perform periodic program reviews, updates and approvals. Review, consultation and evaluation of proposed ISPs. Stakeholder engagement and communications. Monitoring of programs and ISPs includes reviewing regular IFO reporting. For the Blue Box program, this includes overseeing the accuracy of the 220+ municipal Blue Box program reports into the Datacall, and auditing 20 municipalities reports each year. Research, analysis and development of approaches and actions to identify and implement new initiatives, update current WDO policies, support issues management, and support the Board. 6

Facilitating dispute resolution between IFOs and stakeholders, i.e., service providers, municipalities, and stewards. Completing the redesign of the municipal data management system, called the Municipal Blue Box Datacall, which was started in 2013. Additional information on the core business activities is provided in Appendix C. 6.0 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 planned for WDO operations for 2014 is $2,845,000. This is a decrease from the 2013 budget of $2,984,000. The increase over the currently projected actual costs for 2013 year end (of $2.36M) is due to higher payroll costs, projected annual increases in administration expenses, and professional fees. There is no increase in staff complement planned for 2014. Table 1 provides an outline of the 2014 budgeted costs compared with 2013 budgeted and actual costs. Table 1: 2014 WDO Budget Summary 2013 Budget 2013 Actual 2014 Budget Payroll 1,350,000 $ 1,243,000 $ 1,350,000 Communications & Consultations $ 200,000 118,000 170,000 Office & Other Expenses 644,000 569,000 635,000 Professional Fees 790,000 540,000 690,000 Total 2,984,000 2,470,000 2,845,000 Operations There are no staff level changes planned. The WDO staff complement for 2013 was eleven (11). Chief Executive Officer Director of Operations Director of Stakeholder Relations Manager of Policy and Planning Office Manager Three Oversight Analysts Two Communications Advisors Data Manager 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 2014, these fees will depend on the need for legal review of new Industry Stewardship Plan (ISP) proposals, new policies, program plans and agreements, disputes with the IFOs, disputes between the IFOs and their stakeholders, changes by the IFOs/ISOs, and any projects requested by the Minister. 7

The implementation of the Blue Box Datacall redesign will be completed in the first two months of 2014. Beyond the Blue Box Datacall redesign, there is no significant technology change planned for 2014 at this time. The 2014 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. Table 2: WDO Office and Other Expenses 2013 Budget 2013 Actual 2014 Budget Payroll $ 1,350,000 $ 1,243,000 $ 1,350,000 Communications & Consultation $ 200,000 $ 118,000 $ 170,000 Communications Support 100,000 60,000 70,000 Stakeholder Engagement 100,000 58,000 100,000 Office and Other Expenses $ 644,000 $ 569,000 $ 635,000 Bank Service Charges 3,500 2,000 2,000 Board & Committee Expenses 55,000 32,000 50,000 Dues, Subscriptions & Event Registrations 4,500 12,000 15,000 Insurance 20,000 6,000 8,000 Municipal Datacall 300,000 281,000 290,000 Office Furnishings & Computer Hardware 20,000 6,000 6,000 Postage and Delivery 8,000 3,000 6,000 Printing and Reproduction 15,000 9,000 13,000 Office Lease 140,000 133,000 150,000 Staff Expenses 30,000 37,000 40,000 Supplies 30,000 27,000 31,000 Telephone & Internet Expenses 18,000 21,000 24,000 7.0 Communications Plan In 2014, the objectives for WDO communications will be to: Provide expertise in the waste reduction/recycling industry in Ontario. Build and maintain stakeholder and industry confidence in WDO leadership and expertise through its activities. Manage and resolve stakeholder and IFO issues effectively and proactively wherever possible. These objectives will be met by focusing on three strategic areas: a) Lead the Way: WDO as a Thought Leader. Continue to build WDO s profile as a resource and expert in waste reduction and the evolving industry. WDO will lead by highlighting best practices from 8

around the world. b) Put a Face to WDO. Maintain a strategic, integrated program of proactive outreach activities to increase WDO s understanding of stakeholder challenges, build networks and contacts for WDO and increase WDO s ability to proactively manage issues and resolve disputes. c) Be a Source and Resource. Build and maintain a proactive consistent dialogue with stakeholders, sharing information on WDO waste reduction activities and the industry. Continue to build WDO into a key information source. WDO will increase engagement with stakeholders through a variety of mechanisms and activities including; the CEO Update, website, blogs, social media, and Listen & Learn visits. 9

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 planning to revise the WEEE Program and MHSW Program Plans in 2014, depending on the progress of Bill 91. 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 that continue to be undertaken with the assistance of expert consultants. 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. 10

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. 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 2006. WDO continues to verify disposed tonnes and the GAP calculation. Communications The WDO communications group plan and organize the activities for stakeholder engagement, e.g., CEO Update, Annual Meeting, website, 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) in-kind 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