Product Stewardship Organisation Structures

Product stewardship allows people and business to take responsibility for the products they make and sell at the end of their useful life, so that these products are recycled, reused or repurposed.  It can be a voluntary or regulated scheme.  It can be designed specifically for a single producer or include the whole supply chain.

A robust stewardship scheme has some typical features related to declarations of product imported/produced and management of levies, advanced disposal fees and take back fees.

These structures enable protection of sensitive information and help protect scheme participants from breaches of the Commerce Act including cartel conduct and anti-competitive agreements.

Note: This is a guide only and does not constitute legal advice.

Feature 1: Black Box Declaration Data and Financial Management

A “Black Box” structure is set up to receive product declaration information from brand owners to enable accounting of fees / charges for participation in the scheme.

It is separate from the Product Stewardship Organisation (PSO).  It can be involved with the internal structures and workings of the PSO, but the reverse cannot occur, the PSO cannot be involved with the internal structures and workings of the “Black Box” function.

It reports only aggregated product data and financial information that does not identify the specific brand owner or product supplier.

It is typically an accounting function and works under a contract arrangement.

For regulated stewardship schemes, provision can be made for Government participation in this structure due to the need to ensure sound fiduciary management of funds resulting from regulation of products under the Waste Minimisation Act 2008.

Feature 2: Product Stewardship Organisation

The Product Stewardship Organisation (PSO) is a not-for-profit entity.

It is a governance function and best practice is that those sitting in a trustee position are not directly benefiting from the funds collected for participation in the scheme, nor could they make use of the aggregated data for their own commercial/professional gains.

Its key functions are to:

a) Receive aggregated product data and financial reports;

b) Provide oversight of the scheme on behalf of participating brand owners / supply chain;

c) Award and monitor commercial contracts for service delivery (management, marketing, auditing, collecting, transporting, processing, end use);

d) Set strategic plans and audit against these;

e) Manage the use of funds against the Purpose, Mission and Vision of the scheme;
and

f) Work with advisory groups which may be set up from time to time for the betterment of the scheme.

Feature 3: Advisory Groups

Advisory groups are an integral feature to the ongoing success of a industry-wide stewardship scheme. They can be brought together around a particular area of expertise – for example extraction of materials to maximise value which may be unique; through to functions such as evaluating tenders from service providers.

They are typically directly involved in the production, distribution, collection and reprocessing of the product being stewarded and are at arm’s length to the PSO and the decisions it must make around use of funds and provision of data.

Stewardship Scheme Structures

There are as many structures as there are schemes operating worldwide.  Before a decision is made about the structure that best suits the scheme, the PSO needs to be clear about:

  • The Purpose (the materials in scope)
  • The Mission (what it is set up to achieve)
  • The Vision (looking forward to enabling forward planning)

Non-for-profit organisation structures most commonly used in New Zealand are:

  1. Incorporated Society
  2. Charitable Trust

An Incorporated Society is generally more structured. It can be incorporated under the Societies Act 1908 for certain protections for members, and

  • will have a set of rules or constitution under which the PSO operates;
  • has a board of at least five members;
  • has a membership of a minimum of 15 individuals or five corporate bodies such as other societies, charitable trusts or companies (each corporate body counts as three individuals), or a mix of both;
  • can make profits and employ/contract providers, but may not distribute profits to members;
  • has its income taxed although it may be eligible for a range of tax exemptions.

A Charitable Trust generally enables a greater level of flexibility. It is incorporated under the Charitable Trusts Act 1957 and:

  • will have a trust deed under which the PSO operates;
  • has a board of at least two trustees;
  • must have charitable aims i.e. not be for private profit;
  • once registered and incorporated, has a separate legal identity distinct from its members or trustees;
  • must be registered with Charities Services to obtain or keep charitable tax-exempt status.

Feeling overwhelmed?

Product stewardship can seem overwhelming at times but don’t worry, we can help.  We’ve done it all before.

With over 15 years of experience designing and delivering product stewardship schemes in New Zealand, you’re in safe hands with 3R.

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