I spoke with Ron Gonen, co-founder and CEO of
RecycleBank, to learn how he built one of the largest public-private partnerships that creates incentives for social good.
RecycleBank is a reward program that motivates people to recycle by measuring the amount of material each home recycles and then converting that activity into RecycleBank points that can be used at more than 1,500 local and national reward partners like Target, Kraft foods, Coca-Cola and Starbucks. Households can earn up to $400 annually in RecycleBank points. The program piloted in Philadelphia in 2004. It's expanded to 20 states and is days away from its UK launch.
Why recycling?
I've always had an interest in social policy and the environment, and I wanted to make sure that what I did could have an impact today. There's a lot of great discussion around global warming and climate change and things like the electric car. Those are all very important initiatives, but they don't relate to the average person's life today; the average person can't get involved and I think it's incredibly important for the environmental community to remain sustainable and you do that by getting people active at a large scale right now. So I took it as my goal and my interest to find something that would activate people's interest in the environment today. Recycling is something that touches everybody: you could be rich, poor, black, white, Hispanic, urban, suburban. If you bought something during the week, you should be recycling it. I felt like [recycling] would give me maximum penetration to touch the most amount of people.
How does it work?
Everybody gets one of our RecycleBank recycling containers, there is a chip embedded in that container and a mechanical arm retrofitted to the truck that reads the chip to identify how much is being recycled. That information is sent wirelessly to our servers. We run an algorithm that posts credit to your account and you can log on to your account. It’s like looking at a bank statement—you can see how many points you have earned and you can use those points to shop at over 1,500 different stores and you can also see your environmental footprint.
Class discrepancies around recycling
The biggest discrepancy that I see is an infrastructure issue. In upper-income neighborhoods, people are generally given a cart with a lid and wheels for recycling, whereas in lower-income neighborhoods, people are given a bucket, or nothing. That's the biggest discrepancy. I don't think that recycling, or for that matter, most environmental decisions are rich or poor. I sure would say infrastructure, access and convenience are the issues. The more affluent you are, the better the neighborhood you live in, the more convenient it's going to be for you, and the more infrastructure you're going to have to support this action that you want to take.
Recycling creates a level playing field
RecycleBank is trying to level the playing field. Because everyone can participate, everyone can be rewarded, both financially from his or her Recycle Bank points, as well as from seeing their personal eco-footprint. The good neighborhoods set a great example of what's possible. I want to try to bring some of the middle- and lower- income neighborhoods up to that standard, from an infrastructure and convenience standpoint.
What’s non-trash worth? RecyleBank’s revenue model
We’re paid by diverting waste from the landfill, and via some of our reward partner relationships. One of the ethoses of RecycleBank is that we want to support environmental actions that are also smart economic decisions. Cities today spend a lot of money disposing of waste in the landfill. We’re very focused on helping municipalities divert that waste, which saves them a lot of money. We take a cut [usually 50%] of the savings that we generate from municipalities. So, the revenue we make from each municipality can range dramatically, depending on what their existing recycling rate is, and what their disposal fee is. Some of our reward partners have advertising deals with us as well.
Providing society incentives to promote market economies
I have a strong interest in economics, and economics is around lining up incentives. The government thinks it’s a good idea for people to save for retirement, so we create a 401K account—incentives around retirement. The government said if you're willing to save this amount of money, we’ll allow you to save it tax-free. We see home ownership as a good idea, so we told people you can deduct the interest on your mortgage, which aligns incentives.
I'm a big believer in aligning incentives, and when you recycle, you create a lot of value. You create value for your city because the city doesn't have to pay to dispose of waste in a landfill; you create value for manufacturers who receive the materials. So if you want people to give you more of it, you should align incentives, and give them some of that value.
Can social incentives mend the health care crisis?
If I were as involved in health care as I am in environmental policy, I would be creating incentives for people to stay healthier. So, you should be able to use some of your money tax-free for yoga classes, or going to the gym, or get a tax deduction for each day that you ride your bike to work. Most of our health care costs occur after we become unhealthy. People should be given [financial] incentives to keep themselves in good shape. It doesn't mean that they won't get sick but the rate of disease and the rate of illness would go down significantly, and the recovery time would go up significantly, and would save a lot of money.
Ron will be speaking at Sustainable Brands 09 in Monterey, California, on June 3.