This newsletter was originally published in September 2023

In each issue, Bottle Bill Common Ground will explain a single principle or practice for a meaningful, modern DRS. We will cover topics such as ease of use for consumers, production standards for industry, and compliance and enforcement measures for government.

By following this roadmap, states can achieve major environmental and economic benefits

We are now focused on 10 essential practices — requirements on how to build, run, and maintain a modern deposit return system (DRS) for beverage containers.

Practice #10: Management of material flow & financial data

Management of material flow & financial data makes it possible to accomplish ‘clearing’, a computer-based exercise where deposit containers registered at the point where they enter the market are “matched” with the units returned. Once this calculation is complete, the container has been “cleared.” Clearing is essential not only for operations, but also for data management and reporting compliance. It involves using information technology providers to find the right system for the DRS setup. The information collected is linked to a central database management system to ensure timely tracking and accountability for each container

Resource: Guide

A Guide to Modern Deposit Return Systems: 10 Essential Practices

10 key requirements for successful implementation of a DRS to serve as a roadmap for policymakers, advocates, and producers seeking the best public policy solutions.

A defining feature of modernised DRSs is the use of technological platforms to reconcile the number of empty containers returned with those sold, as well as the refund of deposits against those collected. This not only establishes a high bar for transparency and accountability but also achieves something few waste or material management systems can: unit-specific tracking.

Why does this matter? Let us count the ways. The ability of DRSs to track each beverage container moving through the system:

Establishes a required standard for transparency and accountability
Enables efficient clearing — deposit containers registered at the point of sale get matched with those returned
Maximises visibility for producers, distributors, and system operators into the flow of money and materials within the system
Creates a valuable database of information to inform future policymaking
Supports government reporting on progress towards zero waste and climate goals

How does this work? First, there should be a direct online connection (e.g., via reverse vending machines, also known as RVMs) between return points or counting centers and the system operator. Besides reducing any potential data leakages within the system, this direct connection ensures accurate and reliable data can be captured during the return process.

Second, the information collected should be seamlessly and automatically uploaded to a central database that is easily accessible to the regulatory body. This enables efficient data management and facilitates monitoring and oversight of the system’s operations.

Third, unit tracking enables a high level of transparency in financial transactions. It ensures that every deposit collected is properly accounted for and can be traced back to the specific container it originated from. Effective legislation requires that these specific activities be followed:

Maintaining a central database with barcode and registration information for all products in the system (see Practice 3: Official Reporting and Compliance)
Aggregating material and financial flow data from both automated and manual collection points
Clearing deposits in a transparent, timely, and unit-specific manner
Paying handling fees and other compensation, as required, to the appropriate parties
Invoicing deposit initiators, such as producers or importers, for the costs associated with the DRS, including handling fees, processing fees, and other related expenses

All of these activities should be both reported to and monitored by the appropriate regulatory agency (see Practice 4: Oversight and Enforcement).

Processing Fees and Requirements

Processing fees are typically negotiated in a service contract and set on a per container or tonnage basis. They tend to be most influenced by material and size of container, sales volume, who owns the scrap material, and the level of automation involved in processing the containers.

Effective legislation also sets out processing requirements for deposit initiators, such as producers or distributors, to ensure they take back their containers from the retailers they deliver to or from the authorised redemption centre that serves those retailers. Some DRS jurisdictions also require:

Minimum pickup frequency (e.g., once every two weeks)
Volume-based pickup requirement (e.g., once 10,000 beverage containers are amassed)
Minimum operating hours for return points

Implementing robust quality assurance processes for reconciling depot and/or processing centre counts, particularly for manual collections, is crucial for minimising the potential for overcounting and other fraudulent activity within a DRS. In instances where the use of automated counting and sorting equipment for containers is minimal, ensuring effective quality control measures becomes paramount.

Incidents of counting centres inflating the reported number of containers for their own financial benefit have been observed in both Canadian and U.S. programs. While auditing procedures have been implemented to address and curb such fraudulent actions, legislators must continue to prioritise mitigation strategies to safeguard the integrity of the system.

Just as meaningful deposit levels are essential for achieving high redemption rates, handling fees are a critical part of what makes DRSs work well. This is especially true in jurisdictions where there is no legal obligation on retailers to provide take-back services. Handling fees should be determined based on the actual cost of service.

Similarly, careful determination of processing fees and requirements greatly impacts system outcomes. Experience shows considerable benefits of automation in reducing fraud. And the use of spot audits to verify the number of declared containers against the number received at processing centres serves as a valuable tool in mitigating potential fraud within the system.

Case Study: Denmark

Established in 2002, Denmark’s deposit system — operated by Dansk Retursystem — is one of the highest performing DRSs worldwide, achieving a redemption rate of 92% in 2022. The Danish legislation includes the following provisions to ensure material flow and financial data is well recorded:

Processing Empty Containers:

Empty containers can be counted and registered at return points using RVMs equipped with a compactor or sealed container system. Alternatively, counting machines at Dansk Retursystem can be used.
When counting is done electronically in RVMs, the central control unit registers various data about the packaging, such as packaging type, product type (GTIN), deposit group, sales group, recipient of returns, provider, and deposit code.
If the compactor or sealed container system is non-operational at return points, Dansk Retursystem assumes responsibility for counting, registration, and data forwarding.
In cases where containers cannot be scanned by a counting machine, manual control procedures are employed to identify the deposit mark.

Data Registration and Forwarding:

Dansk Retursystem electronically transmits the registered data and estimates (if the exact number of packaging items collected is uncertain) to a central server maintained by the operator with whom they have a contractual agreement. Subsequently, the data is deleted, and Dansk Retursystem is prohibited from copying, storing, or accessing the information.
Dansk Retursystem is obligated to enter into an agreement with an independent operator for the registration and forwarding of data regarding returned and collected empty single-use packaging. The operator is required to transmit the registered data to the auditing company and Dansk Retursystem.
The agreement between Dansk Retursystem and the operator should solely include the data specified in the law. If the operator submits any other data, Dansk Retursystem will terminate the system operator agreement.
A copy of the agreement between Dansk Retursystem and the operator is filed with the Danish Environmental Protection Agency (EPA).

Data Forwarding by the Operator:

The operator is responsible for forwarding data received from the central control units of RVMs and from Dansk Retursystem to the auditing company.
Additionally, the operator supplies data to Dansk Retursystem, specifying the number of returned and collected containers categorised by deposit groups and sales groups.

Overall, the Danish legislation ensures an accurate and controlled process for counting, registering, and managing empty beverage containers. Whether handled by return point operators or Dansk Retursystem, the system establishes secure and traceable financial data flow, facilitating proper auditing and monitoring by relevant entities.

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