Dr. Robin Dhakal
But let’s take a step back. Is it really fair to place that
kind of responsibility on consumers? And more importantly, is it actually
working?
This article challenges that consumer-first narrative. While
well-meaning, it misplaces the real power to drive ESG progress. It’s not
individual choices that move the needle- it’s the decisions made by producers.
These are the companies that design, manufacture, and distribute the products
we rely on every day. If we want real impact, the responsibility needs to shift
from fragmented consumer efforts to the concentrated influence of corporations.
Take plastic pollution. Consumers are encouraged to sort
their recyclables, clean out containers, and hope they end up in the right bin.
But that focus on individual behavior hides a much bigger issue: the sheer
scale of plastic production. Since 1950, global plastic output has exploded
from just 2 million tons to over 400 million tons a year. No matter how
diligent individual recycling habits are, they’re completely outpaced by the
amount of plastic being produced in the first place.
And it’s not just plastic. The fast fashion industry churns
out tens of billions of garments a year, most designed to be worn just a few
times before ending up in landfills. Electronics are built to be replaced, not
repaired. In 2022 alone, the world generated 62 million tons of e-waste, and
only a small fraction of it was properly recycled. The rest? Often shipped off
to developing countries or dumped, causing serious environmental and health
issues.
Meanwhile, the companies behind all this waste are rarely
held accountable. Consumers are told to “buy less” or “reuse more,” while the
true drivers of environmental damage- the producers- continue to operate
unchecked. The economic model rewards them for pushing out more products,
faster, and the environmental and social costs are pushed onto the public.
That’s not just unfair; it’s a structural flaw in the market.
Companies know that consumers are paying attention to
sustainability. And many have responded- not with real change, but with
marketing.
Greenwashing is when companies highlight the small, positive
things they do while quietly maintaining business as usual. Companies often put
labels like ‘eco-friendly,’ ‘sustainable,’ or ‘carbon-neutral’ on products,
creating an illusion of responsibility. For example, fashion brands like
H&M and Zara promote “eco-conscious” collections, but their core business
is still built on overproduction and disposable clothing. Fossil fuel companies
run slick ads about their investments in renewable energy, but those
investments are often tiny compared to their continued expansion of oil and gas
operations. Shell, for example, has been accused of greenwashing by promoting
its investments in renewables while continuing to expand its fossil fuel
operations.
This kind of selective storytelling distorts how consumers
view companies. It also messes with the market. Greenwashing gives companies a
way to appear responsible without actually changing their practices. And
because companies know more about their true environmental footprint than
consumers ever could, they’re able to shape perceptions while avoiding
accountability.
Here’s where economics comes in. When companies produce
goods that cause pollution, generate waste, or create social harms, they often
don’t pay the full price of those consequences. Instead, the costs-
environmental clean-up, health impacts, and more- are pushed onto society.
These are known as “negative externalities.”
This leads to what economists call a market failure. If
prices reflected the true cost of goods- including their environmental and
social impact- polluting products would be more expensive, and cleaner
alternatives would be more competitive. But because those extra costs are
hidden, the market sends the wrong signals. It encourages overproduction,
overconsumption, and underinvestment in sustainability.
Fixing this means internalizing those costs- in other words,
making producers pay for the impact of what they make. That gives them a real
incentive to design better products, reduce waste, and invest in cleaner
technologies. They have the scale, resources, and control to make meaningful
changes. Consumers, on the other hand, can only do so much with limited budgets
and incomplete information.
So how do we shift that responsibility in a real, lasting
way? Policy is the answer- and one of the most powerful tools we have is
Extended Producer Responsibility (EPR).
EPR laws require companies to take ownership of their
products even after they’ve been sold. That means handling recycling,
collection, and safe disposal. When companies are financially responsible for
end-of-life product management, they have a direct reason to reduce waste at
the design stage, invest in greener supply chains, and build smarter systems
for reuse and recycling. For example, why design a product that’s difficult or
expensive to recycle if you’re the one paying for its recycling? EPR pushes companies
to innovate in product design, making goods more durable, reusable, repairable,
and recyclable. This means less waste, fewer virgin materials, and a smaller
environmental footprint.
Countries in Europe that have embraced EPR have seen
recycling rates soar. In some places, packaging recycling exceeds 70 to 80
percent. In contrast, the U.S., which relies more on voluntary efforts and
municipal programs, struggles to recycle even 10 percent of plastic. The
difference isn’t about consumers- it’s about producers being held to a
different standard.
But EPR isn’t the only policy option. Carbon taxes and
cap-and-trade programs can make pollution more expensive, pushing companies
toward cleaner alternatives. Material taxes on non-recyclable inputs can make
sustainable materials more cost-effective. Product standards- like requiring a
certain percentage of recycled content- can push companies to shift their
practices. And transparency laws that require companies to disclose their ESG
data make it harder for them to greenwash and easier for the public to hold
them accountable.
Critics often say these policies will raise prices. And yes,
that might happen — but those prices would finally reflect the real cost of
production, including the impact on the planet. Plus, these policies can unlock
innovation, create new industries, and lead to better products. In the long
run, the benefits far outweigh the costs.
Not everyone agrees with producer-focused responsibility. So
let’s address a few common criticisms.
Some argue that consumers still need to be part of the
solution. That’s true. But consumers can’t fix what they can’t see or control.
Most don’t have access to detailed information about how a product was made,
nor the power to influence supply chains. Producers do. And without policy
change, even the most eco-conscious consumer is stuck making difficult, costly,
and sometimes ineffective choices.
Others say that these kinds of regulations will raise
prices. And they might- at least initially. But in many ways, that’s the point.
Cheap goods often carry hidden costs that don’t show up on the receipt:
pollution, climate damage, health problems, and the long-term degradation of
ecosystems. Consumers still end up paying- just not at the checkout. They pay
through rising healthcare costs, the growing burden of disaster recovery, and
even through contaminants like microplastics found in food, water, and air.
Making producers bear those costs brings much-needed transparency and fairness
to the system. Plus, studies of Extended Producer Responsibility (EPR) schemes
have shown that while there may be some short-term cost increases, the
long-term benefits- including higher recycling rates, lower landfill expenses,
and greater resource efficiency- can help stabilize prices and lead to a more
resilient, sustainable economy.
Some worry that regulation stifles innovation. But history
shows the opposite. When faced with new rules, companies often invent better
products, processes, and technologies. Think of how emissions standards spurred
electric vehicles or how bans on certain chemicals led to safer alternatives. These
innovations not only met regulatory requirements but also created new markets
and competitive advantages. Forward-thinking companies already understand this;
they see sustainability as an opportunity for innovation and market leadership,
not just a compliance burden. Limits can push progress.
And yes, global supply chains are complicated. But producers
are the ones who run them. They decide what goes into a product, where it’s
made, and how it’s distributed. If anyone has the leverage to drive change,
it’s them- and they shouldn’t be let off the hook because the problem is big.
The idea that consumers are solely responsible for fixing
ESG challenges isn’t just wrong- it’s counterproductive. It distracts from the
real levers of change and allows companies to avoid accountability. We need a
system that puts responsibility where it belongs: with the producers. Through
smart, fair policies like Extended Producer Responsibility, carbon pricing, and
product standards, we can create a market where doing the right thing isn’t
just good PR- it’s good business.
Markets work best when they reflect reality. Right now, they
don’t. It’s time we corrected that- not by asking consumers to do more, but by
demanding that the people who make, market, and profit from the products we use
every day do their part.
That’s how we build an economy that truly serves people and
the planet.
4Ocean. (n.d.). Unpacking the Problem: Plastic Waste in the
Consumer Goods Industry. Retrieved from: https://www.4ocean.com/blogs/consumer-goods/unpacking-the-problem-plastic-waste-in-the-consumer-goods-industry
Changing Markets Foundation. (2020). Talking Trash: the
corporate playbook of false solutions to the plastic crisis. Retrieved from: https://changingmarkets.org/report/talking-trash-the-corporate-playbook-of-false-solutions-to-the-plastic-crisis/
Tax Foundation. (2024, September 26). Extended Producer
Responsibility (EPR) Policies. Retrieved from https://taxfoundation.org/research/all/state/extended-producer-responsibility-epr/
Dr. Robin Dhakal
Dr. Robin Dhakal is an Assistant Professor at
UAGC. He earned an M.A. and a Ph.D. in Economics from the University of South
Florida and a B.A. in Business/Economics and Mathematics/Computer Science from
Warren Wilson College. His academic research focuses on development economics
and political economy. He has been teaching Economics in colleges and
universities for the past 12 years. You can reach him at robin.dhakal@uagc.edu.
