Why waste management’s most important metric can’t tell you where value is created
Picture two loads of organic material leaving the same commercial district on the same morning, bound for the same anaerobic digester across town. Both are diverted from landfill, and both will count identically toward the operation’s diversion rate. But one hauler stops there—material moved, box checked. The other tracked where it went, measured the emissions it avoided, and sold that outcome into a market willing to pay for it. On the diversion report, the two loads look the same. On the profit and loss statement, they are not.
That gap—between two loads a metric calls equivalent and a market prices very differently—is the misalignment at the heart of the modern waste sector. The numbers the industry reports and the numbers that drive its day-to-day decisions have drifted apart.
Reporting in CO2e, managing in tonnes
Walk into most waste operations and you’ll find a genuine commitment to emissions disclosure sitting alongside an operational reality still governed by mass. Tonnes landfilled, tonnes diverted, diversion rate. These are the figures that set targets, trigger bonuses, justify routes, and get rolled up the chain. They’re objective, cheap to capture, and deeply embedded in a regulatory framework that grew up around a single question: how much material, how much landfill space, how many years until the cell is full.
That framework answered the capacity question well. It answers the value question poorly. Diversion rate treats getting material out of the landfill as the finish line, but the destination is the part that actually carries the climate and economic value, and it’s the part the metric throws away. Compost, renewable natural gas, and animal feed may all count equally toward a diversion target, even though the climate benefits and economic value of those outcomes differ substantially. Treating diversion as the destination, rather than something worth knowing and monetizing, is how an operation ends up flying with an instrument that’s precise about the wrong quantity.
The distinction is what happens after diversion. Hitting a diversion target and capturing the full climate-and-commercial value of a material are different achievements, and the metric rewards the first while staying silent on the second.
Your organics are a revenue stream you may not be capturing
Here’s where the misalignment shows up on the P&L. Organic waste that’s merely diverted is a problem solved. The same material, sent somewhere that pays for it, is an asset: feedstock for renewable natural gas, input for animal feed that displaces higher-emitting production, the basis for inset opportunities and avoided-emissions credits that an increasingly serious market will pay for. The point isn’t that one destination always wins—it’s that the destinations differ, and the diversion rate can’t see the difference.
And the people writing those checks are not thinking in tonnes of mass. They’re thinking in tonnes of avoided carbon. Emissions credits, insetting agreements, and carbon-priced feedstock contracts are all priced on the carbon avoided, with the verification and additionality scrutiny that pricing implies. A buyer purchasing the avoided emissions value of your organics is doing the carbon math whether or not the operation generating the material is. An operator can hit its diversion targets and still leave substantial climate and economic value on the table—uncounted, unpriced, and handed to whoever downstream is willing to do the accounting.
That’s the practical cost of treating diversion as the destination. The value is in where the material actually goes, and the operation that doesn’t track that is giving away a product it could be selling.
The journey isn’t free of roadbumps
The carbon side of this is not a solved system, and it would be dishonest to present it as one. Measurement is genuinely hard—avoided methane in particular is variable and difficult to quantify precisely. Additionality is a persistent and fair question: would the diversion have happened anyway? Verification frameworks are still maturing, and the risk of double-counting the same avoided tonne in two places is real and has to be designed against deliberately.
None of that is a reason to keep managing by a metric that can’t see value. It’s a reason to bring the same rigor the sector already applies to GHG reporting into the metrics that drive operations, to close the gap between the two rather than living with it. The diversion rate is wonderfully exact. It’s just exact about something that is no longer the whole point.
The new destination
As climate accountability hardens from voluntary disclosure into financial and regulatory obligation, and as the market for high-quality avoided-emissions value matures, the operators who win will be the ones whose internal metrics match the terms their buyers and regulators are already using. That means measuring—and managing by—where material ends up and what that destination is worth, not just whether it cleared the landfill.
The two loads will still count the same toward diversion. But only one question determines whether they’re equally valuable: what happened next? The operators that can answer that question—and accurately manage and price the data—will increasingly outperform the ones that can’t.
Disclosure: I lead Therm Solutions, which develops carbon finance programs for the refrigeration and food-waste sectors. This piece is about the metric, not the company.
