Finance

Christian Klein, head of German software giant SAP, says Europe risks falling behind the U.S. and China if it ends up overregulating the AI sector.
“If you only regulate technology in Europe, how can our startups here in Europe … compete against the other startups in China, in Asia, in the U.S.?” Klein said.
Instead, he argues businesses need a more harmonized, pan-European approach to pressing issues like the energy crisis and digital transformation — and less regulation overall, not more.

Christian Klein, Co-CEO of German software and cloud computing giant SAP, speaks during a press conference to present SAP’s financial results for 2019 on January 28, 2020 in Walldorf, southwestern Germany. – German software giant SAP reported a bottom line undermined by heavy restructuring costs, but lifted forecasts for the year ahead.
Daniel Roland | AFP | Getty Images

Europe should avoid regulating artificial intelligence and focus its attention on the results of the technology instead, the CEO of German enterprise tech giant SAP told CNBC Tuesday.
Christian Klein, who has held the top job at SAP since April 2020, said Europe risks falling behind the U.S. and China if it overregulates the AI sector.

While it’s important to mitigate the risks associated with AI, Klein argued that regulating the tech while it’s still in its infancy would be misguided.
“It’s very important that how we train our algorithms, the AI use cases we embed into the businesses of our customers — they need to deliver the right outcome for the employees, for the society,” Klein said on CNBC’s “Squawk Box Europe” Tuesday.
“If you only regulate technology in Europe, how can our startups here in Europe, how can they compete against the other startups in China, in Asia, in the U.S.?” Klein added.
“Especially for the startup scene here in Europe, it’s very important to think about the outcome of the technology but not to regulate the AI technology itself.”

Instead, Klein argued, businesses need a more harmonized, pan-European approach to pressing issues like the energy crisis and digital transformation — and less regulation overall, not more.

Upbeat earnings

His comments came after SAP reported bumper third-quarter earnings late Monday. Shares of the software vendor jumped more than 4% to a record high.
The software giant posted total revenue of 8.5 billion euros ($9.2 billion) for the quarter, up 9% year-over-year as sales related to cloud products jumped 25%.
SAP raised its 2024 outlook for cloud and software revenue, operating profit and free cash flow. The German firm has been working toward a transition to cloud computing over the last decade.
In 2016, SAP acquired Concur, the business travel and expenses platform, in a bet that software would move to the cloud.
More recently, SAP has made AI a big focus of its strategy as it looks to reposition itself for faster growth after higher interest rates and macroeconomic headwinds dented tech spending and led to industry-wide layoffs.
In January, SAP announced a restructuring plan affecting over 7% of its global workforce — or the equivalent of 8,000 roles. More

Alumni from Klarna have gone on to create 62 new startups — more than any other fintech unicorn in Europe, according to a new report from venture capital firm Accel.
Out of 98 venture-backed fintech unicorns in the region, 82 have produced 635 new tech-enabled startups, according to Accel’s report.
Accel labels these companies “founder factories,” on the basis that they have become breeding grounds for talent that often go on to establish their own firms.

Buy now, pay later firms like Klarna and Block’s Afterpay could be about to face tougher rules in the U.K.
Nikolas Kokovlis | Nurphoto | Getty Images

LONDON — More startups are being spun out of Swedish digital payments firm Klarna than any other financial technology unicorn in Europe, according to a new report from venture capital firm Accel.
Accel’s “Fintech Founder Factory” report shows that alumni from Klarna have gone on to create a total of 62 new startups, including the likes of Swedish lending technology firm Anyfin, regulatory compliance platform Bits Technology and AI-powered coding platform Pretzel AI.

That is more than any other venture-backed fintech startup worth $1 billion or more in the region.
This includes the digital banking app Revolut, whose former employees have founded 49 startups. It also includes money transfer app Wise and online-only bank N26, where ex-staff at both firms have started 33 companies each, according to Accel’s data.

‘Founder factories’

Accel labels these companies “founder factories,” on the basis that they have become breeding grounds for talent that often go on to establish their own firms.

“We now have a very long list of large, durable, successful companies in Europe across the different ecosystems — including London, Berlin and Stockholm — that have been generating interesting outcomes,” Luca Bocchio, partner at Accel, told CNBC.
Out of 98 venture-backed fintech unicorns in Europe and Israel, 82 have produced 635 new tech-enabled startups, according to Accel’s report, which was published Tuesday ahead of a fintech event the firm is hosting in London Wednesday.

The data also factors in fintech unicorns based in Israel. However, most of the biggest fintech founder factories come from Europe.

Klarna’s workforce reduction

Klarna has attracted headlines in recent months due to commentary from the buy now, pay later giant’s founder and CEO, Sebastian Siemiatkowski, about using artificial intelligence to help reduce headcount.

Klarna, which currently has a company-wide hiring freeze in place, cut its overall employee headcount by roughly 24% to 3,800 in August this year. Siemiatkowski has said that Klarna was able to reduce the number of people it hires thanks to its implementation of generative AI.
He is looking to further reduce Klarna’s headcount to 2,000 employees — but has yet to specify a time for this target.
Klarna’s ability to produce so many new startups had little to do with cutbacks at the company or its focus on using AI to boost worker productivity and hiring less people overall, according to Accel’s Bocchio.
Asked about why Klarna topped the ranking of fintech founder factories in Europe, Bocchio said: “Klarna is an organization that is coming of age now.”
That means it is currently “well positioned to produce interesting founders,” Bocchio added — both because it’s large and has been around for a long time, and because of the “interesting” ways its staff work internally.

Staying close to home

Another notable finding from Accel’s report is that most companies founded by former fintech unicorn employees tend to do so in the same cities and hubs their employer was founded in.
Nearly two-thirds (61%) of companies founded by former employees of fintech unicorns were founded in the same city as the unicorn, according to Accel.
More broadly, the numbers show that Europe is seeing a “flywheel effect,” according to Bocchio, as tech firms are scaling to such a large size that staff can take learnings from them and leave to set up their own ventures.
“I think the flywheel is spinning because that talent is remaining inside the flywheel. That talent is not going anywhere.” This, he said, “speaks to the maturity and appetite” of individuals within Europe’s fintech founder factories. “We expect this trend to continue. I don’t see any reason why it should stop.” More

HSBC has unveiled a major overhaul, announcing a new geographic setup, consolidated operations and a new CFO — the lender’s first female finance chief.
This is the second heavyweight leadership shakeup for HSBC in recent months, after former finance boss Georges Elhedery was named CEO of the group back in July.
The bank also announced plans to restructure into four divisions: Hong Kong, U.K., international wealth and premier banking, and corporate and institutional banking.

Aaron P | Bauer-Griffin | GC Images | Getty Images

HSBC on Tuesday unveiled a new geographic setup and consolidated its operations into four business units, amid a key overhaul that delivered the lender’s first female finance chief.
The bank’s shares were flat in early London trade Tuesday. The U.K.-listed stock is up more than 6% over the year-to-date.

As part of the restructuring outlined in regulatory filings with the Hong Kong bourse, HSBC plans to divide its operations between an “Eastern markets” branch, reuniting Asia-Pacific and the Middle East, along with a “Western markets” division, comprising the non-ringed-fenced U.K. bank, the continental European business and the Americas.
Chinese insurer Ping An, HSBC’s largest shareholder with a more-than-9% stake, has previously campaigned for the spinoff of HSBC’s Asian business from the rest of the group’s operations — although this was ultimately rejected during the bank’s annual general meeting last year.
The bank on Tuesday also announced plans to streamline its businesses in a bid to “reduce the duplication of processes and decision making.” From January, it will operate through four divisions: Hong Kong, U.K., international wealth and premier banking, and corporate and institutional banking.
“The new structure will result in a simpler, more dynamic, and agile organisation as we focus on executing against our strategic priorities, which remain unchanged,” Elhedery said Tuesday in a statement, adding that the shakeup will help propel HSBC in its “next phase of growth.”
The bank’s new corporate and institutional banking unit will bring together its commercial banking business (outside of Hong Kong and the U.K.), global banking and markets business, and Western markets wholesale banking operations.

UBS analysts said the magnitude of the required restructuring was currently “unknown and important.”
“Aligning functions for a group with 213,978 staff involves exceptional costs, a divisional shift provides the opportunity for new CEO cost reductions,” they wrote in a Tuesday note entitled “Simpler, faster, better?”.
“Also important is whether this structure will prompt other changes: for example, (i) where does Australian retail (65% of loans are [residential] mortages) fit in this structure? (ii) is insurance manufacturing key to international wealth? and (iii) does HSBC need a bigger corporate Latam presence?”

Change at the top

Like many European lenders, HSBC has benefitted from a high interest rate environment since the Covid-19 pandemic, but now faces the loss of that support after the European Central Bank started loosening monetary policy in June.
Back in July, HSBC posted estimates-beating pretax profit of $21.56 billion in the first half of the year, announcing a share buyback program of up to $3 billion. The bank is set to next report its financial results on Oct. 29.
Earlier this month, the Financial Times reported that Elhedery was targeting the bank’s senior management as part of cost-cutting restructuring plans that could save as much as $300 million.
Amid the managerial overhaul announced Tuesday, HSBC said Pam Kaur — currently group chief risk and compliance officer — will assume the CFO post on Jan. 1, taking over from interim Chief Financial Officer Jon Bingham.
This is the second heavyweight leadership shakeup for HSBC in recent months, after former finance boss Georges Elhedery was named CEO of the group back in July. More

Residents of Beirut are, by now, used to warnings from the Israel Defence Forces ahead of bombing runs. Typically, these instruct locals to stay away from a tower block suspected of harbouring fighters, or perhaps a school said to double as a weapons cache. The warning on October 20th was a little different. It told people to steer clear of branches of al-Qard al-Hassan (AQAH), a bank. More

Diana Greene Foster led The Turnaway Study, a landmark research study on the socioeconomic outcomes for Americans who are “turned away” from abortion.
Foster, a demographer and professor at the University of California San Francisco, found higher instances of poverty and a greater likelihood of bankruptcies and evictions for women who couldn’t get an abortion.
Abortion is on the ballot in 10 states. One poll suggests it’s the most important issue for young women on Election Day.

Arizona residents rally for abortion rights on April 16, 2024 in Phoenix, Arizona.
Gina Ferazzi | Los Angeles Times | Getty Images

Abortion is an important issue for many voters, especially young women, heading into the November election.
Abortion access is about more than politics or health care; it’s also a personal finance issue, said Diana Greene Foster, a demographer who studies the effects of unwanted pregnancies on people’s lives.

Foster, a professor at the University of California San Francisco, led The Turnaway Study, a landmark research study on the socioeconomic outcomes for Americans who are “turned away” from abortion. The study tracked 1,000 women over a five-year period ending January 2016. The women in the study had all sought abortions at some point before the study commenced; not all received one.
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In November, voters in 10 states — Arizona, Colorado, Florida, Maryland, Missouri, Montana, Nebraska, Nevada, New York and South Dakota — will choose whether to adopt state ballot measures about abortion access.
Such ballot measures follow a U.S. Supreme Court decision in 2022 that struck down Roe v. Wade, the ruling that had established a constitutional right to abortion in 1973.
Nationally, women under age 30 rank abortion as the most important issue to their vote on Election Day, according to the KFF Survey of Women Voters, which polled 649 women from Sept. 12 to Oct. 1. It ranked as the third-most-important issue among women voters of all ages, behind inflation and threats to democracy, according to the poll from KFF, a provider of health policy research.

Abortion is among the least-important issues for registered Republicans, according to a Pew Research Center poll of 9,720 U.S. adults conducted Aug. 26 to Sept. 2.
CNBC spoke with Foster about the economics of abortion access and the financial impacts of the end of Roe v. Wade.
The conversation has been edited and condensed for clarity.

Low earners most likely to seek an abortion

Greg Iacurci: Can you describe the population of women who typically seek abortions in the U.S.?
Diana Greene Foster: One good thing about The Turnaway Study is that our demographics closely resemble national demographics on who gets abortions.
More than half are already parenting a child. More than half are in their 20s. A small minority are teenagers, even though lots of people think teenagers are the main recipients.
It’s predominantly people who are low-income. That’s been increasingly the case over time. It’s become disproportionately concentrated among people with the least economic resources.
GI: Why is that?
DGF: I think wealthier people have better access to contraceptives, even after the Obamacare-mandated coverage. Not everyone benefits from that. Not all states participate in that.
[Medical providers] still give contraceptives out. There are 20 states that have laws that say you should be able to get a year’s supply at a time, but almost nowhere is that actually available. The law says you should be able to get it, but you don’t. I led the studies that showed that if you make people go back for resupply every month or three months, as is very commonly done, you’re much more likely to have an unintended pregnancy. The laws have changed, but practice hasn’t changed. Access is not perfect yet.
Also, some people have abortions who have intended pregnancies because something went wrong with their health, with the fetus’s health, with their life circumstances. So even contraceptives aren’t the ultimate solution.

Greater likelihood of poverty and evictions

GI: What are the economic findings of your research?
DGF: When we follow people over time, we see that people who are denied an abortion are more likely to say that their household income is below the federal poverty line. They’re more likely to say that they don’t have enough money to meet basic living needs like food, housing and transportation.

Diana Greene Foster
Courtesy: Diana Greene Foster

Wanting to provide for the kids you already have is a common reason for abortion. We see that the existing children are more likely to be in poverty and in households where there aren’t enough resources if their mom couldn’t get an abortion.
[They’re also] more likely to have evictions, have a larger amount of debt if they’re denied an abortion.
GI: Can we quantify those impacts?
DGF: For example, six months after seeking an abortion, 61% of those denied an abortion were below the poverty line compared to just under half — 45% — of those who received an abortion. The higher odds of being below the [federal poverty line] persisted through four years.
And based on credit reports, we find that women who were denied abortions experienced significant increases in the amount of their debt 30 days or more past due, to an average of $1,749.70, a 78% increase relative to their pre-pregnancy [average]. The number of public records, such as bankruptcies, evictions and court judgments, significantly increased for those denied abortions, by 81%.
GI: Why does this happen?
DGF: Having a kid is a massive investment. Deciding to parent a child relies on an amount of social support and housing security and access to health care, and our country isn’t at all set up to provide those things for low-income people.

Why costs are both rising and falling for women

GI: Your study took place at a time when Roe v. Wade was still the law. That’s no longer the case. How do you expect these economic consequences might be impacted?
DGF: In The Turnaway Study, people were denied abortions because they were too far along in pregnancy, but now you can be denied an abortion at any point in pregnancy in something like 13 states. So, it potentially affects a much larger group of people.
But there have been other changes which have to do with resources to help people travel and information about how to order medication abortion pills online. So, it isn’t the case that everyone who wants an abortion is now carrying a pregnancy to term.
There has been a lot of effort to circumvent state laws, and I think The Turnaway Study really reveals why. People understand their circumstances, and they are very motivated to get care, even when their state tries to ban it.
GI: What are the financial impacts some women in those states might encounter?
DGF: I’m actually studying the economic costs of the end of Roe and travel [expense]. Costs went up by $200 for people traveling out of state. People were delayed more than a week.
Under Roe, people could drive to an abortion clinic or get a ride; [after Roe ended,] they were much more likely to be flying, having to take more modes of transportation. Over half stayed overnight. They traveled an average of 10 hours. That means taking time off work, too. So, it dramatically increased the cost for those who traveled to get an abortion.

There are people who ordered pills online who are not [included] in the study. For those people, the cost may have gone down, because it’s possible to order pills online for less than $30.
But you have to know about it, and you have to have an address, and you have to have internet, and it takes a level of knowledge to be able to pull that off. There can be a need for follow-up medical care, so you have to be able to get that. More

The Nasdaq MarketSite in New York, US, on Monday, Sept. 16, 2024. 
Yuki Iwamura | Bloomberg | Getty Images

KKM Financial has converted its Essential 40 mutual fund into an ETF, joining the growing shift by asset managers to a more tax-efficient fund model.
ETFs make it easier for investors and financial advisors with taxable accounts to choose when to create capital gains or losses. This differs from mutual funds, which can sometimes hit their investors with an unwanted tax bill due to withdrawals or portfolio changes.

“When you look at the tax efficiency of an ETF compared to a mutual fund, it is much more advantageous,” said Jeff Kilburg, founder and CEO of KKM and a CNBC contributor. “A lot of the wealth advisors that I work with really have issues with the capital gain distribution typical to a mutual fund.”
Many asset managers have been converting their mutual funds to ETFs in recent years, due in part to a 2019 SEC rule change that made it easier to run active investment strategies within an ETF. The number of active equity mutual funds has fallen to its lowest level in 24 years, according to Strategas.
More broadly, many asset managers are pushing the Securities and Exchange Commission to allow ETFs to be added as a separate share class within existing mutual funds.
The newly converted KKM fund will trade on the Nasdaq under the ticker ESN. The goal of the Essential 40 is to allow investors to “buy what you use” in one equal-weighted fund, according to Kilburg. Its holdings include JPMorgan Chase, Amazon, Waste Management and Eli Lilly, according to FactSet.
“We believe without these companies, the U.S. economy would be hindered, or would be in trouble,” he said.

The old mutual fund version of the Essential 40 had a three-star rating from Morningstar. Its best relative performance in recent years came in 2022, when it declined less than 11% — much better than the category average of about 17%, according to Morningstar.
Equal-weighted funds can often outperform market-cap weighted indexes during downturns. They’ve also been a popular strategy this year, due in part to concerns that the market was too reliant on the so-called Magnificent Seven stocks. The Invesco S&P 500 Equal Weight ETF (RSP) has brought in more than $14 billion in new investor funds this year, according to FactSet.
In 2024, the KKM fund was up about 16% year to date before its conversion, with roughly $70 million in assets, according to FactSet.
The ETF will have a net expense ratio of 0.70%, equal to that of the old mutual fund. More

Robinhood launched margin trading in the U.K. Monday, allowing users to leverage their existing asset holdings as collateral to purchase additional securities.
Margin trading where traders invest using borrowed cash to increase the size of their trades, is a risky investment strategy.
Robinhood’s U.K. boss Jordan Sinclair said the firm had to get the local regulator “comfortable” with its approach to get the green light on launching margin in the country.

Tthe Robinhood logo is displayed on a smartphone screen.
Rafael Henrique | Sopa Images | Lightrocket | Getty Images

LONDON — Robinhood said Monday that it’s rolling out margin investing — the ability for investors to borrow cash to augment their trades — in the U.K.
The U.S. online investment platform said that the option would allow users in the U.K. to leverage their existing asset holdings as collateral to purchase additional securities.

The launch of margin trading follows the recent approval of the product, after Robinhood held conversations with Britain’s financial regulator, the Financial Conduct Authority (FCA).
Margin trading is a rarity in the U.K., where regulators see it as more controversial because of the risks involved to users. Some platforms in the country limit margin trading for only high-net-worth individuals or businesses. Other firms that offer margin investing in the U.K. include Interactive Brokers, IG and CMC Markets.
The rollout comes after Robinhood debuted a securities lending product in the U.K. in September, allowing consumers to earn passive income on stocks they own, as part of the company’s latest bid to grow its market share abroad.
The stock trading app touted “competitive” interest rates with its margin loans offering. Rates offered by the platform range from 6.25% for margin loans of up to $50,000 to 5.2% for loans of $50 million and above.

Jordan Sinclair, president of Robinhood U.K., said that many customers feel they can’t access more advanced products like margin trading in Britain, as they’re typically reserved for a select few professional traders investing with the likes of heavyweight banks JPMorgan Chase, Goldman Sachs, Morgan Stanley and UBS.

“There’s so many barriers to entry,” Sinclair told CNBC in an interview. “Ultimately, that’s what we want to break down all those stigmas and barriers to just basic investing tools.”
He added, “For the right customer this is a great way to diversify and expand their portfolio.”

A risky business

Investing on borrowed cash can be a risky trading strategy. In the case of margin trading, investors can use borrowed money to increase the size of their trades.
Say you wanted to make a $10,000 investment in Tesla. Usually, you’d have to fork out $10,000 of your own cash to buy that stock. But by using a margin account, you can “leverage” your trade. With 10x leverage, you’d only need to have $1,000 upfront to make the trade, instead of $10,000.
That can be a lucrative strategy for professional traders, who can make even larger returns than on usual trades, if the value of the purchased asset rises significantly.

It’s a riskier path for retail traders. If the value of the asset you’re buying on borrowed cash drops significantly, your losses will be dramatic, too.
Robinhood announced it was launching in the U.K last November, opening up its app to Brits in March. At the time of launch, Robinhood was unable to offer U.K. users the option of margin trading, pending discussions with the FCA.
“I think with the regulator, it was just about getting them comfortable with our approach, giving them a history of our product in the U.S., what we’ve developed, and the eligibility,” Robinhood’s Sinclair told CNBC.
Sinclair said that Robinhood implemented robust guardrails to ensure that customers don’t invest more cash than they can afford to lose when margin investing.
The platform requires users seeking to trade on margin to have a minimum of $2,000 of cash deposited in their accounts. Customers also have to opt in to use the product — they’re not just automatically enrolled for a margin account.
“There are eligibility criteria. There is a way to review appropriateness of this product for the right customer,” Sinclair added. “Fundamentally, that’s a really important part of this product. We recognize it isn’t for the novice investor that’s just getting started on our customer.”
Robinhood says that its customers’ uninvested cash is protected to the tune of $2.5 million with the U.S.’ Federal Deposit Insurance Corporation, which the firm says adds another layer of protection for users. More

Donating my old queen-sized mattress proved difficult. I recycled it and paid nearly $100 for the service in New York.
More than 75% of mattress materials, like wood, foam, steel and fiber, can be recycled.
The economics can be challenging for recyclers.
Some states have enacted mattress recycling laws that make it cheaper for consumers. However, state programs are funded by a fee on mattress purchases.

The author paid a company, Renewable Recycling, to pick up and recycle his queen-size mattress in New York City.
Greg Iacurci

I paid $95 to recycle a mattress.
It may sound odd, silly even, to pay so much to dispose of a run-of-the-mill household item.

But the economics of mattress recycling illustrate why it can be difficult — and costly — to be an eco-friendly consumer in the U.S.
Americans discard about 15 million to 20 million mattresses each year, according to the Mattress Recycling Council. That’s an average of about 50,000 per day.
Most end up in a landfill, experts said.
Mattresses are “one of the hardest things to recycle,” said Alicia Marseille, a sustainability and circular economy expert at Arizona State University.
“It’s a massive waste stream,” she said.

‘It’ll probably be there for hundreds of years’

Mattresses at a garbage dump.
Robert Brook | Corbis | Getty Images

My mattress — a queen-sized hand-me-down from family and probably close to two decades old — was in desperate need of replacement. The average mattress has a lifespan of about 14 years, from manufacture to consumer disposal, according to MRC.
But what to do with it?
I live in Brooklyn, where residents can dispose of a mattress for free as part of routine trash pickup.
As someone who meticulously tries to cut waste in everyday life — avoiding single-use plastics, composting food scraps — it was painful to think of mine wasting away in a landfill.

“If you put your mattress in a landfill, it’ll probably be there for hundreds of years, just sitting there,” said Meg Romero, the recycling and litter control superintendent for Charles County, Maryland.
Surely, I can find a new home for it instead, I thought.
Wrong.
After two weeks of unsuccessful dispatches to local homeless shelters, organizations like The Salvation Army and Goodwill, and community forums like Buy Nothing and The Freecycle Network, I’d exhausted my patience for a free-giveaway option.
Individuals who donate a mattress to certain groups may be able to claim a tax deduction for its fair market value on their federal tax return. Taxpayers would need to itemize their deductions to benefit.
Did I neglect to reach out to some interested parties? Probably. Might someone else have different results? Yes. But my personal cost-benefit analysis dictated that it was time to ditch donations.
I researched some recycling options, and selected Renewable Recycling Inc., based in East Rockaway, New York. There are few other U.S. companies that do such work, experts said. A directory compiled by MRC lists just 55.

How a mattress is recycled

Mattresses are picked up and placed into a truck to be hauled to a recycling facility at the Prima Deshecha landfill in San Juan Capistrano, California, on March 10, 2022.
Mark Rightmire/MediaNews Group/Orange County Register via Getty Images

More than 75% of a mattress is recyclable, according to MRC. Some companies put it at closer to 90%.
Recyclers strip them of materials like wood, steel, and various foams and fibers, and sell them into secondary markets.
The materials are then re-purposed: Shredded foam and fibers as carpet padding, animal beds or insulation; wood as mulch and fuel; and springs as scrap steel, for example.
“If you can recycle, it will give those materials another life to be used as something else,” said Romero of Charles County, which launched a mattress recycling program for residents on Aug. 1.
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That re-use has other environmental benefits. For example, there’s a reduced need to extract or source new materials for manufacturing, which cuts greenhouse gas emissions and water and energy use, experts said.
Unusually, the Charles County service is largely free for residents. They can bring two items a day — like a mattress and box spring — to the Charles County Landfill for recycling for no charge. Additional items cost $10 per piece.
Residents recycled more than 900 mattresses in September, over double officials’ estimates, Romero said. The county contracts with a Baltimore-based company, Deco Solutions, to manage the process.

Charles County’s motivations weren’t purely environmental, though.
Mattresses are bulky, taking up precious real estate in the county landfill, Romero said.
“A landfill is a limited, finite space,” said Peter Conway, the president of Spring Back Colorado, a recycler based in Commerce City. “They want to put things that break down, things that are easily compactible.”
“Mattresses are kind of the antithesis of that,” Conway said. He expects to divert 8 million pounds of waste from Colorado landfills this year.

Why mattress recycling can be expensive

Shredded old mattress materials.
Guillaume Souvant | Afp | Getty Images

The $95 fee I ultimately paid to Renewable Recycling is “pretty standard” among mattress recyclers, Conway said.
The expense covered mattress pickup from my Brooklyn apartment and transport to the company’s warehouse in Oceanside, New York. (I could have saved $55 by dropping off the mattress myself, but I don’t own a car.)
Spring Back Colorado also charges $40 for each mattress and box spring that a consumer drops off. An additional fee of $60 or more applies, depending on the travel distance, if a consumer asks for home pickup.
Mattresses are harder to recycle than other items like plastic bottles, aluminum cans and cardboard, said Romero, of Charles County.

“They’re all made completely differently,” Romero said. “There’s no uniform construction, and there are several different types of materials used to make one mattress.”
The process is more time- and labor-intensive, she said. Often, workers must break them down by hand.
For example, cotton remnants must be picked off steel mattress springs before it can be shredded or baled for sale to scrap markets, according to the Mattress Recycling Council. Staples also need to be removed from wood frames before going to market, it said. Each coil in a “pocket coil mattress” is individually wrapped in fabric and must be separated, Romero said.

‘Razor-thin margins’

Additionally, mattress materials yield only “modest revenues” when sold, Reid Lifset, a research scholar and resident fellow in industrial ecology at Yale School of the Environment, wrote in an e-mail.
Those revenues often depend on fluctuating commodity prices.
“We don’t set the price for a ton of foam or steel,” Conway said. “One day we might get 18 cents a pound and the next week only get 10 cents.”

If you put your mattress in a landfill, it’ll probably be there for hundreds of years, just sitting there.

Meg Romero
recycling and litter control superintendent for Charles County, Maryland

There must also be a market demand for those commodities — and sometimes those markets aren’t nearby, adding to shipping costs.
For example, Spring Back Colorado used to send all its foam and ticking to a recycling center in California, Conway said. It cost the company about $2,000 to ship each truck load.
About a year ago, that California partner stopped accepting shipments: Demand had dried up for material, Conway said. He called companies as far afield as Mexico, Canada, India and Egypt to find alternative placement, but ultimately found a new partner in Texas, he said.
“It’s pretty razor-thin margins we operate on,” Conway said.
Spring Back Colorado earns additional revenue from mattress pickups and drop-offs, and from partnerships with businesses and municipalities, he said.
“Someone has to pay,” said Marseille, of Arizona State University. “It usually falls to consumers.”

Consumer fees subsidize recycling efforts

Kosamtu | E+ | Getty Images

Some states and municipalities are making it more cost-effective for consumers to recycle their mattresses.
For example, Charles County, Maryland, funds its fledgling mattress program largely with taxpayer money. About $150 of residents’ taxes are allocated to the county’s Environmental Resources division each year, for services like curbside recycling, disposal of yard waste, oil and anti freeze — and now mattress recycling, Romero said.
Three states — California, Connecticut and Rhode Island — have enacted mattress recycling laws since 2013. A similar program in Oregon is launching Jan. 1, 2025.
The laws require the mattress industry to develop and administer state programs to collect and recycle discarded mattresses for free.
The initiative is funded by consumers, though.

Someone has to pay. It usually falls to consumers.

Alicia Marseille
sustainability and circular economy expert at Arizona State University

Individuals and institutions (like hotels and dormitories) in such states pay a fee each time they buy a mattress: $10.50 in California, $11.75 in Connecticut, $20.50 in Rhode Island and $22.50 in Oregon, said Amanda Wall, a spokesperson for the Mattress Recycling Council. MRC is a nonprofit created by the International Sleep Products Association, a mattress industry trade group, to build and run these state programs.
Retailers forward those fees to MRC, which funds the consumer recycling efforts. Ultimately, the fees subsidize free mattress drop-off and recycling at any MRC-funded collection site in participating states, Wall said. (Recyclers can still charge a fee for mattress pickup, she said.)
The mattress industry has pushed for similar legislation in New York, Massachusetts, Maryland and Virginia this year, and plans to keep working with these state legislatures in 2025, Wall said.

The laws are an example of “extended producer responsibility” policies states have adopted more broadly, forcing companies to bear some end-of-life responsibility for their products, said Marseille.
Some question whether consumers shoulder too much of the burden right now.
“Companies aren’t making, for the most part, more easy-to-recycle products,” Conway said. “It’s on the consumer to figure out how to responsibly get rid of their items in a conscious way.”
He thinks it needs to be easier and more affordable for consumers to recycle to promote that behavior.
“At the end of the day, if you have two options, and one is throw it in a hole in the ground, and the other is recycle it, 95% of the people will go with that cheaper option,” Conway added. More