This has been a bear for us. Most cups are laminated paper or poly. The lamination is to prevent coffee from seeping into the paper and 1.) picking up the taste of paper and 2.) weakening the seams of the paper and increasing the risk of a consumer getting burned.
The plastics in the poly cups are not easily recycleable.
To a large degree, it is like the paper-plastic debate in supermarkets. At home, we use canvas bags picked up from trade shows, company give-aways and so on. The same principle has been working at work, too.
As an example, we sell into a lot of hospitals. One of the key selling points is that we give away cases of mugs to employees. Hospitals have to pay for waste removal, so if we can sell them on lower costs of waste disposal due to reusing mugs, then we have a win-win.
At one hospital, the mugs were given away at employee appreciation day and we got a couple of those Brother P-touch labeling machines so people could put their name and phone extension on it so it would be easier to keep track of whose mug was whose.
In the choice between reduce, recycle and reuse, we've found the best environmental answer in reuse.