EPR for Packaging – are you covered?

EPR for packaging has arrived. Businesses have already started collecting data, and the first data submissions are due by October. So, What is EPR? In a nutshell, extended producer responsibility (EPR) for packaging makes producers responsible for the cost of collecting, sorting and recycling household packaging. This includes the funding of council recycling collections and management of litter. The aim is to create a more circular economy, and to provide an incentive to reduce and design more recyclable packaging. In January, packaging producers were asked to start collecting data, and the first data submissions are due in October. With the total cost of EPR expected to rise from £140m in 2021 – and likely to reach higher levels in 2022 – to £1.7bn per year, businesses will need to budget for significant increases. . The volume of data required will also increase. To give an idea of scale, reporting under packaging compliance currently takes the average Reconomy Group company Valpak customer 8.3 days. With up to 11 submission dates under the new system, our calculations show that the combined reporting time for EPR, Plastic Packaging Tax and the deposit return scheme (DRS) will rise to 30.5 days – an increase of 368%. Who is affected? On the surface, the threshold for compliance remains the same. Those businesses with a turnover of over two million pounds, or those which place more than 50 tonnes of packaging onto the market, must report twice-yearly and purchase packaging recovery notes (PRNs) through a compliance scheme. A percentage of the PRN value is returned to recyclers to fund infrastructure. The new system incorporates two marked changes. Under EPR, compliance will be shouldered by just one area of the supply chain – brand owners, importers and online marketplaces. At the same time, smaller businesses will take on new responsibilities. While not obligated financially, those with a turnover of more than one million pounds, or which place 25 tonnes of packaging onto the market, will still need to report once a year. How much more will I pay? Cost increases are part and parcel of the ‘producer pays’ principal behind EPR. The 40 million packaging product details held in Valpak’s database enable us to forecast costs across typical household products. For example, analysis shows that a four-pint bottle of own-brand milk is likely to increase from 0.28p to £1.1p under EPR, while a fifty-inch TV will rise from 27p to £1.12. What is eco-modulation? As EPR progresses, the government plans to introduce eco-modulation, offering a reduced rate for those packaging items that can demonstrate greater recyclability. Some product designs have already changed to meet customer demand or internal targets – Easter eggs no longer come in non-recyclable blister packs, and toilet rolls are wrapped in paper instead of plastic. The details of eco-modulation have not yet been released but, when it arrives, we can expect to see many more of these changes. The rise of data If there is one message to take from this article, it is to start collecting data. The level of information required under EPR is staggering, and calls for a whole new set of metrics. In our own reporting software, we have increased the number of submission fields from 117 to 600 to allow producers to track their progress under EPR. With the arrival of eco-modulation, we expect this to exceed 1,000 fields. Sourcing data As well as talking to finance to make sure that funds are in place to meet the new costs, it is important to liaise with IT to prepare for data collection. Next update supplier contact lists until you are certain you are speaking to the right person – it is amazing how often the CEO is given as the main point of contact. Make sure that suppliers understand what is being asked of them, and give them a clear timeframe. Sourcing data at a granular level is hard enough with own-brand products; for importers, the task is even more challenging, so factor in enough time for overseas suppliers to turn around the information you need. The good news is, packaging producers are rallying to gather the correct data. However, despite their efforts, and even with dedicated members of staff in place, many are still flummoxed by the level of data, components and methodology required. Under Plastic Packaging Tax, for example, submitted evidence has been declined. It may sound obvious, but the key is to make sure that evidence provided by suppliers is correct. Tens of thousands of suppliers are now engaged with our online Product Data Hub, which collects data from suppliers and allows producers to spot bottlenecks. Last year, the hub recorded three million product lines, and each of these underwent an approval process – similar to online banking – before the information was delivered to producers. For global businesses, collected data can then be easily applied to submissions across multiple countries. As EPR extends beyond packaging, electricals and batteries to other products, these too will be added to the mix. Changing tide Faced with the demands of this wave of new regulations, it is easy to forget the rationale behind EPR. The government hopes the move will kick-start a genuinely circular economy, reducing carbon emissions, and bringing a more coordinated approach to every area of the packaging lifecycle. Many producers and suppliers are already contemplating change, commissioning lifecycle assessments and considering a switch to alternative materials or polymers. These changes are not just beneficial for the environment. Valpak’s benchmarking team compares packaging across product lines, to forecast costs under EPR and provide recommendations. We compared potential savings for common grocery packaging products, and found that switching to ‘best in class’ for pasta packaging would result in a saving across the whole category of £496,000. Conclusion As we embark on the greatest change to packaging legislation since packaging legislation began, we need to look to the future and envisage a world of more streamlined, recyclable packaging. Then return to the present, and concentrate on gathering the numbers needed to plot our route.