The UK is coming into a period of major change in environmental policy. As Government looks to set out its stall and introduce new standards on the environment, every business will be required to make sweeping changes across areas ranging from waste reduction and carbon emissions to their use of product packaging.
One of the most seismic of these legislative changes will be the introduction of Extended Producer Responsibility (EPR) from 2023.
While this may seem a way off, businesses, and specifically procurement teams, must not be lulled into complacency. They will have to rethink every element of their product materials and packaging, and without fast and decisive action, some sectors will be facing crippling bills from 2023.
So what is EPR and why do firms need to get ahead of it?
Legislation on EPR will extend a producer’s responsibility for the products and packaging they use to the post-use stage.
The aim of this is to incentivize companies to design products that are easier to reuse, dismantle and recycle at end of life.
The converse impact of this, however, will be punishment and big bills for use of products that do not meet the new standards. In a sector like retail, where packaging plays a huge part in every element of the supply chain from manufacturers and producers to the end retailer, the bill is shaping up to be an important one. Talk to one of our procurement consultants for advice on how to avoid this and stay ahead of the legislation.
What is the expected cost of EPR and which sectors will take a hit?
The Government has estimated costs of the new EPR legislation will be c. £820m per year, but British Retail Consortium has estimated that the actual cost could, in fact, be over £2bn per year. In combination with the plastic tax, retailers could be looking at additional costs of £3bn.
Using an assessment of the largest producers of plastic packaging from WRAP, the circular economy, and resource efficiency experts, we have highlighted which sectors will be most impacted by the new legislation.
Our assessment shows that consumer-facing sectors, notably grocery manufacturers and retailers will be the hardest hit with an estimated £815m per year. Coming in 2nd place in our evaluation are the commercial and industrial sectors which are facing down an expected cost of £629m per year.
|Industry||Waste (kt)||Share of Waste (%)||Cost to Industry based on Waste Contribution (£million)|
|Commercial & Industrial||731||31%||≈629|
|Construction & Demolition||62||3%||≈53|
And within these sectors, certain businesses will be looking at a heftier bill than others. We have pulled out some of largest packaging producers below from a 2019 report from the Ellen Macarthur Foundation.
Coca-Cola, Mars, Nestle and Danone are responsible for producing 6 million metric tons of plastic every year, according to company-provided figures in a report from the Ellen MacArthur Foundation. Coca-Cola alone produces a massive 3 million tons.
To find out where you sit in this assessment, get in touch with our procurement consultant experts.
Are all firms in line for a big bill?
Many businesses have foreseen potential impact of the legislation and have worked hard to get ahead of it. A survey by The Grocer for example showed how major retailers are perceived in their action on reducing the negative environmental impact of their packaging, with Tesco leading the charge.
What strategies are companies using to get ahead of this?
Businesses are being forced to think differently and creatively to change their operations in line with EPR.
Re-imagine, reduce, re-use, recycle are the driving philosophies behind these new strategies and companies have adopted them in interesting ways. These are just some of the strategies adopted so far:
- Re-imagine – Procter & Gamble
- P&G has committed to a 30% reduction in plastic packaging used by its Ariel and Lenor brands across Europe by 2025. One of the key elements in this strategy is selling Ariel PODS washing tablets in bags as opposed to round tubs, saving 75% of packaging.
- Reduce – Sky
- Sky cut single-use plastic from its Q device and the box is now completely plastic free. The packaging it is shipped in is also made from 100% recycled cardboard and even the sticker that used to hold the old box together has been replaced by a natural adhesive that holds the box shut.
- Reuse – Unilever
- Unilever has introduced a range of new initiatives to encourage reuse of packaging across its consumer brands. It recently launched its first ever refill trials across seven of its brands in a UK Asda store, where consumers can buy product in reusable aluminium or stainless steel that they can reuse at their next trip.
- Recycle – Walkers crisps
- Walkers’ has launched a new packaging recycling scheme, developed in partnership with TerraCycle, that taps into an established network of recycling collection points around the UK.
So what is next for EPR?
The good news for the hardest hit sectors is that Defra and its devolved counterparts in Scotland, Wales and Northern Ireland are working with industry bodies to come up with a tailored solution.
The Industry Council for Packaging and the Environment (INCPEN), the Food and Drink Federation (FDF), and the British Retail Consortium (BRC), will all be working with government as it develops a system of EPR modulated fees which will soften the blow on these industries.
But although the blow will be softened, the need for reform in packaging is unavoidable. Government will increasingly clamp down as it aims for ambitious 2030 and 2050 targets on waste reduction. Businesses must therefore act fast before they’re hit by crippling fees.
How Proxima can help
As a procurement consultancy, we are often inspired and defined by who we work with. We provide expert procurement services to clients in the UK, US and around the world.
For more information on how our procurement consultants can help you prepare, reduce your spend, increase your cost savings, and optimize your procurement strategy – simply get in touch.