Making Sense of Domestic and Global EPR Regs

Extended producer responsibility (EPR) requirements are reshaping the way brands package their products here and abroad. Complying with these environmentally focused packaging policies can be a challenging and costly undertaking, especially for brands with a global footprint. Packaging Digest spoke to EPR spoke to consultants and advocacy groups for their perspectives on managing the compliance process and its inevitable costs.

There are currently five packaging-related EPR laws in the US plus about a dozen states that have introduced similar bills, all without a federal legal framework, or even best practice guidelines, meaning each state must figure out its own policy, explains Scott Cassel, CEO and founder, Product Stewardship Institute (PSI), a strategic policy and technical consulting nonprofit that works to advance EPR in the US, Canada, and Europe.

While progress is always the goal, a lack of consistency from state to state could be a minefield, thanks to differing terminology definitions and varied timelines for registering, supplying data, and making payments to producer responsibility organizations.

Image: Cassel/Canva/Packaging Digest

Considering fees & costs.

There’s also the issue of cost. Brand owners are saddled with fees on all packaging materials covered under the new EPR laws, with fee structures incentivizing the use of certain materials over others. Fees are based on four factors: the type of materials used; the amount (weight) of each material used per year; the cost to manage these materials in the reuse, recycling, and composting system; and a range of other “eco-modulation” factors that could either add or subtract from the fee based on toxics, recycled content, environmental impact, and other environmental attributes.

Related:Here’s Help for Your Packaging EPR Compliance

The goal, Cassel says, is identifying the least sustainable (AKA: more costly) packaging materials and then tackling the related costs, timeframes, and technical feasibilities associated with switching to improved materials and design options. As such, he expects the probability of increased demands for companies that test and certify packaging materials for recyclability, reusability, compostability, and recycled content. “Companies such as UL Solutions, Biodegradable Products Institute, and ASTM, as well as the Federal Trade Commission's Green Guides for marketing claims, will play significant roles in ensuring fairness among producers,” he says.

Image: Wight/Canva/Packaging Digest

PSI works with stakeholders to develop EPR policy models that provide best practice elements, along with options to choose that best fits state preferences. Some industries engage with state and local governments early to get ahead of the policies and have been successful at harmonizing laws nationwide but others, like the packaging industry, have associations that represent producer interests, “which has made it more challenging for producers to coalesce under a unified policy,” Cassel says, advising producers to start mobilizing their resources and to engage with industry associations and governments in states poised for EPR developments to learn as much as possible about the new laws. 

“EPR laws raise the playing field so that brands using less impactful packaging have a competitive advantage over those whose packaging is more impactful,” he explains, noting that that the US federal government and many state governments have provided funding to assist companies in ramping up to use more sustainable packaging.

Sizing up global hurdles.

For international businesses, global regs present added layers of challenges spanning regional rules, fee structures, and reporting frequency. There’s also the issue of identifying who’s responsible for submitting data and paying required fees.   

“From a compliance perspective…sometimes it is the retailer or brand owner’s responsibility and sometimes that of the producer, or a mix of all in the packaging value chain,” explains Gillian Garside-Wight, consulting director at Aura, a packaging sustainability consultancy that works internationally with some of the largest brand owners and retailers in the world. “The best of these are eco-modulated so that businesses pay lower fees if their packaging is more sustainable, and higher fees if the packaging they use is more harmful to the environment.”

Other challenges include some areas requiring a minimum volume of sales for EPR compliance, while for other areas it’s based on turnover with no minimum at all. “A US-based business might find itself facing EPR fees even if it just sells one item online to a customer in Europe,” she warns. “Plus, EU regulations on EPR do not mean that every member state follows the same fee structure. In fact, each of the 27 member states interprets the legislation differently.”

What’s more, she advises that global businesses be mindful of their specific obligations since some EPR obligations may be data and fee-based while others are just data-based. “Given the wide range of EPR regulations in place, it is unlikely that an international brand will pay no fees at all however, ensuring the packaging is recyclable in the territory of sale and contains recycled content will keep their fees down, and ensure they are being responsible towards the future of the planet,” she says.

Image: Harris/Canva/Packaging Digest

Sydney Harris, policy director at Upstream, a nonprofit organization that specifically advocates for the advance of reuse systems, says it remains to be seen if brand owners might switch their packaging materials to comply with the EPR regulations and avoid fees. “Each of the policies is designed with this outcome in mind, so I certainly hope it's the case,” she says. “We’re seeing evidence from France that significant ‘malus fees’ (penalties) are needed to really drive producers to make different packaging decisions, so I think it will depend on how much each regulatory agency - as well as Circular Action Alliance and any other PROs that emerge - leans into these stronger incentives and disincentives.” 
There’s definite trepidation among brands and retailers about how much it all will cost, though Garside-Wight believes the highest cost will be the actual EPR fees rather than the testing of packaging materials. “Businesses are going to need accurate data on their packaging, across every product line and SKU at a granular level” she advises. “This must be coupled with a thorough understanding of their current and future EPR obligations for each country where they sell their products.” 

Image: Shetty/Canva/Packaging Digest

However, this shift also necessitates increased testing to identify potential, hazardous substances in packaging materials, both to comply with regulations and meet customer demands, says Abhishek Shetty, CEO,  Acquis Compliance.  “This, in turn, is leading to a rise in demand for testing lab services,” he says. “To ensure efficiency and cost-effectiveness, collaboration between brands, packaging suppliers, consultants, and testing labs is crucial.”

The silver lining, he says, is that packaging innovations are poised to lessen the environmental burden. “As regulations tighten, we are witnessing a significant shift towards eco-friendly packaging solutions [and it’s] driving a surge in demand for sustainable packaging materials,” he concludes.