Over the past two decades, more and more countries have implemented Extended Producer Responsibility (EPR) programs to address the growing cost of packaging disposal and alleviate the burden on governments to pay for it. The programs, which shift the cost of collecting and recycling onto those who place the packaging on the market (in most cases, the obligated companies are brand owners or first importers), have been in place in Europe since the 1990s and have been established more recently in parts of Asia, Latin America and Canada. Now, interest in EPR is gaining strength in the U.S. as local governments look for ways to ensure funding of recycling and hold brand owners more accountable.

The idea behind EPR is to increase recycling by funding the infrastructures and to internalize the costs of recycling services into the product. Many, but not all, EPR laws also privatize the recycling systems. It is also intended to incentivize companies to choose materials that are less harmful to the environment by holding businesses financially responsible for their disposal. To accomplish this objective, the programs charge brand owners for what they put on the market—and that doesn’t just mean the packaging directly around the product. The scope of EPR can extend to transport packaging, service packaging (e.g. bags, gift wrap, or foodservice ware) and even to printed inserts and coupons the consumers take with them when they leave the store. In some jurisdictions, just business-to-consumer packaging is covered while in others, such as Belgium, both business-to-consumer and business-to-business is subject to EPR.

Fee or Tax?

In most countries, the charge for packaging recovery is a “fee,” but in some, like Denmark, it is a tax. While the specifics of EPR systems can differ by country, each requires obligated companies to pay compliance organizations a specified amount based on the amount (weight) and type of material for every piece of product packaging they sell there. These fee rates are adjusted each year by the waste recovery organizations according to formulas that consider a variety of factors, including collection, handling, sorting, processing, infrastructure, and administrative costs, offset by the value of the material collected.

Generally, the more difficult the material is to recycle, the higher the fee. For example, plastics, laminates and composites can cost up to 500% more than other materials. And in some jurisdictions, brand owners face an even stricter penalty when they introduce packaging that contaminates the recycling stream. In France, a disruptor fee of an additional 50% to 100% is imposed on plastic PET bottles containing aluminum (labels, plugs, caps, inks), using PVC sleeves, or silicone, as well as on glass packaging with ceramic or porcelain caps.

Conversely, to drive better design decisions, some jurisdictions award bonuses to proactive brand owners. In France, companies receive a two percent reduction in fees if they implement a preventative measure like weight or volume reduction in their packaging and a 10% discount for using recycled content.