Grasping complexity and acting proactively on sustainability is key to ensure successful compliance with packaging laws and avoid financial sanctions.
In brief:
- In the current fast-evolving packaging legislative context, it is becoming more and more challenging for companies to remain compliant.
- To ensure compliance, businesses need to understand the European and national obligations in depth and act proactively.
- Reducing their environmental footprint is only one of many reasons for companies to rethink their packaging strategy.
Evolving legislative landscape
In 2019, generated packaging waste was estimated at an average of 178.1 kg per inhabitant1. With the European Green Deal, its climate neutral 2050 target and the Circular Economy Action Plan (2015), the European legislative landscape is growing, and packaging is one of the key focuses:
- Reducing packaging and packaging waste by imposing increasing recovery and recycling targets
- Boosting packaging design for re-use and recyclability
- Reducing the use of multi-materials packaging
- Increasing recycled content in packaging
In that context, recent and upcoming changes have occurred in several EU Directives Regulations related to packaging. Their transposition into national legislations leads to new obligations for companies, through – though not exclusively – the Extended Producer Responsibility (EPR)2.
In 2018 in the frame of the EU Circular Economy Package, two Directives were amended: the Packaging and Packaging Waste Directive (PPWD) and the Waste Framework, introduced respectively in 1994 and in 2008. The PPWD is currently already in revision by the European Commission and a proposal of the new version is expected in summer 2022. It tackles the essential requirements of packaging design towards stricter eco-design criteria.
In 2019 the Single-Use Plastics Directive (SUPD) was adopted to deal with the problem of marine litter and plastic pollution. It establishes new types of obligations such as bans, consumption reduction measures, marketing restrictions, product and marking requirements for various single-use plastic products (i.e. food containers, cutlery, beverage cups, etc.).
EU Member States had two years to transpose the Directives into their national legislation. Companies introducing packaging on the market should therefore be ready to be compliant with recent and imminent upcoming measures.
How are businesses impacted by the EU packaging Directives?
For companies that sell packed products in Europe, packaging regulatory obligations directly affect their business, in particular:
- Packaging design requirements, as listed in the PPWD’s essential requirements, will be intensified in terms of restrictions related to its manufacturing, specific composition, and reusable or recyclable nature,
- Packaging recovery and recycling targets to be achieved by “responsible” companies which must report on the packaging placed on the market and finance the waste management process: in some countries, the fees on their packaging are variable depending on eco-design criteria,
- Labelling requirements: mandatory or discouraged symbols regarding sustainability (e.g. The Green Dot, recyclability, the material identification codes, disposal guidelines, etc.),
- Many single-use plastic products are banned or their consumption is strongly reduced,
- Some countries are introducing an additional tax on plastic packaging (UK, Italy, Spain): in the UK, the tax has taken effect in April 2022, applying to all plastic packaging containing less than 30% recycled content.
This non-exhaustive list of obligations clearly indicates the direct impacts on companies and the importance of packaging compliance in their business operations. However, it appears to be very challenging to achieve and maintain compliance over time.
The packaging compliance complexity for companies
The complexity of implementing EU packaging rules is related to the diversity in the transposition of the Directives into national laws and the fast-changing legal environment currently observed in the region. This is a challenge, especially for companies operating in multiple EU countries, with a high risk of unintentional non-compliance and heavy sanctions. Similar schemes are being developed all over the world as well: US, Canada, Latin America, Asia and South Africa.
Indeed, European Directives on packaging are transposed at country level, with well over 27 relevant legal texts in addition to UK and Norwegian legislations. The different transpositions lead to difficulties in implementing laws in the following fields. In addition, only a few legal texts are available in English. Most of them are written in the local language and not translated afterwards.
Extended Producer Responsibility
- Extended Producer Responsibility (EPR) rules vary from one country to another. For example, in terms of the definition of the liable party in the packaging supply chain, the related obligations (registration, reporting frequency and deadline and financial contribution) and the penalties and rewards for packaging design. Depending on the country, a company decides to comply with the EPR rules on its own by establishing a reverse logistics system (i.e. be self-compliant), or it is possible to register and transfer its take-back obligations (collection and recovery of packaging waste) to a Producer Responsibility Organization (PRO). If a company opts for contracting with a PRO, in some countries several organizations are active and in competition: choosing the right one is important, as the fees and reporting processes may vary from one organization to another.
- Labelling and marking requirements
- These requirements vary greatly among countries as well and there are no uniform rules. The Green Dot logo is an example of the complexity for businesses to remain compliant with labelling in many countries, as this logo is currently mandatory in Spain and Cyprus, encouraged in several EU countries, and discouraged in other countries like France.
- National versus international compliance
Compliance complexity further increases through the national evolutions over time: between 2019 and 2021, there have been many changes regarding packaging obligations: e.g. new marking requirements in Italy and Portugal, an extended producer registration scope in Germany, or the introduction of eco-modulation in the EPR fees system of Czech Republic. The changes will not stop here, with for instance the new upcoming obligation for 2024 requiring all EU countries to ensure that EPR schemes are established for all packaging types.
How to overcome the challenge and ensure compliance?
To ensure your company is compliant, you first need to understand the restrictions, obligations and associated risks and centralize this information at Group level. This requires learning and reviewing all the relevant legislations and obligations of each country in which your packed product is placed on the market. This screening must be executed considering all the packaging components, types, materials and characteristics.
Secondly it is important to understand how to comply with the take-back obligation, through adhesion to a PRO or independently by a reverse logistics system. Regular monitoring of updates in the legislation should be realized to identify how it may affect your business and operations and ensure you remain compliant over time.
Finally, rethinking your packaging strategy is also a necessary step to meet your obligations as more and more eco-design criteria are integrated into national legislations and could also benefit your business in avoiding additional taxes or reduce costs because of lower EPR-fees charged for the new packaging design. This will allow you to meet new customer expectations. In general, working with suppliers along the entire value chain is becoming a best practice to reduce your carbon footprint. A sustainable portfolio is a key solution as packaging represents on average 12% of the carbon emissions (scope 3) of a company active in the Fast Moving Consumer Goods sector.
EY Belgium Climate Change and Sustainability Executive Director
Climate change is a reality: we need to act now to adapt and mitigate. Passion, trust and team work will enable us to get there!
Sophie heads the EY Belgian Climate Change and Sustainability Services team, a team of consultants specialized in decarbonization strategies with a specific knowledge in the field of circular economy, focusing on packaging and waste management.
She has over 20 years of experience in providing energy efficiency and decarbonization advisory services, and was actively working on behavioral change programs to achieve energy savings.
Sophie and her team are also guiding organizations to report on sustainability information to increase transparency and reliability.
