Understanding Extended Producer Responsibility: The Basics (2023)
What is the carbon footprint of your product?
Every product has an environmental impact: from the way it is produced and consumed to the way it is disposed of. Traditionally, municipalities bore the responsibility of waste management. However, municipalities have no control over products or their packaging themselves: only producers can make more environmentally safer products to begin with. This is where the idea of producer responsibility came from.
As brand owners, manufacturers, importers, and retailers have a responsibility for the end-of-life care of their products.
Many countries mandate this process through laws and regulations, often called extended producer responsibility. However, sometimes companies take a proactive approach on their environmental stewardship initiatives because they understand the cost benefits of doing so.
What is Extended Producer Responsibility (EPR)?
Producer responsibility is sometimes referred to as product stewardship, green accounting, individual producer responsibility (IPR), or extended producer responsibility (EPR). While these terms are often used interchangeably, the Product Stewardship Institute now defines extended producer responsibility (EPR) as mandated or regulated product stewardship. This is unlike stewardship programs, which are voluntary.
Extended producer responsibility (EPR) is a policy strategy where importers and manufacturers of products must take responsibility for the end-of-life management of their products (recycling and disposal fees) once they have served their usefulness to consumers. EPR requires producers to pay regulatory fees to account for the cost of recycling and overall handling of post-consumer materials.
EPR can help incentivize importers and manufacturers to evaluate the impacts of their production process, use, packaging, and disposal of their products and to change the design to minimize these impacts, like changing the material selection of their packaging.
Who and What does EPR Apply To?
Extended producer responsibility applies to producers, who are the brand owners, first importers, or retailers of products that are resident in the province, state, or country they are being sold in. The packaging they come in, or the product itself, may be subject to EPR fees (sometimes called eco-fees).
Common types of companies that are considered producers include:
- consumer product manufacturers,
- distributors of consumer goods, and
- retailers.
Products (or goods) can be targeted items (e.g., solvents, electronics, batteries, tires, and paints) or the packaging that ends up in the residential waste collection system.
How Much Does EPR Cost Producers?
EPR requires producers to pay regulatory fees to cover the handling of post-consumer materials. However, how much you pay will depend on your:
- Jurisdiction (state, country)
- Business revenue
- Volume or mass of materials
Extended producer responsibility in Canada is dependent on each province’s laws. In the U.S., each state has its own laws and regulations governing EPR and costs. Producers may be impacted by multiple laws in several states or provinces.
In many jurisdictions, producers generating a minimum revenue of $2 million annually are responsible for paying fees to the regulatory EPR program in their area. EPR programs are constantly evolving, and new regulations are appearing all the time. Thus, simply because a producer may not be obligated to report now, they could very well be required to do so in the future.
In many cases, producers add the environmental costs of a product throughout its life cycle to its market price to help offset these fees. This often happens in the form of recycling fees or environmental handling fees, or eco-fees, such as those found on receipts for electronics or batteries.
How to Reduce Costs Associated to EPR with Data and Reporting
The best way to reduce your EPR costs is to understand how your business and products will be impacted. With proper planning and reporting, producers who are subject to EPR regulations can see significant cost savings. Here are the steps you should take:
1. Understand Which Laws Apply to You
Understanding which laws apply to your business can be tricky. The first reason is that the regulations vary from state to state or from country to country. Several different laws can impact national and multi-national corporations at the same time.
Secondly, new laws are constantly being proposed and enacted. In the United States, 75 new laws were added in 2022 alone.
2. Create a Database of Your Products and Packaging
Creating a site-specific database that includes a list of all your SKUs is a critical place to begin. During the development of this database, you should measure the specific packaging materials and identify products that may be targeted for a specific producer.
Ensure your database is unique to you and your business and not made of general estimates, as this can often result in higher fees and more reporting being done than necessary. A database can inform the preparation of the necessary reports and manage fees to the agency delivering the EPR program.
3. Review Your Database and Costs Annually
Since laws are always changing and new laws are being added, it is a good idea to review your database annually to better anticipate any changes to costs and fees.
An annual review of the materials and therefore, the cost of EPR compliance, allows you to identify where the costs are coming from, but also the options for reducing them. With proper reporting, you can even assess the impact of potential changes to packaging, before any changes are made.
4. Consider Changing Your Product Packaging
Choosing different packaging materials may result in lower EPR costs. For instance, using more sustainable materials like compressed cardboard with a special plastic laminate rather than complete plastic for packaging.
Not only can lighter packaging material result in reduced EPR fees, but it can also lead to reduced shipping and delivery costs as well. Ultimately, choice of packaging can have an impact in many stages of the product life cycle.
What Are the Benefits of Extended Producer Responsibility?
From supporting the circular economy to waste reduction and improved recycling, EPR will benefit municipalities, recycling programs, and even producers in the long run.
1. Supports the Circular Economy
One benefit of EPR is that it supports the circular economy, which is a system that looks to reduce and even eliminate pollution and waste throughout the lifecycle of products and materials.
There are other stages to this type of economy, such as businesses working to reduce their greenhouse gas production and use of other fossil fuels during the product production phase, offering take-back and repair programs during distribution, and recovering materials throughout a product’s lifecycle.
EPR provides significant benefits that fit extremely well within the circular economy, allowing it to thrive and perform optimally at all stages.
2. Improves Recycling and Waste Reduction
Two intertwined benefits EPR provides are waste reduction and an increased focus onto reuse and recycling activities. For instance, producers have changed their product packaging to not only reduce their environmental impact, but also increase their cost-efficiency as it relates to EPR.
Such changes can include choosing more sustainable materials, including compressed cardboard with a special plastic laminate rather than complete plastic for packaging. Not only is this a change to lighter material, which as a result reduces the cost the producer must pay to the EPR program authority, but it is also easier to recycle and reuse when it reaches end-of-life.
Next Steps
EPR programs are being implemented in more jurisdictions every day, including the Blue Box Regulation in Ontario. In order to not only remain in compliance with regulations, but also embrace the benefits of EPR, understanding extended producer responsibility is becoming increasingly more important.
