Ellen MacArthur Foundation: EPR schemes “make recycling economics work,” Coca-Cola, Danone and Diageo show support

16 Jun 2021 --- The Ellen MacArthur Foundation is calling for the implementation of Extended Producer Responsibility (EPR) schemes to create a circular economy for packaging. 

Mandatory, fee-based EPR schemes would require industry players who introduce packaging to the market to provide funding dedicated to collecting and processing their packaging after its use. 

Ellen MacArthur maintains the alternatives – relying on funding from public budgets or from voluntary contributions – are “unlikely to scale to the extent required” and “fall short of being dedicated, ongoing and sufficient.”

One hundred and fifty signatories have signed the statement, including Coca-Cola, Danone and Diageo. Others, ranging from packaging manufacturers to recyclers and NGOs, have publicly committed to:

• Ensuring their entire organization and its actions align with the EPR statement.
• Being constructive in their engagement with governments and other stakeholders, while advocating for and improving EPR policies in a local context.
• Engaging with peers, relevant associations and collaborations to work toward aligning positions and actions accordingly.

Governmental versus EPR costs
According to the Organisation for Economic Co-operation and Development (OECD) definition, EPR is “an environmental policy approach in which a producer’s responsibility for a product is extended to the post-consumer stage of a product’s lifecycle.”

The foundation has three pillars: Eliminating unnecessary packaging; innovating new products and business models; and keeping packaging in the economy. “But currently, the economics do not stack up,” the report reads. “Collection, sorting and recycling or processing packaging costs more than the revenues made from selling the recycled materials.” 

Relying on government funding has significant shortcomings. The report highlights this type of funding is “not ring-fenced” or “dedicated on an ongoing basis.” Sufficient governmental financing has also been lacking across most low- and middle- and high-income countries.

A few selected high-value items, such as aluminum cans or PET bottles, might be more successful but not enough to achieve high overall packaging recycling rates.

“Proven funding mechanism”
The report highlights that if designed well, EPR funding can remain dedicated to specific activities and objectives, such as covering the net cost of collecting, sorting and recycling. Where recycling is not possible, disposal and safe treatment of packaging are options. 

The fees are tied to and evolve with the actual net cost of achieving the outcomes set out in the EPR regulation, ensuring the funding is sufficient. Due to their mandatory nature, EPR schemes also guarantee an ongoing funding stream. 

EPR schemes are “more than a funding mechanism,” says the statement, enhancing the efficiency and transparency of the system and incentivizing upstream packaging solutions.

Countries with current mandatory EPR schemes tend to achieve a higher collection-for-recycling rate (-40%) than countries with no EPR (-10%) or only limited or voluntary EPR (-15%) in place.

Evaluation of various funding mechanisms against the criteria of being dedicated, ongoing and sufficient.Industry reacts
The statement has already been publicly endorsed by more than 100 businesses in the packaging value chain and over 50 other organizations. 

Prominent packaging manufacturers include DS Smith, Mondi and Tetra Pak, alongside brands and retailers Beiersdorf, Danone, Diageo, Ferrero and FrieslandCampina.

“Good EPR schemes can motivate businesses and help us achieve our circular economy targets,” says Michael Goltzman, vice president of global policy and sustainability of The Coca-Cola Company.

“We believe mandatory EPR schemes are central to the establishment of a circular packaging economy, in which waste is a valuable resource used to address a range of economic, social and environmental challenges,” adds Andre Nel, general manager of sustainability at Pick n Pay.

The European Investment Bank and Closed Loop Partners have also signed up as investors, while the World Wildlife Fund, The Recycling Partnership, The Pew Charitable Trusts and As You Sow join as NGOs.

“Setting up EPR schemes creates new markets for recycling,” says Maarten Dubois, project lead of the circular economy, OECD. “It is challenging to set up, but if successful, it is a game-changer in the global transition toward a circular economy.”

By Anni Schleicher