How Packaging Waste Regulations Can Affect Your Business

 

All businesses that use or manufacture packaging should ensure that it is recovered and recycled responsibly. The 1994 EU Waste Packaging Directive (the "Directive") was implemented to increase recycling and recovery of packaging and waste. The Directive was implemented in England and Wales through the Producer Responsibility Obligation (Packaging Waste) Regulations 2007 (the "Regulations"). The Regulations were implemented to encourage producer responsibility.

The main objectives of the Regulations are to:

  1. minimise the amount of packaging used;
  2. increase packaging recycling and recovery;
  3. minimise the quantity of packaging sent to landfills; and
  4. ensure that product packaging and manufacturing meets minimum standards.

 

Which businesses will the Regulations affect?

The Regulations will apply to any business which:

  1. has a turnover of more than £2 million per annum; and
  2. handles more than 50 tonnes of packaging per annum.

The Regulations apply to the whole process from the manufacturing of packaging to the selling of any packaged goods. All businesses who complete one of the following activities must comply with the Regulations:

  1. manufacture raw materials for packing;
  2. convert raw materials into packaging;
  3. place goods and products into packaging;
  4. sell packaging to the final consumer;
  5. hire or lease packaging;
  6. import packaging; or
  7. franchisors and licensors of trade marks.

All businesses to which the Regulations apply must demonstrate to The Environment Agency of England and Wales that they have recovered and recycled a certain tonnage of packaging each year.

 

How can businesses comply with the Regulations?

The Individual Route

Businesses can choose to recover and recycle the packaging themselves, this is referred to as the ‘individual route'.

If a business chooses to discharge recycling obligations in-house, they must:

  1. register with The Environment Agency by 7 April each year;
  2. assess carefully the amount of packaging used and processed by the business (and any group company) each year; and
  3. complete a data form which details the amount of packaging to be recycled that year in accordance with the minimum standards required.

To calculate recovery and recycling obligations, each business will need to:

  1. calculate the tonnage of packaging materials handled that year;
  2. calculate what activity was performed on what packaging (for example selling, importing or manufacturing);
  3. apply these figures to the UK business recovery and recycling targets;
  4. pay a registration fee to cover The Environment Agency's costs of monitoring and analysis of the data;
  5. ensure that the required amount of packaging is recovered and recycled that year in accordance with the amounts specified in the Regulations;
  6. provide evidence of recovering and recycling in the form of packaging waste recovery notes (PRN's) or packaging waste export recovery notes (PERNs); and
  7. confirm to the Environment Agency your compliance by 31 January the following year.

Joining a Compliance Scheme

Currently, the majority of businesses opt to join a compliance scheme. Joining a scheme ensures that the business is exempt from having to carry out its own recovery and recycling obligations.

The schemes take on legal obligations of packaging producers, provides an operational plan on behalf of all the scheme members and is responsible for providing evidence of recovery and recycling for its members. However, compliance schemes still require businesses to pay an agency fee and to calculate the tonnages of packaging handled during the year.

 

How do PRNs Work?

PRNs are the only form of evidence accepted by The Environment Agency to prove that the recycling or recovery of packaging has taken place. A PRN is a voucher signifying that one tonne of packaging waste has been reprocessed or recycled. Where such reprocessing and recycling has not taken place, businesses can purchase PRNs as evidence that their producer responsibility obligations have been met and in this way they can ‘buy off' their obligations to recycle. Markets for PRNs can vary in accordance with demand causing prices to differ for different materials.

 

Non compliance with the Regulations

Failure to comply with the Regulations is a criminal offence which is punishable:

  1. on summary conviction (in the Magistrates' Court) by a fine which can not exceed the statutory minimum of £5,000; or
  2. on conviction of indictment (in the Crown Court), to an unlimited fine.

When deciding whether a business should be prosecuted under the Regulations, The Environment Agency will consider the following:

  1. previous compliance;
  2. any environmental effect resulting from its actions;
  3. whether the offence was deliberate; and
  4. the overall business attitude towards the Regulations.

By way of example, in 2008 a business was fined £225,000 under the Regulations for failing to comply over a three year period.

 

Looking to sell you business?

If you are selling, or considering selling, a company or business which deals with packaging, it is likely the buyer will request evidence to confirm that the Regulations have been complied with and will require protection in they have not. It is therefore important that you ensure compliance with the Regulations to avoid issues being raised during the sale process.

 

Packaging Essential Requirements Regulations 2003 ("2003 Regulations")

The 2003 Regulations require businesses that place products into packaging to ensure that the packaging meets certain requirements before arriving on the market.

The Regulations require that:

  1. packaging weight and volume are of the minimum amount necessary whilst incorporating the necessary level of hygiene and safety;
  2. packaging must be manufactured as to permit reuse;
  3. all hazardous substances contained within the packaging must be minimised; and
  4. the packaging produced must not exceed the maximum permitted levels of cadmium, mercury, lead and hexavalent chromium.

Trading Standards Officers are responsible for ensuring that the packaging meets the standards set out in the 2003 Regulations. Failure to comply with the 2003 Regulations is a criminal offence punishable:

  1. on summary conviction (in the Magistrates' Court) by a fine which can not exceed the statutory minimum of £5,000;
  2. on conviction of indictment (in the Crown Court), to an unlimited fine.