EPR Means More Data from Private Label Retailers
June 28, 2012
By Emma Dawley
With extended producer responsibility (EPR) programs, consumer packaged goods companies are not the only ones affected; retailers who sell private label products are also responsible for reporting and paying fees. Unfortunately, retailer private label product and packaging data are often incomplete or inaccurate, and when retailers use averages, they risk paying an extra 30 percent or more in fees.
What is EPR?
EPR, which can be focused on products or product packaging, is a policy approach designed to promote the incorporation of environmental costs associated with a product into its market price. This concept is facilitated by shifting the costs of recycling and waste disposal from local government to private industry via material weight-based fees. Effective EPR programs create a link between the cost associated with product and packaging waste management and the fees that stewards -- producers legally obligated to recover and recycle their products and/or packaging at end-of-life -- are asked to pay.
While it began in North America with “bottle bills” in the 1970s, interest in the EPR policy approach was renewed in the 1990s. Since then, laws have been passed in more than 20 European nations as well as in Canada, Japan, Korea, Taiwan, Australia, Uruguay, Brazil and New Zealand. Now, as U.S. states and municipalities struggle to meet budgets and face growing pressure from brand owners to offer extended recycling services, states are considering framework legislation that would establish EPR as a state policy.
Key Challenges Facing Retailers
The key challenges facing obligated retailers of product packaging are identifying sales subject to fees, translating products into weight of packaging, and reporting sales in the correct categories. To address these issues, many retailers create internal compliance teams of personnel who track and interpret EPR rules and reporting requirements. In addition to regulatory tracking, these teams are usually tasked with ensuring that the steward maintains the detailed packaging bill of material (BOM) data needed for report preparation. It can take months to collect the necessary data from suppliers, a challenge that is compounded for retailers whose product mix rapidly changes and is often only relevant for one reporting period or less.
Common data points required for EPR reporting include packaging component weight, material type and function, as well as other less common data such as color, form, and country of origin. Since collecting these data has proved particularly challenging for retailers of private label products,
several approaches have been accepted by EPR programs.
Approaches to Data Collection
The approach preferred by all EPR programs is for obligated retailers to report precise weight and composition data on actual packaging sold in the market. In the case of retailers who have many thousands of different products of different sizes that are constantly changing, the burden of data collection is vast. Most retailers are at a loss for the necessary data. They may have incomplete or inaccurate data, the data may be inaccessible or spread across multiple repositories, or they may not have the data at all.
Some EPR programs offer “calculators” to help estimate their packaging usage. Unfortunately, the categories covered by these calculators are broad, and the packaging data associated with them are outdated and inaccurate in many cases. When retailers use these calculators as opposed to real data for reporting, they risk paying significantly higher fees.
Average BOM assignment is another methodology used by retailers to estimate packaging configurations and associated fees. This entails the collection of real packaging BOM data for a representative sample of products and packaging mix that is then extrapolated to account for products with unknown packaging data. When applied correctly and based upon reasonable assumptions, the use of average BOMs can adequately represent the packaging composition of the retailer’s product mix without the overwhelming burden of collecting 100 percent of the data. The sample data must be reviewed and refreshed to ensure that it represents the product mix as the latter changes.
Accurate Data is Key
EPR programs aim for all obligated retailers to work toward datasets that more fully and accurately reflect the actual packaging put on the market. This is a goal of any effective EPR program, since accurate data is critical to setting appropriate EPR targets and fees, and essential to encouraging the proper incorporation of end-of-life considerations into the design of packaging and products. EPR programs do not expect a retailer’s data to be perfect or complete in the first year; the goal, however, should be continuous improvement in data collection and reporting. With the right approach and toolbox, this goal can become a cost-saving reality for any retailer.
Retailer Saves $300,000 Annually
EPI was recently involved in a project in which it assisted a major North American retailer with EPR reporting compliance. The results were measurable and confirmed that reporting accurately using real data and efficient tools is an achievable goal that can save retailers money and provide EPR programs with the data they want. By using average BOM methodology and our proprietary solution, the retailer was able to more accurately and efficiently report upon its packaging and save more than $300,000 in EPR fees per year, as well as redeploy the staff previously dedicated to compliance tracking and reporting to other activities more central to their core business.
At the same time, new reports submitted to the EPR programs by this retailer more accurately reflected the packaging actually put on the market, providing these organizations with better insight into the waste stream mix and better data upon which to base future EPR fees.
Emma Dawley is the redipoint Solutions Director at Environmental Packaging International (EPI), a consultancy specializing in packaging sustainability and compliance with global product stewardship laws. redipoint is a global EPR compliance reporting tool used by brand owners, retailers and manufacturers. For more information, visit www.enviro-pac.com.
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