In verifying EPR: declaring products, not just material Kgs is essential
A seemingly technical detail in Extended Producer Responsibility (EPR) regulation holds the key to its success or failure: how producers declare the packaging they put on the market.
Two approaches are vying for policymakers' attention:
The first, simpler at first glance, asks companies to report the total weight (in kilos) of each material – plastic, aluminium, cardboard, and so on.
The second, more granular method, requires companies to declare the number of units of each product sold, along with the weight of all associated packaging materials.
While the former might appear less burdensome for businesses, it is a mirage of simplicity that will ultimately undermine the verifiability and effectiveness of EPR schemes. Policymakers must embrace the latter, unit-based approach to ensure genuine accountability and drive meaningful reductions in waste.
Decision Point 9: Should the EPR Fee be over a company's total material weight or over the material weight per stock-keeping unit (SKU)?
While the former might appear less burdensome for businesses, it is a mirage of simplicity that will ultimately undermine the verifiability and effectiveness of EPR schemes. Policymakers must embrace the latter, unit-based approach to ensure genuine accountability and drive meaningful reductions in waste.
The fundamental flaw of relying solely on aggregated material weight declarations lies in its inherent unverifiability. Consider a common Fast Moving Consumer Goods (FMCG) product, such as a can of soft drink. As detailed, this single unit involves not only aluminium but also potentially cardboard, plastic shrink wrap, a wooden pallet, and cellophane for transport. If a company simply declares a total tonnage of aluminium, plastic, cardboard, and wood placed on the market, regulators are left with an opaque figure. There is no clear link between these declared weights and the actual number of product units sold.
Consider a humble can of soft drink. Beyond the aluminium itself, it often travels in packs secured by cardboard or plastic, stacked on wooden pallets, and wrapped in plastic film. A company reporting only the total kilos of aluminium, cardboard, plastic, and wood shipped offers a superficial picture. Regulators are left with an unverifiable mass, unable to accurately link it to the actual number of products placed on the market with the materials that were reported. This opacity breeds opportunities for underreporting and hinders any meaningful assessment of true material flows.
The unit-based approach, in contrast, leverages the very systems that businesses already use. Enterprise Resource Planning (ERP) systems, the backbone of modern production and sales, meticulously track the number of units produced and sold, along with the associated material inputs. Requiring companies to report at the Stock Keeping Unit (SKU) level – a single can, a six-pack, a pallet of cans – along with the corresponding weight of each packaging component, provides a clear and auditable trail. For our can of Coke, the producer would not declare the total kilos of aluminium, but instead the grammes of weight of aluminium per can, the grammes of cardboard or plastic per multipack, the wood and film per pallet. This they need to do once. Then the number of each sold is reported once a year, or every time goods are imported, so they can be charged at customs.
The benefits of this granularity are manifold. Verification becomes straightforward. Regulators can cross-reference sales data with declared packaging materials, making it far easier to identify discrepancies and ensure accurate reporting. Furthermore, this detailed data provides invaluable insights into material consumption patterns, allowing for more targeted and effective policy interventions to promote reuse, recycling, and design for circularity.
Some industry players will undoubtedly argue that reporting total material weights is less complex, requiring fewer data entry points. However, this short-sighted view ignores the inherent difficulty for companies themselves to accurately aggregate these weights without linking them to production units. As illustrated by the experiences of Indonesia and the Netherlands, where weight-based reporting is in place, regulators struggle to reconcile declared tonnages with actual product volumes during site visit verification, casting doubt on the accuracy of the reported data.
The argument that calculating material weights per product unit is overly burdensome also rings hollow. Modern ERP systems are designed to provide precisely this information. For companies with a limited product range, such as mineral water producers, the task is minimal: declare the materials per bottle and then simply report the number of bottles sold annually.
Even for retailers with vast product assortments, like a supermarket with tens of thousands of SKUs, solutions exist. Standardized data templates and batch upload functionalities, such as those offered by systems like Kolekt-EPR, streamline the process, allowing suppliers to easily provide the necessary packaging weight information per SKU, data they likely already manage within their own ERP systems.
The choice for policymakers is clear. Opting for the superficial simplicity of weight-based reporting risks creating EPR schemes that are opaque, unverifiable, and ultimately ineffective in driving real change. Embracing the unit-based approach, while seemingly more complex, provides the granular data necessary for robust verification, accurate material flow analysis, and ultimately, a more circular economy. It is a fundamental decision that will determine whether EPR becomes a genuine tool for sustainable waste management or merely a bureaucratic exercise. Weighing waste wisely means counting units, not just kilos.