The Extended Producer Responsibility (EPR) in Europe

The European Union (EU) aims to become climate neutral by 2050. To achieve this vision requires a fundamental transformation in the manufacturing and trade of goods within its internal market. The EU is working on new regulations that extend the responsibility of companies throughout the entire life cycle of their products. Manufacturers and resellers must therefore adopt a proactive approach in reducing the environmental footprint of their products and exploring strategies to minimise the utilisation of non-recycled materials.

What is EPR?

Extended Producer Responsibility (EPR) describes environmental policies that makes producers responsible for the entire life cycle of their products, spanning from design to end-of-life management, including waste collection and recycling. EPR aims to ensure that producers actively engage in sustainable practices and decrease the total environmental impact from their products and packaging. In practice, EPR requirements can translate into a wide variety of obligations for the producers and resellers and can affect multiple product groups (non-exhaustive list).

Examples of EPR requirements

Collection fee for products, Collection rate targets, Carbon footprint declaration, Minimum content of recycled materials, Responsible sourcing of raw materials, Product passport, Performance and Durability requirements

Examples of product groups

Packaging, Batteries, Electronic products, Plastics, Furniture, Paints, Chemicals, Energy-related products, Iron, Steel, Cement, Aluminium

EPR implementation in the EU

The first EPR policy appeared in the EU in the early 1980s and spread across different Member States. As a result of the EU’s commitment to climate neutrality, organisations are now facing greater challenges and responsibilities in meeting these evolving requirements. The implementation of EPR requirements at the EU level is usually structured in three ways:

1. Regulatory Framework for Specific Products

Certain products, such as packaging, batteries, plastics and electronic waste, are subject to specific laws and regulations that outline mandatory requirements for environmental sustainability. These specific laws provide a comprehensive framework for regulating the life cycle of these products, ensuring their responsible management. The ‘Proposal for a regulation concerning batteries and waste batteries’ is one example of specific regulatory framework.

2. Eco-design for Sustainable Product Regulation (ESPR)

Products that do not have dedicated legislation mandating environmental sustainability requirements, such as textiles, furniture and paints, usually fall under the Eco-design for Sustainable Product Regulation (ESPR). This regulatory framework covers 31 different product groups, and serves as a comprehensive guideline for promoting sustainable design principles and practices.

3. Products without a Dedicated Legal Framework

Certain products, such as large-scale stationary industrial tools, do not have a specific legal framework governing their environmental sustainability obligations. These products fall outside the scope of the ESPR and are subject to alternative measures and strategies for ensuring their sustainable management.

EPR in Switzerland

Switzerland does not currently possess a comprehensive EPR framework similar to the ESPR. However, the country closely monitors new developments in the EU and has established specific requirements for certain products, such as batteries, packaging and electronic equipment. At present, Switzerland mainly enforces three forms of EPR obligations.

Prepaid fee that producers are obligated to pay to finance the waste disposal of certain products. This financial contribution ensures the appropriate management of waste associated with their products.
Take-back and elimination requirement, whereby producers must bear the responsibility and cost of retrieving their products at the end of their lifecycle.
Obligation to inform both consumers and resellers concerning the various options available for product disposal.

A 5-step approach to EPR requirements

EPR requirements go beyond product compliance and fee payment obligations. The concept of circularity, especially EPR, needs to be embedded into the overall strategy of the company. For this purpose, we recommend a comprehensive five-step approach:

Evaluate: Gain a thorough understanding of the current sustainability level of the company's products, examining their environmental footprint and performance.

Understand and anticipate future trends: Analyse regulatory trends and observe the actions of competitors in order to identify potential future requirements and stay ahead of the curve.

Quantify potential impacts: Conduct an impact assessment to determine how the company might be affected by forthcoming regulations, considering costs, operational adjustments and resource allocation.

Establish objectives: Consult stakeholders and update the company's sustainability ambitions to align with evolving regulatory expectations, considering factors such as raw material sourcing, production efficiency, product use phase and end-of-life management. Establishing an interdepartmental working group is an excellent way to gather valuable insights address the EPR topic in a holistic manner.

Implement strategic changes: Identify key actions, assign deliverables to heads of relevant departments and monitor their implementation. These actions can take multiple forms, such as integrating sustainability targets into product design, establishing a data collection process in place that collects sustainability information across the entire value chain (data on raw material extraction, production, recycled materials, etc) and designing sustainable procurement policies at the group level.

Interlinks with key EU sustainability initiatives

Certain EPR related requirements stems from other regulatory initiatives and transcend product groups. Presented below are some examples of interlinkages between EPR requirements and other key sustainability topics.

Sustainability reporting: The Corporate Sustainability Reporting Directive (CSRD) obliges companies to disclose data points such as the recyclability rate. The EU Taxonomy also contains disclosure requirements which are relevant for manufacturers (i.e. CapEx).
Due diligence in supply chains: Under the new Directive on Corporate Sustainability Due Diligence (CSDDD), companies must integrate due diligence into policies, identify potential adverse impacts in their value chain and make sure that they minimise their impact of their products on the environment.
Greenwashing: There are emerging obligations regarding the use of the "sustainable" label, such as the Proposal for a Directive on Green Claims that imposes stricter guidelines on the use of the "sustainable" label. Companies would have to provide data to justify any claims they make on their products and get verification from a third-party prior to the claim being used in commercial communications.
Green taxes: In addition to the EU obligations on packaging, some EU Member States have also implemented taxes and other levies in order to discourage the use of plastic, such as the plastic packaging tax or the single-use-plastic fee. Other packaging, such as aluminium casks and containers, are also subject to further taxation through the Carbon Border Adjustment Mechanism (CBAM, read more about this topic in our dedicated blog post. These green taxes increase companies' financial as well as administrative burden with the submission of periodic tax returns and declarations.
Data management: The extensive number of obligations generates a vast increase in the volume of data which needs to be collected. It is crucial for businesses to build solid data governance processes in order to be compliant with the new regulations efficiently. Appropriate data management enables the data use to be leveraged across different reporting obligations, reducing the costs of data collection and processing and ensuring accuracy in the information reported as well as the calculation of taxes and levies.

How PwC can help you

The plethora of sustainability regulations and requirements imposed by regulatory bodies poses a significant challenge for companies. Effective governance and robust data management are essential to address these obligations. We highly recommend assessing your current position and potential gaps with the upcoming regulatory changes. Each company should evaluate the following points:

Does your company manufacture, import or sell products?
What is your level of familiarity with EPR regulations in your country and in the EU?
How are the regulatory updates monitored and implemented?
What are the gaps identified and how do you intend to close them?
To what extent is the concept of EPR integrated into your company's overarching strategic framework?
Has the data management practices and governance framework been thoroughly reviewed to ensure alignment with evolving EPR regulations?
What measures and best practices are your competitors adopting to integrate current and upcoming EPR requirements?

PwC actively assists clients across various sectors in embracing a holistic approach in order to comply with the ever-evolving sustainability regulations. Please contact us to discover how our team of experts can support you.