Producer Responsibility and Consumer Protection

Overall conclusion
In our opinion the conclusions to chapter 6, the discussion of relevant issues (chapter 7) and criteria for selection of EPR strategies for South Africa (chapter 8) are generally very good – though we do have a few reservations as set out below.

However, the earlier chapters focusing on existing examples of EPR across the world are not at the same standard. There is too much reliance on academic sources and information from websites – no government-commissioned studies are referenced – and the researchers hardly ever show that they have considered opposing conclusions from different sources. As a result, claims from interested parties tend to be taken at face value.

Chapter 1: Introduction and Objectives

p.3: “Drivers for businesses to adopt EPR are identified and include: reduced costs, retaining customers, reduced production time, lower production costs, gaining market advantage and the proactive preparation for regulations.”

With respect , in our opinion the main driver for business is the wish to avoid punitive legislation by opting for an approach which allows industry to self regulate .The drivers mentioned are possible but very debatable.

Chapter 3: Legal context

p.7: “The clause [in the CPA] that states that goods/packaging etc. must be accepted ‘without charge to the consumer’ may rule out the possibility of a tax or levy being added to the product price.”

We don’t think this is” ruled out”. There is a difference between accepting back free of charge and covering the cost when the goods were supplied in the first place. The aim surely is to avoid an economic disincentive to the return of goods at end-of-life.

Chapter 5: Status of EPR

p.12: “It is the manufacturer that designs and develops the packaging as well as choosing the packaging materials.”

To ensure this is clearly understood it is the Brand owner who specifies the packaging, closure and labels he wants for his product, not the Packaging converter who supplies the packaging. This is defined as the producer on p 75.

p.18: “Although the majority of packaging-related instruments are public policy measures there are some corporate initiatives that are regarded as quite successful as well. The Body Shop, for example, has a policy of using recyclable packaging and also to promote the reuse and take-back of packaging to their customers.”

This 1998 reference wrongly suggests that there is something special about companies using recyclable packaging. In fact, almost all rigid plastic packaging, paper , glass and cans are recyclable. The Body Shop used to allow customers to bring their cosmetics bottles back to the store to be refilled, but it stopped this many years ago as the return rate was only 1%-2%.

p.18: “[Germany’s Packaging Ordinance] has, however, been successful in reducing waste, encouraging the redesign of packaging to be more environmentally sustainable and increasing refilling and recycling.”

It has certainly increased recycling, as has the legislation in all EU member states, but it is hard to see how that law has encouraged more environmentally sustainable design. And it has certainly not increased refilling, despite providing the sanction of mandatory deposits if the market share of refillable beverage containers fell below the 1991 (pre-Ordinance) level of 72%. According to official figures, by 2001 it was 61% and by 2007, 47%. In SA the refillable share for malt beer is over 75%.

p.19: “The Courtauld Commitment is a voluntary agreement between WRAP and major UK grocery organisations that supports less packaging and food waste ending up in household bins. It is a powerful vehicle for change and in 2008 has led to zero growth in packaging despite increases in sales and population.”

Maybe, but as there was no baseline data all we have to go on is WRAP’s assertions. In any case, UK packaging use has been stable for many years, long before the Courtauld Commitment.

The average growth for SA packaging in the period 2000 -2009 inclusive is 2,8% ( 2,6 % if one excludes the one time major injection of a new design refillable bottle)which is well below GDP for the same period. One major reason for this is the improved design assisted by technology enabling lighter packaging to do the job.

p.19: “To deliver this, retailers, brands and their suppliers are working in partnership with WRAP to develop new packaging solutions and technologies across the whole UK supply chain.”

So they are, but WRAP may be claiming the credit for innovations that would have happened anyway. Lightweighting has been a continuous process for many years. It is interesting to note that in 2007, as part of the Courtauld Commitment, Tesco set themselves a target of reducing all their packaging (branded and own-label products) by 25% by 2010. It has worked with its suppliers on over 3,600 packaging reduction initiatives and has now concluded that this target may not have been the most beneficial way of bringing about optimum environmental performance. It is now aiming for a 15% reduction by 2010.

In SA the major retailers are also targeting reductions in packaging tonnage as identified later in this paper.

p.20: “It was surprising to note that the potential volumes of waste collected from industry is far higher than that collected from households, and since the costs of collecting waste from households is higher, that there should not be a requirement to collect waste from households.”

It depends on the objectives:

• In most of Europe, the aim has been to reduce the amount of packaging going into landfill and to optimise the use of resources by increasing recycling. Since waste from businesses is relatively clean and homogeneous and available in larger quantities and therefore cheaper to collect, it follows that it is best to focus first on the “low-hanging fruit” and move into household packaging waste at a later stage.
• In other European countries, notably Germany and Belgium, the aim was to transfer the cost of packaging waste management from the public sector to the private sector and to be seen to be doing something about “the packaging problem” – which meant setting separate recycling targets for household packaging.
• In SA, the aim (as we understand it) is to reduce the amount of packaging to landfill and simultaneously introduce EPR and eliminate harvesters on landfill.. This will be achieved by continuing to drive Industrial and Retail collections but to focus on household waste collection in which there are still largely untapped volumes of recyclable waste.

The success of different national programmes cannot be evaluated without understanding their different objectives.

p.21: “Free riders and competition issues arose as a challenge. In Sweden, EPR gave rise to monopolistic tendencies and it was recommended that the intervention of the competition authority was required. Free-riders were also identified as a problem in other countries. It appears that free-riding is reduced where the EPR relates to a product with a small number of producers. Germany overcame the problem of free-riders by imposing an obligation on all people falling within the ambit of the regulated sector and requiring such people to submit reports to verify compliance.”

There are free-riders with every system, and beyond a certain point it costs more to pursue them than they would yield in fee income. However, the threat of being caught, prosecuted and made to pay backdated fees will help to minimise free-riding.

Germany has not overcome the free-rider problem, which has been particularly serious there ever since waste management companies were allowed to set up producer responsibility organisations to compete with the not-for-profit organisation DSD but were not subjected to the same strict rules. This situation lasted from 1998 until the end of 2008, and although Germany has now belatedly introduced a registration system it will not be easy to claw back the situation.

Where there is competition between producer responsibility organisations, as in most of Central and Eastern Europe, free-riding is more difficult to detect but the main disadvantage is that short-term price competition becomes more important than long-term development. There is also a lack of transparency in reporting results when costs and prices are commercially sensitive – the monopoly organisations tend to report in much more detail. On the other hand, non-profit monopolies can take on a life of their own, divorced from the interests of the companies who set them up – DSD in Germany is the prime example.

Academic commentators tend to overrate the value of competition between producer responsibility organisations. These organisations contract out the physical operations of collecting, sorting and reprocessing and as far as packaging is concerned, the important thing is that contracting-out is done by competitive tendering wherever possible.

For waste electrical and electronic equipment (WEEE) it is different. Packaging volumes are stable – the assumption is that packaging placed on the market will be roughly equal to packaging reaching end-of-life. EEE sales are still growing rapidly, and when new equipment is bought the old stuff isn’t always discarded (TVs in more rooms, computers passed to other family members, items stored in the loft “just in case”). Thus, for WEEE there is a question of future liabilities which the packaging organisations do not face The first producer responsibility organisations for WEEE were monopolies, and they tended to take an extremely conservative view of future liabilities, quickly building up huge reserves. Prices came down when they were exposed to competition, which is now the case in the vast majority of EU member states. Thus competition between WEEE organisations has been of demonstrable benefit, which is not the case in the packaging sector.

p.23: “The USA places the responsibility for EPR on the individual states and has no all encompassing legislation on EPR. There are however, some focussed pieces of legislation which are aimed at particular products. One such piece of legislation is The National Beverage Producer Responsibility Act of 2002.”

The KPMG paper suggests that this Act is part of US law. It isn’t – it was only a proposal introduced into the Senate in 2002 and again in 2003, and was never adopted.

p.26: “Only the very best products, which are kindest to the environment, are entitled to carry the EU Ecolabel. The EU Ecolabel is a rapidly growing brand. Many producers wanting to sell their products across Europe have realised the benefits that the European Ecolabel brings.”

Not correct! The Commission is proposing to revamp the scheme because “the current scheme is not achieving its objectives as it suffers from low awareness of the label and low uptake by industry, resulting from overly bureaucratic processes and management” [Commission document COM(2008) 401 final, 16 July 2008].

Some other eco-labels have been more successful – the FSC, the Nordic Swan, the Blue Angel.

P34 PRN’s

We would like to place on record that this particular scheme is one which is complex in the extreme and should not be contemplated for the packaging and paper Industries in SA.

p.34: “Since the EU Directive is a ‘producer responsibility’ measure, it is up to packaging producers to meet the costs of achieving these targets.”

The Directive isn’t a producer responsibility measure – it is an instruction to governments to ensure that the objectives are met, and it is silent on who pays for what. Denmark has no producer responsibility system.

Chapter six –EPR in SA.

Pp 37 -45
The analysis does cover the main areas but fails to mention a number of key players in the initiatives.

P42
We need to explain the statement that packaging saves more than it wastes as it has been misunderstood. What we are saying is that packaging, through its preservation and protection roles, extends the life of the product it is protecting and this saves much more in volume than the packaging at end of life.

P45
The numbers quoted for PRASA (paper) are misleading.
The Industry recycles over 1 million tons out of a total of 1, 89 million tons of recyclable paper. The difference between this number and the 2, 5 million produced in SA is exports and products such as toilet tissue which is not suitable for recycling after use.

P 46
It is stated that the paper Industry in SA collects 45kg per capita compared to 300 per capita in Europe. These figures are not really directly comparable as the per capita consumption of packaging in SA is about 25% of the developed world.

P57
Construction waste is probably severely understated at 1,4 million tons per annum compared with one of the other research papers of 8-12 million tons .

P61
The statement that the Chemical sector is the only one in SA to have been involved in waste minimisation is misleading. Redesign to reduce packaging mass has been a feature of the packaging industry for years.

Chapter 7: Discussion of relevant issues

p.62: “The difference between South Africa and other countries is that, apart from high-end goods such as electronics, white goods, CFLs and batteries, the consumer is not the one that is incentivised to sort and recover.”

The only incentive that any EPR system provides consumers is the opportunity to “do the right thing” by taking advantage of collection systems designed to fit in with the way they live, i.e. the provision of kerbside collection or “bring” collection facilities at supermarkets, urban shopping centres, car parks etc.

Deposit systems provide a strong economic incentive by applying a spurious value to the used containers (as the KPMG report explains on p.65). Other possible incentives include pay-as-you-throw (i.e. charging householders by weight or volume for the garbage they put out for collection), which can work alongside EPR.

Chapter 8: Criteria for selection of EPR strategies for South Africa

p.69: “A target of a minimum amount of recycled content (or secondary materials) per product can be set (like a performance standard). While minimum recycled content requirements are a performance standard per se, they will also encourage taking back of materials for recycling or re-use of the product.”

No! Recycled materials have long been in the manufacture of new packaging where this results in reduced cost and environmental impact, but imposed minimum levels of recycled content would be difficult to measure, impossible to police, could lead to fraudulent claims and would restrict the range of market outlets for that material.

A lot of effort has been put into producing materials for packaging that are consistent, as thin as possible (source reduced) and of guaranteed high quality. Imposed product specifications that demand the use of minimum levels of recycled materials would go in the opposite direction.

The concept of a "closed loop" where a product is constantly recycled back into itself may result in a reduced use of recycled materials because it ignores other, possibly better, market outlets and would concentrate any impurities and contaminants in the materials. For example, additives such as clay coatings build up as paper is repeatedly recycled.

A mandatory minimum recycled content in packaging would cause recovered materials to be chan¬nelled into packaging when they might more economically be used in other products. It might be better to use recovered metal to make a manhole cover or a car engine near the point where the waste arises than to ship it across the country for use in packaging. The secondary materials market has traditionally been entrepreneurial and if we want to expand it, we need to keep it as unfettered as possible.

And most importantly, considerations about the management of used packaging must not be allowed to compromise the safety of food packaging.

Where government can help is to help develop markets for products using recycled materials by specifying these products in government tenders -- as examples plastic timber products for a variety of end uses such as park benches.

p.70: “In the absence of legislation such as that seen in Europe, there has been a tendency to ‘over-package’ goods, with multiple materials that make it difficult to separate and recycle.”

Is this true? The only time it is in the Brand Owner’s commercial interest to use more packaging than necessary is for gift packaging or deliberate deception (which does happen, but is fairly rare and already illegal elsewhere). Also, some packaged goods manufacturers may lack the resources or commercial acumen to exploit the lightweighting opportunities offered by their suppliers.

Overpackaging in all other instances is just a waste of money, and is often a perception rather than a fact. One needs to understand the supply chain and the preservation and protection requirements for a particular product before making such a judgement.

Laminated materials may be difficult to recycle, but they are certainly not an example of over-packaging, since the combination of materials is designed to achieve maximum protection using minimum material. Whether they are good for the environment depends on the trade-off between the resource benefits of recycling and the resource and environmental benefits of light weight (reduced vehicle movements, etc).