Navigating the EU Packaging and Packaging Waste Regulation

At a glance
 

• The EU Packaging and Packaging Waste Regulation (PPWR) imposes new rules on packaging suppliers, manufacturers, producers, retailers and waste management companies for packaging made from any material placed on the EU market (regardless of a company’s location). The Regulation is expected to come into force in late 2024, and to start to apply 18 months afterwards. 
• Companies are mandated by the Regulation to prioritise design modifications and choices of materials to be able to meet recycling performance grade thresholds. The detail as to how these requirements should be implemented will be provided in secondary legislation, with the initial measures expected to be published from the application date of the PPWR. 
• The PPWR pushes for increased use of post-consumer recycled plastic waste in packaging. Companies may face challenges of limited supply and higher costs (at least initially) in meeting this requirement. Improving recycling rates for plastic packaging requires infrastructure investments. Public sector intervention is important to steer such funding into packaging infrastructure transformation.
• In addition, re-use targets are mandated for the beverages, transport and retail sectors. To encourage consumers to use reusable packaging, companies need clear and transparent communication on reusable options as well as to create incentives for consumer participation, such as through price, convenience or reward programmes. Next to investing in Research & Development (R&D) on reuse or refill packaging, companies may also need to invest in logistical solutions tailored to their chosen reuse model.
• To prepare for the implementation of the PPWR, companies need to embrace circular business practices, focusing on integrating ecodesign principles. They will also need to understand the wider EU environmental policy agenda; assess their packaging inventory; evaluate suppliers’ practices; and review branding strategies, amongst other things. 

This blog is relevant for sustainability officers, operations and design officers, compliance officers, supply chain managers, marketing and information officers of EU-based companies operating in the packaging sector as well as companies importing packaging into the EU.

In November 2022, the European Commission proposed the Packaging and Packaging Waste Regulation (PPWR) as part of the European Green Deal Circular Economy action plan. The PPWR aims to promote circularity in packaging and address the constantly growing level of waste in the economy. Indeed, data show that packaging contributes significantly to plastic usage, paper consumption and municipal waste in the EU (respectively, 40%, 50% and 36%)¹. With the implementation of the PPWR, it is expected that waste levels will be reduced by 18 million tons compared to 2019 levels, CO2 emissions decreased by 23 million tons as materials will be retained in circulation for longer periods, and environmental externalities cut by €6.4 billion. Despite an anticipated additional cost of €5.9 billion for implementing reuse schemes, deposit return systems (DRS), and certifying packaging recyclability and recycled content, the European Commission forecasts overall savings of €47.2 billion in 2030 associated with packaging and packaging waste.

Overview of the PPWR
 

The PPWR affects all economic operators involved in the packaging supply chain, from suppliers to waste management companies. The regulation applies to all forms of packaging and packaging waste and sets packaging sustainability rules as well as transparency obligations. See below its key requirements.

The European Parliament formally adopted the PPWR during its 24 April plenary. However, due to the EU elections in June 2024, the Regulation is expected to be published in the Official Journal of the EU in late 2024, and subsequently start to apply 18 months after. The PPWR foresees a phased rollout, with the European Commission intending to issue targeted Delegated or Implementing Acts to support the implementation of the Regulation. The timeline below outlines how the main requirements are set to unfold over the next decade.  

How the PPWR fits into the wider EU environmental policy
 

The PPWR is part of a broader set of EU regulations aimed at managing packaging and packaging waste and ensuring traceability, alongside the Waste Framework Directive, the Single-Use Plastics Directive and the European Sustainability Reporting Standards (ESRS) E5 on Resource use and Circular economy. New regulations, such as the Ecodesign for Sustainable Products Regulation (ESPR) and its Digital Product Passport (DPP) requirement, as well as the Empowering Consumers for the Green Transition Directive and the upcoming Green Claims Directive, will further shape industry practices. It is necessary therefore for companies to develop a comprehensive strategy joining the dots between different requirements when preparing their compliance efforts.

Business implications of the PPWR
 

How will the recyclability requirements be implemented? 
 

To achieve recyclability for products, companies are mandated to prioritise design modifications and material choices. As such, they will need to craft packaging with recycling in mind, in such a way that the secondary raw materials obtained will be able to substitute primary raw materials, and meet established performance grades by 2030. Those grades, ranging from A to C, set clear benchmarks: ‘A’ mandates a minimum of 95% recyclability, while ‘C’ requires at least 70%. Packaging failing to meet the 70% threshold will be considered non-recyclable and producers will not be able to put it in the EU market. From 2035, the assessment of recyclability will include the weight of effectively recycled packaging categories, such as plastic or metal, while maintaining the same performance grades.

A key difficulty for companies lies in the lack of detail in the PPWR on how to implement these requirements. For that, companies must await the adoption of secondary legislation on recyclability criteria and performance grades, expected by 2028. With the first requirement taking effect by 2030, companies would only have two years to achieve full compliance with those rules. Therefore, they should strategise sooner on removing packaging components hindering recycling, such as heavy metals, coatings, inks or adhesives, and consider alternative materials. It will be essential though for companies to also consider how current design plays a vital role in brand identity, especially for those products heavily reliant on it for market differentiation and consumer recognition.

In addition, an industry-wide effort will be necessary to attain the required recycling qualities and rates. Companies and sectors must contemplate adopting new systems and materials, alongside investments in new technologies for effective collection, sorting, and recycling processes.

What are the challenges when it comes to incorporating post-consumer plastic waste into packaging?
 

The PPWR emphasises the circularity of plastics. Starting from 2030, companies using plastic packaging must gradually incorporate more recycled content from post-consumer plastic waste. However, this may pose challenges due to limited supply of recycled content and high costs in the EU’s secondary materials market, which often require substantial investments in manufacturing machinery, especially when compared to using virgin materials. Many companies therefore currently rely on cheaper, post-consumer plastic waste imports, particularly from Asia. But as this dependence has raised concerns regarding the quality of imported plastic recyclates, the PPWR establishes equitable conditions between third-country and EU plastic recyclates. Going forward, all plastic recycled content will need to meet the same stringent quality standards to preserve its value, which requires importers to adapt their practices to access the EU market.  

Obstacles persist in infrastructure though – substantial investments are crucial to improve the functioning of the EU’s secondary market and raise the recycling rates of materials like PET to meet the PPWR’s targets. Upgrades to existing facilities and the establishment of new ones are necessary to enhance efficiency and processing capabilities. Extended Producer Responsibility (EPR) fees may provide a significant portion of funding, but public sector intervention may be necessary to steer investments into packaging infrastructure transformation or create incentives for companies to initiate necessary actions. 

How can companies enhance consumer engagement with reusable packaging?
 

The PPWR sets reusable packaging targets for companies operating in the beverages, transport and retail sectors. Effective communication between companies and consumers regarding reusable packaging options is essential, emphasizing their suitability for multiple uses while maintaining safety, quality, and hygiene standards throughout various stages like emptying, refilling and reloading. Companies must provide clear information about the materials used, the cleaning procedures for packaging that is returned, the methods employed for reconditioning reusable packaging to ensure its continued suitability for use, and the measures for discarding packaging that no longer meets safety standards. Labels will play a crucial role in providing consumers with assurance, as the labels contain valuable information about the packaging lifecycle.

Besides communication efforts, companies can consider investing in logistical solutions tailored to their chosen reuse model. In both ‘at-home’ and ‘on-the-go’ refilling models, consumers are responsible for keeping and cleaning reusable packaging, with at-home refilling done through subscriptions or store purchases and on-the-go refilling at dispensers away from home. In other cases, companies handle refilling and cleaning themselves. The ‘return-from-home’ model involves high-quality packaging collected and redistributed through subscription services, while the ‘return-on-the-go’ model has consumers bring packaging to collection points like deposit return systems, with companies tracking the packaging via labels. 

To ensure the success of these models, companies must establish compelling incentives that encourage consumer participation. One strategy is to leverage pricing incentives, with the initial purchase priced higher to cover the reusable packaging, and refills offered at a reduced cost. Convenience is also a key factor to consider, and companies can facilitate this by offering home collection services for used packaging through scheduled pickups or by installing refill stations in retail locations. Additionally, reward programs can boost engagement by granting points for returning reusable packaging or buying refills, which can then be exchanged for discounts or free products. 

What steps can companies take now to prepare for the PPWR implementation?
 

Companies in the packaging sector must transition to sustainable practices and adopt more circular business practices ahead of the PPWR’s implementation, focusing on minimizing resource use, increasing packaging recycling and their re-introduction into the economy, extending product lifespans through reuse, and integrating ecodesign principles into decision-making processes. 

To comply with the PPWR, companies need to prioritise the following:

• Conduct a comprehensive review of the whole packaging inventory to assess packaging’s recyclability and the current usage of recycled content. This is essential as the PPWR imposes targets on those areas and mandates a shift from virgin raw materials. Investment decisions will be influenced by the business nature of the in-scope companies as well as their existing sustainability commitments. For instance, waste management companies may invest in sorting and recycling, while other companies involved in the packaging supply chain may opt to join EPR systems or invest collectively. Those already embracing sustainable packaging have an advantage over those needing to revamp their business models, as is the case for single-use packaging specialists. 
• Consider partnerships to form return pools to meet the reuse targets for the beverages sector. 
• Develop a strong understanding of the broader EU environmental policy framework and how the PPWR integrates into it, considering analogous provisions dispersed across different regulations.
• Collect data and trace the supply chain to evaluate suppliers’ packaging practices thoroughly. This could integrate into a broader data strategy that companies need to construct to ensure compliance with regulations extending beyond the PPWR.
• Review branding strategies and design choices, especially for companies whose identity revolves around packaging, to maintain competitiveness. Given that packaging serves as a primary marketing and branding strategy, changes in packaging material, colour, and quantity carry significant weight beyond logistical considerations. By embracing sustainable packaging practices and incorporating them into their branding efforts, companies may demonstrate a commitment to environmental responsibility, fostering a positive brand image that resonates with conscientious consumers, and aligning their statements with the upcoming Green Claims Directive.

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Reference:

¹ European Commission, “COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT REPORT Accompanying the document Proposal for a Regulation of the European Parliament and the Council on packaging and packaging waste, amending Regulation (EU) 2019/1020, and repealing Directive 94/62/EC”, 30 November 2022.