Significant changes are bound to happen to the way manufacturers of products with plastic packaging do business once legislators give final approval to the bills institutionalizing the country’s policy and practice of Extended Producer Responsibility (EPR). Mandates for cutting plastic waste footprint will be clear and measurable. Producers will have to deal with compliance reports, internal systems to record waste reduction, third-party audits, and hefty fines for violations.
Plastic generation has continued to rise to approximately 400 million tons per year worldwide, according to the 5th United Nations Environment Assembly, and is estimated to double by 2040. Filipinos use up about 2.15 million tons of plastics annually, and more than one-third of these reach the environment, said the World Wide Fund for Nature.
In response, the government has started responding to global efforts and targets. In 2019, the National Economic and Development Authority (NEDA) published the Philippine Action Plan for Sustainable Consumption and Production. House Bill (HB) 9147, also known as the “Single-use Plastic Products Regulation Act,” seeks to promote plastic circularity through reduce, reuse, and recycle practices, as well as the EPR.
Senate Bill (SB) 2425 and HB 10696 focus on institutionalizing EPR schemes to tackle the plastic waste problem. Both seek to prevent plastic waste from leaking into the environment by holding those that generate waste responsible for the whole life cycle of their products. The bills, which are currently pending joint resolution, push for the amendment of the Ecological Solid Waste Management Act of 2000 (RA 9003).
EPR is the environmental policy and practice that gives obliged companies (or producers) responsibility over the entire life cycle of their products. With the EPR, producers should ensure proper and effective recovery, treatment, recycling, and disposal of residual plastics from their products, and should adopt ways to improve plastic recyclability or reusability.
EPR schemes are designed for participation by relevant stakeholders — the producers themselves, government, producer responsibility organizations (PRO), waste management operators, and other relevant parties such as the informal sector and third-party auditors.
The latest iterations of the bills have two major differences that must be reconciled. SB 2425 obliges large companies only while HB 10696 encompasses medium and large companies. SB 2425 requires companies to target 10% recovery in the first year of implementation and 80% by the eighth year. Meanwhile, HB 10696 starts with 20% in the first year, and targets 80% by the fifth year.
To encourage compliance, rewards and recognition will be given to outstanding and innovative initiatives. Tax and duty exemptions on imported capital equipment and vehicles used for the EPR scheme may also be awarded to qualified organizations. On the other hand, organizations who submit false documents, misrepresent themselves or fail to meet targets are liable for hefty fines ranging from one to twenty million pesos depending on the size of the organization. Business permits will also be automatically withdrawn for third offenses.
BUSINESSES MUST CONSIDER ZERO-WASTE STRATEGIES
These bills, if passed into law, will surely affect how obliged companies conduct business. Within nine months upon the effectivity of the law, producers or their authorized PRO, shall register their EPR programs with the National Solid Waste Management Council and align their strategies and programs with the mandated recovery targets. Moreover, they will have to submit annual reports to monitor compliance with their respective EPR schemes and targets. Businesses must establish an internal system to record and report their plastic waste footprint, which must be audited by an independent third-party. Recovery or offsetting reports by waste management operators or diverters must also be audited.
Waste management operators must ensure that national targets are met. They must coordinate closely with PROs and obliged companies, possibly set up more materials recovery facilities (MRFs) and prepare the necessary resources. Based on the experience of other countries, integration of the informal sector is crucial to the success of EPR schemes since the current bulk of plastic collection, sorting and recycling relies on them. This raises the possibility of developing a plastic management ecosystem where the informal sector provides their knowledge and expertise to the process, and in return, operators can develop formal programs aimed at providing informal workers with secure livelihoods and social protection.
EPR also requires buy-in from the consumers. PROs must conduct extensive awareness campaigns on the importance of segregation and sustainability. It is worth noting though that worldwide, it is consumers themselves who are showing preference for brands that are true to their sustainability claims.
The EY Future Consumer Index shows that younger generations are critical, skeptical, and willing to switch brand loyalty if expectations are not met. Twenty-four percent of Gen Z and Millennials check the sustainability claims brands make, compared to 4% of Boomers, and they take action, too. Twenty-one percent of Gen Z and Millennials have stopped buying a product because the brand isn’t doing enough for the environment.
The point is that while it may be difficult to strike a balance between sustainability and preserving product quality with attractive packaging that ends up in the environment and landfills, consumer attitudes point to a reputational risk for brands that insist on the status quo. It won’t be a surprise if future consumers switch to alternatives and dump brands that are reluctant to change their packaging to more sustainable forms.
While waiting for the final passing of the bills, businesses should start monitoring their plastic waste flow and build partnerships for the smoother implementation of their EPR program. They can also start redesigning their products or packaging to reduce their plastic footprint. Ultimately, EPR presents an opportunity for businesses to improve their products, show commitment to the achievement of global climate change targets, and transition towards a circular economy.
This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the authors and do not necessarily represent the views of SGV & Co.
Benjamin N. Villacorte is a partner and Erika N. Courteille is a manager from the Climate Change and Sustainability Services team of SGV & Co.