As a specialist for Waste as well as Packaging, plastics have featured in a lot of client and colleague conversations over the past few months.
In particular, a lot of mid-sized businesses have been shocked by the increase in the cost of meeting their statutory Packaging Obligation. These are businesses turning over >£2m and handling more than 50 tonnes of packaging. Required to submit an annual return, and then to purchase PRNs (Packaging Recovery Notes) to offset their packaging consumption.
So why plastics, what plastics are involved, and why has the cost risen so dramatically?
Around 20% of the UKs 11.5m packaging waste in 2017 was plastic (by weight – volume may be higher), and 40% of plastic production is for packaging. David Attenborough’s Blue Planet was a wake-up call and opened many people’s eyes to where waste plastic is ending up, but national governments had already started to address the issue.
This was a problem the UK had traditionally solved by exporting waste plastic to the Far East for recycling, largely washing it’s hands of the problem. However, from the start of 2018, China closed its doors to these imports, and since then other countries including Malaysia and the Philippines have imposed controls as well.
What have the cost implications been?
- Initially, UK waste management companies passed on increased prices for disposing of recyclables, in particular plastics
- Then the cost of PRNs for plastic began to escalate – cost has doubled in the last 12 months, and reached a level where they are on many CFOs’ radar. PRNs could add up to 1p to the cost of a 500ml water bottle
- More recently, the price paid for good quality plastic recycling has begun to increase, resulting in rebates beginning to reappear. However Veolia, for example, still only offer a limited plastic recycling service ‘due to the market’
What businesses are affected?
- Numerous businesses within the food supply chain (think packaging manufacturers, bottlers, wholesalers, retail and hospitality) – do they use plastic bottles, trays or tubs?
- Businesses in other packaging led supply chains, such as toiletries, chemicals & janitorial
- Wholesale businesses disposing of volume pallet wrap
How can Auditel help?
While there is limited opportunity to reduce the cost of compliance through PRNs, we can mitigate the overall cost base with:
- Review of packaging costs & specifications
- Review of waste costs and recycling income streams, including plastics
- Full scope cost management, so that a business is more resilient to costs spikes from particular markets such as PRNs
To read more about the Packaging Obligation, go to www.gov.uk/guidance/packaging-producer-responsibilties
Article by: Martin Wallis
This is an article from: Insight & Innovation: Issue 3 – click here to read the whole newsletter.