Should food and drink producers be responsible for the packaging their goods are sold in? That is the central question posed by the Extended Producer Responsibility (EPR) scheme introduced last year.
Rooted in sustainability principles, the scheme makes F&B firms financially responsible for the environmental impact of their packaging once it reaches the end of its use cycle.
This responsibility most often falls on the so-called ‘brand owner’, even when that company subcontracts packaging or retail activities to a third party.
Unsurprisingly, the scheme has caused quite a stir across the sector since it came into force under the Starmer government just over a year ago, with some businesses sounding the alarm over what they see as significant shortcomings.
Social enterprise and drinks manufacturer Belu is one such business, and its chief executive officer Charlotte Harrington recently spoke to Food Manufacture about the impact EPR is having on purpose-led brands.
Should social enterprises get a break?
Belu is a social enterprise and, as such, passes on 100% of its profits to the international charity WaterAid, which provides people in developing countries with access to clean water and sanitation facilities.
Since 2011, it has contributed around £6.5 million to WaterAid.
So, should purpose-led companies such as Belu, whose ultimate goal is not to generate profits for shareholders but to fund charitable causes, still have to pay EPR fees?
“We were founded with a really simple idea, that there was a different way to do business, and through doing business, you could help solve some of the world’s problems. We exist today as a charity-owned social enterprise. We trade as a commercial entity,” explains Harrington.
“Rather than our shareholders receiving the dividends, they are passed to our foundation, and we have a long-standing agreement with WaterAid who receive all of our operating profits.”
It is this values-led raison d’être that can sometimes create complications, and it is now coming under renewed scrutiny as Belu assesses the financial impact of EPR.
The London-based drinks company relies on the support of philanthropic investors to provide the external capital needed to fund growth. As a result, any additional costs associated with the scheme present a challenge.
The wider question raised by the company is whether EPR is truly fit for purpose when it is applied uniformly across all food and drink businesses, regardless of ownership structure, commercial objectives or social impact.
Is the EPR fit for purpose?
As a business founded not only on charitable but also environmentally conscious principles, Belu is a strong supporter of the EPR scheme’s underlying aims.
Harrington agrees that producers should take responsibility for the packaging they place on the market, but argues that the current system fails to recognise the differences between business models.
As a purpose-led social enterprise, has Belu fallen through the gaps in the categories covered by the legislation?
“We absolutely support the intent of the policy. So the idea that manufacturers, brands, producers should take responsibility for the packaging is right. I think the execution of it has been too simplistic,” Harrington says.
“Currently in the legislation, charities and public services are exempt, and given that we are a charity-owned social enterprise, we believe there has just been an oversight in our business.”
And let us not forget the significant data-collection challenge created by the introduction of EPR, adding another administrative burden to food and drink manufacturers’ day-to-day operations.
Another issue raised by Harrington is that EPR is focused primarily on household waste, with much of the money paid by businesses being directed to local authorities to support waste collection and management.
Most of Belu’s products, however, are sold through hospitality and corporate channels rather than directly to consumers.
Hospitality businesses already pay commercial waste contractors to manage packaging waste, meaning the EPR in its current form can effectively result in businesses paying twice for the same service.
“I think it’s too broad brush in that it’s all about household waste, or consumer waste. It is not about business waste,” she adds.
“We’re a B2B brand and it’s been applied in the same way to retail and hospitality, which is also too simplistic. Hospitality businesses already pay commercial waste contractors to take away and recycle responsibly the packaging that we as a brand have put into the market.”
Should the EPR be tweaked?
Given these very real and credible concerns expressed by Harrington, it begs the question of whether the EPR, in its current form, really is a bit too one-size-fits-all in its approach?
After all, the UK food and drink sector is exceedingly diverse, bringing together a myriad of ways of working.
And that includes producers like Belu, which is a social enterprise and conducts the bulk of its business with hospitality and corporate customers. In this light, the EPR as it stands is not necessarily appropriate.
To that end, Harrington reveals that the company has been in talks with MPs and Defra to identify tangible solutions to these loopholes. However, the glacial pace of any potential changes is putting a serious spanner in the works.
“We’ve had some really positive conversations with MPs and letters with Defra, and it’s all under review, but it’s all really quite slow, and I think that’s our concern. Our frustration is that we’re a small business. We can’t wait a year for this to change.
“My sense on EPR is that they’ve taken a view from a group of people, but that’s not representative of the whole market. Maybe hospitality and smaller businesses weren’t in the room, or weren’t consulted enough?”
Ultimately, Belu believes that clear changes need to be made to the EPR before it is truly fit for purpose.
Specifically, the business argues that social enterprises operate differently from traditional businesses and should be recognised accordingly.
It also believes a distinction should be made between household and hospitality waste streams, with better coordination between EPR and DRS rules.
Furthermore, smaller businesses and social enterprises should be given a stronger voice at a national level when major packaging policies are designed and implemented.
“I think it’s really important that we have the voice of social enterprises heard,” Harrington continues.
“I think hospitality needs to be better represented. We need to cherish and encourage entrepreneurial hospitality businesses and services, because they’re really important for our economy, they’re really important for jobs, particularly for young people.”
Perhaps the recent change in government will lead to the tweaks that Belu is seeking, or at least a more sympathetic ear to its concerns.
Producers must take responsibility for the packaging they place on the market. That point is not in dispute. However, over time, and with continued lobbying, Defra may consider making targeted changes to the EPR that could give smaller and charity-focused businesses some much-needed breathing room.
