Changing pEPR costs and obligations: how can you optimise your commercial position?
The recently introduced packaging extended producer responsibility regime (the "pEPR") shifts the financial burden of dealing with packaging waste squarely onto those classed as ‘producers’. Waste disposal fees became payable from 1 October 2025 for household packaging, commonly disposed of packaging, and glass household drinks containers. Accordingly, many food and drink manufacturers members will have received an invoice (also referred to as a Notice of Liability) from the scheme administrator, PackUK.
Liable producers have been required to assess the recyclability of their packaging, and report the results using the recyclability assessment methodology (“RAM”), with this data being used to calculate the first modulated fees which will apply for the 2026-27 financial year. For many food and drink businesses, pEPR may well represent an uptick in the eco-taxes payable by producers of packaging waste. Recent invoices demonstrate that producers are now facing a noticeable increase in the direct costs associated with managing the packaging waste placed on the market.
For the first time, the fees payable are assessed based on recyclability of materials (as opposed to the previous regime where the fees varied based on the material type alone). The base fee for each material is reflected by what is referred to as an amber rating, with red rated packaging attracting a higher price per tonne and green rated packaging a lower one. Our understanding is that for producers with large volumes of packaging, the difference between a red and green rating could translate into substantial cost savings.
As mentioned, the RAM rating is intended to encourage producers to use increasingly recyclable materials, with reference to the potential to recycle the packaging in question when it is later disposed of:
- Green: packaging is widely recyclable in the current UK infrastructure.
- Amber: packaging may experience challenges during collection and sortation, require specialist infrastructure for reprocessing, the efficiency and output quality of reprocessing is affected, or there is some secondary material loss.
- Red: packaging has specifications that make it difficult to recycle at scale.
As recycling technologies, infrastructure, material availability and supply chain processes evolve, the RAM will be updated to reflect these changes. The aim is to encourage producers to choose materials and designs that are easier to recycle.
The expectation is that the RAM will evolve and change over time, and PackUK have published a 2025 – 2030 roadmap to ensure that it undergoes improvement, addressing stakeholder queries and integrating changes into annual RAM updates.
How can you optimise your commercial position?
Concerns over the compliance with the pEPR regime will invariably be widespread within the food and drink industry. This is not only due to the substantial waste disposal fees but also because of the additional compliance assessments matters and indirect costs incurred (for example, upgrading data systems to meet additional reporting requirements, additional labour costs for data management and verification, instructing external consultants to advise on changes, etc). However, there are several practical steps you can take to manage your exposure:
- Scrutinise your Notices of Liability carefully – it is possible that challenges can be made of calculations, whether this is based on the categorisation of packaging as red / amber or green based on the (rather vague) terms of the RAM. You have the ability to complain about or appeal your Notice of Liability, and a successful challenge can result in recalculation of your fees.
- Review how the RAM is applied to your packaging in general terms. If you believe the methodology does not properly account for the practical realities of your products or industry processes, it may be worth engaging with PackUK and challenging the RAM’s application. PackUK has committed to monitoring the impacts of its modulation policy and engaging with industry to consider emerging issues. There is a genuine opportunity to shape how the regime operates in practice, particularly where rigid application of the RAM is incompatible with industry practicalities or risks hampering creativity and innovation.
- Consider your packaging strategy in light of the fee modulation system. Whilst packaging redesign may present a significant cost, this should be considered against the substantial, long-term cost savings that could be obtained by moving packaging from a red or amber rating to green.
- Consider reviewing your commercial contracts and supply chains. Depending on how obligations and costs are allocated across your supply chain, there may be opportunities to renegotiate terms, restructure arrangements, or work collaboratively with suppliers and customers to minimise your burden.
- Embrace the change – this is an opportunity to increase sustainable practices and contribute towards long-term change for the better.
CMS has extensive experience in supporting clients with compliance matters, reviewing obligations and challenging regulators, both with regards to packaging regulation and other EPR regimes in the UK and Europe.
If you would like assistance, please contact Esme Saynor and Nicola Power at CMS.
