The EPR Law takes on the Philippines' plastic problem

The EPR Law takes on the Philippines’ plastic problem
By: Ma. Celina Añonuevo and Bonar Laureto

Barring any last-minute hiccups, the Extended Producer Responsibility (EPR) Act of 2022 should have lapsed into law by now, which means companies are now responsible for the plastic packaging they use to protect, transport, and sell their products.

The law is meant to address our country’s contribution to the global plastic pollution problem, where 40 percent of global plastic waste ends up in the ocean. In 2016 alone, 11 million metric tons of plastic entered the ocean, and if nothing is done, this may reach 29 million metric tons by 2040.

Previously, manufacturers were only responsible for the impact of the actual production of their products. But under the EPR Law, product manufacturers will be held responsible for the entire life cycle of their product -- from manufacture, to use, and to end-of-life.

Who will be affected by the EPR Law?
The law covers brand owners who sell or supply any commodity under a brand or identity using a product it produced, or a material supplied to it by another manufacturer or supplier. Brand owners are also responsible for their toll manufacturers, as they manufacture products on behalf of the brand owner.

Large enterprises, or businesses with total assets worth more than ₱100 million, are required to participate in EPR, while MSMEs are not required but are highly encouraged.

What materials are covered?
The law covers plastic packaging that is used to “carry, protect, or pack goods for transportation, distribution, or sale.” This includes:

1. Sachets, labels, laminates, and other flexible plastic, whether single layer or multi-layered with other materials. Examples include packaging used for shampoo and noodles.
2. Rigid plastic packaging, whether layered with any other materials, and their coverings or lids. Examples include bottles used for drinks and cosmetics.
3. Rigid plastic promotional items, such as cutlery, plates, drinking straws, or signage
4. Plastic bags, including single-use plastic bags used to transport products that are provided or used upon purchase
5. Polystyrene, including both rigid (e.g., takeout containers) and foam polystyrene (e.g., cups, packing foam)

Products made of plastic are not covered by the law.

What do companies have to do?
Companies must establish or phase-in EPR programs for their plastic packaging within six months of the law’s effectivity and register these with the National Solid Waste Management Commission. They also need to measure their annual plastic packaging footprint and meet diversion targets. By the end of 2023, they need to demonstrate recovery and diversion of 20 percent of their 2022 plastic packaging footprint; 40 percent by 2024, with 10 percent annual increase up to 80 percent by 2028 and onwards.

Companies are also required to submit annual compliance reports that are audited and assured by an independent third-party auditor. The report should include the company’s plastic packaging footprint, amount of plastic recovered, recovery rate, and EPR program compliance based on standards to be established by the Department of Environment and Natural Resources.

What can companies do to recover plastic packaging and offset their plastic footprint?

Compliance comes in many forms, including:

1. Recovery schemes such as redemption, buy-backs, or any other method that results in high collection and recycling rates of the plastic waste
2. Recycling and other sustainable methods
3. Transporting plastic waste to appropriate processing or disposal sites in the country
4. Cleanup of plastic waste leaked to coastal areas, public roads, and other areas
5. Establishing commercial or industrial-scale recycling, thermal treatment, or other waste diversion or disposal facility
6. Partnership with LGUs, communities, and the informal waste sector to recover plastic waste

Note, however, that while schemes such as redesigning products to increase reusability and recyclability, using recycled content in a product, and establishing refilling stations reduce a company’s overall plastic footprint, these are not considered “diversion activities.”

Who can I work with on this?
Companies can do an EPR program on their own or form partnerships with other companies, NGOs, and/or LGUs to scale up their activities. Companies can also join a Producer Responsibility Organization.

For the waste footprint and diversion certification, companies need to work with independent auditors who can certify that their declared waste footprint and waste diversion are correct.

Are there incentives?
The EPR program costs are considered necessary business expenses and are deductible from annual gross income.

What are the fines?
Companies that don’t register their EPR programs or fail to meet the diversion targets will receive fines:

1. First offense – fine between ₱5 million and ₱10 million
2. Second offense – fine between ₱10 million and ₱15 million
3. Third offense – fine from ₱15 million to not more than ₱20 million and suspension of business permit until they comply
   

If a company doesn’t meet the diversion requirements, it will have to pay the fines above, or a fine twice the cost of recovering and diverting the amount of plastic needed to comply, whichever is higher.

No doubt this new law will have a significant impact on the operations of covered companies, at a time when many businesses may still be on recovery mode from the pandemic. But considering that the Philippines is one of the world’s largest contributors to marine plastic pollution, it is our collective responsibility to take bold action now. Let’s clean up our act while we can still make a difference.
 

This article originally appeared in The Manila Times on 25 July 2022 in the weekly Deloitte on the dot column. Click here to access that column. The authors are part of the climate and sustainability advisory team within the risk advisory group of Deloitte Philippines (Navarro Amper & Co.), a member of the Deloitte Asia Pacific Network. For comments or questions, email manonuevo@deloitte.com or blaureto@deloitte.com.