UK retailers likely to pass on EPR-linked costs to consumers

UK retailers are likely to pass on as much as 80% of the costs related to the country’s new extended producer responsibility (EPR) mandate to consumers, according to new research.

The British Retail Consortium (BRC) surveyed leading retailers in the country to understand how they are approaching their EPR obligations for packaging, with a new law coming into effect this month mandating data collection and disclosure and imposing waste management fees and potential charges to the environmental regulators.

It found that over 80% of costs are likely to be passed onto consumers, further increasing inflation in the UK.

According to the BRC, retailers were already hit with £5 billion in extra employment costs last year due to higher employer National Insurance and rising National Living Wages, leaving them with little room to absorb EPR-related costs estimated in the billions of pounds.

Andrew Opie, Director of Food & Sustainability at the BRC, said: “Retailers support the polluter pays principle and are making significant changes to reduce and improve their packaging. But the packaging tax is also a multi-billion pound levy being paid by consumers during a cost-of-living crisis. They will ask: what are we getting for higher prices? Unless funds are spent transparently and effectively, EPR threatens to just be another burden on an already overtaxed industry with no tangible benefits for customers or the environment.”

EPR expected to increase sustainable packaging on the market

The new EPR scheme is expected to bring positive environmental results, with 85% of retailers intending to increase the proportion of sustainable packaging in their products and almost four in five (78%) planning to reduce the total volume of packaging they place on the market.

These efforts will help reduce costs, with EPR fees based on both materials and amounts of packaging used.

However, in addition to the financial impact, 85% of retailers also expect increased administrative and compliance burden as they begin mandatory reporting of packaging composition and amounts.

BRC argues that while the new law has potential to increase transparency and change packaging practices, protections are necessary to ensure the money raised from EPR can only be used by local councils to collect and operate local recycling, as well as fund improvements to local recycling systems.

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