Micro, small and medium enterprises (MSMEs) are encouraged to start preparing for the requirements of Republic Act No. 11898 or the Extended Producer Responsibility (EPR) even if the law will implement compliance on small businesses five years from now yet.
Bonar Laureto, director for climate and sustainability at Deloitte Philippines, said during the Circular Economy Forum “Understanding the Extended Producer Responsibility (EPR) Law of 2022” of the Makati Business Club and The Dutch Embassy in Manila that early preparation would mean reduced cost for MSMEs.
Laureto said MSMEs will eventually be required to comply during the review on the fifth year of the law’s implementation.
“My recommendation is for MSMEs to start looking into their option even within this next five years,” he said.
This is because the cost consideration in building one’s waste diversion can be minimized by already starting to shift towards the use of more recyclable packaging at this early. The more recyclable the packaging is, he said, the lesser is the cost of recovery.
It is also important to start early for MSMEs because the EPR compliance process also takes time and requires working with packaging suppliers.
For instance, he said, if the packaging has very high plastic content or materials that are difficult to recycle, MSMEs may want to try to work with suppliers to see whether they can do to shift their packaging to more recyclable content. He stressed that the type of materials use will determine the cost and affordability of the product.
Laureto explained that the recovery of packaging materials starts with producing the right materials. He also suggested MSMEs to start building its value creation to drive recovery at much lower cost. It is also important for MSMEs to forge an alliance with local government units and other stakeholders.
Under the law, all large enterprises with brand ownership that generate plastic packaging wastes are mandated to comply. This means that if a company owns a brand and brings this particular product with the brand into the market, the company owns the packaging and therefore regardless of the supplier of the packaging, that company owns the packaging. “That's going to be part of your plastic footprint,” said Laureto.
The law further provides that by February 2023, obliged companies must be able to submit an EPR planning program to the Department of Environment and Natural Resources (DENR) and National Ecology Center (NEC).
The obliged company will have a year to recover an intended amount of waste based on recovery targets. This means that by July 2024, the obliged company will have to submit its EPR compliance audit report.
The standards for waste footprint will be developed by government in due time, but Laureto said the latest draft of the law’s IRR stipulates that the private sector whether obliged company or collective or PRO (producer responsibility organization) will have to develop their own standard. A producer may also choose to delegate this responsibility to a third party or PRO, which is paid by the producer for used-product management.
Companies must also demonstrate that they are able to recover a percentage of that footprint based on a schedule of recovery targets.
The recovery targets would be 20 percent of plastic footprint for the first year ending December 2023. The recovery target doubles to 40 percent by 2024 and 10 percent incremental increase year on year to achieve 80 percent by 2028 and onwards.
Initially, MSMEs are not yet covered but small and medium sized organizations that have a brand that collectively adds up in terms of asset value to a large company beyond the definition of medium sized company, then they also need to be incorporated.
Examples are companies with franchises. Individually, franchises are small or medium, but, collectively as a brand, will constitute a large company. “They will be included as part of the obliged companies, which are covered,” he said.
All types of packaging waste such as tarpaulins and signages, promotional items, sachets, labels, laminates and other flexible plastic packaging products, rigid plastic packaging products, plastic bags, which include single-use plastic bags, and polystyrene, are all considered part of the plastic footprint of a company.
Through the EPR, obliged companies "have the responsibility for the proper and effective recovery, treatment, recycling or disposal of their products after they have been sold and used by consumers" to reduce packaging waste generation and improve the recyclability and reusability of packaging wastes.
The law also provides for third party auditors on the company’s compliance report. To ensure faster recovery and proper disposal of packaging waste for recycling, the law requires obliged companies to create a roadmap by labelling their products.
There are three options by which obliged companies can comply with the requirements: individual, collective, actual trading exchange platform for waste credits with waste certifying bodies.
Fines and penalties will be charged against enterprises who fail to comply with the provisions of the law to ensure proper plastic packaging waste management.
Lapsed into law on July 23, 2022, the EPR amended some of the provisions of RA 9003 or the Ecological Solid Waste Management Act to include among others, the Extended Producer Responsibility for plastic packaging and reconstitution of the National Solid Waste Management Commission who shall approve and oversee registered EPR Programs.