Is £200 a tonne enough to move the dial?
Kathy Illingworth, Head of Sustainability Consulting at Ecoveritas shares their insight into the Plastic Packaging Tax and questions if the price is right to shift company behaviour
Businesses are stuck in a rapid spin cycle. From Covid-19 to supply chain disruption and the energy crisis, it is not surprising that sustainability is not top of the agenda. The Plastic Packaging Tax (PPT) is estimated to affect 20,000 companies, yet since its introduction into UK law this April only 2600 companies have signed up so far. Is this a question of unfortunate timing, or is there more to it than that?
While only the UK’s largest suppliers were required to register within the first month PPT was mandated, figures have remained low after many months. Confusion is high amongst businesses, with many hesitant over what PPT means for them. For some, it isn’t obvious what the tax really means, especially when the definition of plastic packaging is not entirely consistent.
In each case, the UK Government has outlined what is and isn’t part of the PPT scope and subject to the levy. For any plastics manufactured in or imported into the UK, they will be subject to the tax, unless evidence presents that the plastics contain at least 30% certified recycled material. For example, dental floss cases, plug-in air fresheners and tea bags are not subject to PPT as plastic is an integral part of the goods, while coat hangers designed for use in the supply chain, closures on condiments and liquid soap pumps are1. Even where the primary function is for storage, there are discrepancies, where board game boxes with plastic inserts are not subject to the tax, versus resealable food packaging (for cheese and pasta) where it is1. Following active and persistent engagement from the BRC on this issue, HMRC has indicated that filled reusable plastic crates will also be exempt from the tax.
This list, however, is not exhaustive and is privy to inconsistencies in the definition of plastic packaging between the UK Government, HMRC and DEFRA (Department for Environment, Food and Rural Affairs). Here, time-poor businesses that are strategically shifting their resources to manage market volatility may find that the cheaper option right now is to simply pay the levy at a rate of £200 per tonne.
Striking the right balance
While three in four consumers are in favour of banning single-use plastic products2 and anti-plastic campaigners want to push government-backed voluntary schemes further3, some packaging firms would prefer to pause regulatory frameworks until the current storm subsides4. This then begs the question, when is the right time?
Choosing between sustainability and survival should not be an option on the table – and yet for many businesses it is. The main issue here is the cost of gathering evidence becomes too burdensome on producers, particularly at a time when resources are already stretched. If we put the brakes on regulations like PPT and Extended Producer Responsibility, we are just kicking the can further down the road. However, that does not mean that plastic packaging firms are alone.
In the food industry in particular, producers should be focusing on where it is technically and legally feasible to switch from virgin plastic to recycled content, such as in bottles, tubs and trays, rather than disregarding the issue at large. Film used in bakery and snacks as a protective barrier, for instance, cannot be switched to recycled content as – in its current form – it is simply not legally feasible due to food contact regulations, but it is pivotal that a levy of this nature encourages development of recycled content in film. This is where government bodies have the power to strike the right balance between consumers, campaigners and corporations, ensuring that the best support is given to research and development in this field to reduce our reliance on plastic.
In addition, investment is lacking in collection systems for films in the FMCG sector. Without that backing, businesses will pay the levy. This causes a distortion in the market where government bodies believe there are lower levels of recycled content occurring and raise taxes in order to change behaviour. In this scenario, there are no winners.
Data is power
Yet with the right investment, change becomes inevitable. Driven by a need to meet 30% recycled content targets, the supply chain recognises that in order to reach that goal, investment in technical innovation is essential.
For industries like construction that commonly use plastic packaging for products, the PPT has incentivised some businesses to implement an audit to understand what their tax liability could be. For one building materials store in Coventry, the audit identified areas where plastic could easily be eliminated, such as in branded packaging of tools. Yet in other areas, plastic is integral to ensure the safe transportation of goods. While stretch wrap over pallets were understandably flagged as a problematic area, dumpy bags accounted for 27% of the liability within the audit – quite a surprise to the company5.
For the construction company above, data of this nature is powerful and ignites conversation with suppliers to challenge the status quo. Where alternatives can be found for materials with 30% recycled content, then they should be used where it is legally and technically possible to do so.
To ensure sustainability goals remain on track, all-in-one data tools that give compliance offers, procurement teams and product developers full visibility of their packaging data, i.e. show their total tonnage in the market, the number of active product lines, and their recycled content coverage, are an ideal solution to an arduous task. This is where Ecoview from Ecoveritas can help.
As an easy-to-use web platform, Ecoview uses business intelligence from the global packaging industry to provide accurate sustainability, compliance and packaging data in one automated workflow. The system is designed to simplify technical packaging management and add more value for brands, manufacturers, retailers and their supply chains. For example, it can show businesses the recycled content of all materials, broken down by component type and department, alongside a handy plastic packaging tax calculator.
On the cusp of change
Producers are in need of real solutions that simplify the complexities of the PPT in order to make real change. They know that plastic pollution is no laughing matter, but neither are rising energy costs. The energy cap for UK businesses is limited to six months – and then what? Burying our heads in the sand will not work, so let’s use that time wisely to innovate, invest and ignite the supply chain to take action on reducing plastic where necessary.