“Pepsi” loophole in packaging regulations to be closed

Most companies in the UK that use significant quantities of packaging to sell their products must contribute to the meeting of recycling targets ultimately set by Europe's Packaging Directive. But firms based abroad apparently escape this obligation.

” PepsiCo is not registered. It is part of a gap in the regulations which should be sorted in a forthcoming consultation from Defra. “
– Environment Agency
This is understood to be because the Environment Agency has no jurisdiction to enforce the UK producer responsibility regulations overseas.

While a number of companies are thought to be taking advantage of this loophole, Switzerland-based PepsiCo is one of the largest.

The Environment Agency has confirmed that the company – which owns brands including Pepsi Cola, Walkers crisps and Quaker cereals – is not registered under the UK producer responsibility system.

A spokeswoman for the Agency said: “No, PepsiCo is not registered. It is part of a gap in the regulations which should be sorted in a forthcoming consultation from Defra. The regulation needs to be amended, but this will be part of the consultation.”

Pepsi
By failing to take part in the UK's packaging recycling system, Pepsi could be inflicting a significant dent in the amount of investment going into UK recycling at a time when the UK is facing potentially hefty fines from the EU if it misses recycling targets.

The company's Walkers brand alone is responsible for putting over 5.2 billion bags of crisps on the UK market each year.

Commenting on its non-registration within the packaging producer responsibility system, a spokesperson for PepsiCo said: “We are of course concerned about pack recycling and the biggest issue we face as a business is the practicality of getting consumers to recycle their empty packs. All of our packaging is fully recyclable and we make consumers aware of this by printing the recycling logo on the back of all of our packs.

” We are of course concerned about pack recycling and the biggest issue we face as a business is the practicality of getting consumers to recycle/ “
– PepsiCo
“To help encourage consumers to recycle more of our packs we are currently trialling schemes to physically recover empty packs via supermarkets. Packaging is a core part of our business as it ensures the freshness and quality of our products,” the PepsiCo spokesperson added.

Consultation
Defra has confirmed that “technical changes” in the packaging regulations are needed, with the Department's spokesman stating that a consultation on possible amendments to the regulations is likely to be issued “mid-August”.

Other loopholes are thought to exist in the areas of franchise packaging and leased packaging. Companies that run on a franchise basis could have avoided their recycling duties because their “master franchise” is located abroad.

Similarly, foreign-based companies leasing out packaging (such as crates or pallets) to businesses in the UK are also thought to be outside the jurisdiction of the Environment Agency.

PRNs
The affect of these companies not taking part in UK producer responsibility is that there is a lower demand for packaging waste recovery notes (PRNs) than expected. These notes are the evidence documentation used for producer responsibility, the means for investment money to pass from packaging producers to recyclers.

At the moment, the current low demand for PRNs has seen prices falling to just 4 per tonne for PRNs in the paper and wood streams. For PRNs relating to steel and aluminium packaging, their value is now a tenth of that seen towards the end of last year.

The last time PRN prices hit these kind of levels – in 2003 – investment in UK packaging reprocessing via PRNs fell from an annual 115 million to 51 million.

Data
Experts in the packaging recovery sector have told letsrecycle.com the “Pepsi” loophole “could be very significant” with respect to the PRN market. Defra looks likely to issue packaging recovery data later this month, which could confirm the shortfall in the PRN demand levels expected.

One industry observer warned that the forthcoming consultation would have to see some changes made to producer recycling targets if companies like PepsiCo were not successfully brought within the regulations.

He said: “This is high risk government threatening compliance with the Directive. There's no point in anyone contracting to purchase PRNs if Defra can't get the targets right.”