Finding Opportunities In EPR Reporting: From Data Chaos To Strategic Advantage
Decoding the complexities of EPR reporting is essential for businesses navigating the circular economy. Christine Yeager tackles the sometimes "uncomfortable" but necessary shifts required, diving deep into material mapping challenges across diverse state regulations like Oregon, Colorado, and California. Learn about the nuances of reporting packaging components, the varying definitions of "obligated producer," and the hurdles of gaining visibility into sales data. Discover how embracing these compliance exercises can transform into strategic opportunities, from precise budgeting for EPR fees to fostering stronger relationships with retail partners and unlocking innovation pipelines.
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Finding Opportunities In EPR Reporting: From Data Chaos To Strategic Advantage
In this episode, we're going to go deep again into what are the challenges, but also what are the opportunities related to reporting for EPR. In this show, we embrace the uncomfortable but necessary shifts required to build a circular economy. Reporting is definitely uncomfortable. It's not really a fun activity. I guess maybe if that's your thing, but for most people, I think it's been not the most fun activity.
If you're working in packaging, sustainability, compliance, or just trying to keep your business out of regulatory hot water, this episode is definitely for you. We're talking about data, specifically mapping your packaging portfolio to the right materials, the right categories and the right state level rules. Two deadlines have already passed, and there's another deadline later in the year.
Let's start with a vocabulary check. We'll just ground ourselves in a few terms before we dive in. If you've been reading my show, then you should know at this stage what EPR is. Nonetheless, if this is your first episode, just quick recap. Extended Producer Responsibility is a policy approach where producers or brands that make and sell paper packaging. In this case, take on the financial burden of the end of life of their packaging, and it moves it away from municipalities, our local governments.
Material mapping. This is the process of aligning each component of your packaging portfolio with a specific material category. Data mapping is a way to translate data from one definition to another. In this case, it would be your material, how you track the sale of your products, translating that into the definitions that have been defined for what is a covered material or a reporting category. Obligated producer, this is the entity that's responsible for reporting and paying fees under the extended producer responsibility legislation. This definition can vary by state.
B2B packaging, packaging used between business, so business to business, B2B, like a shipping box used to send product to a retailer or like a pallet wrap, things like this. Finally, fee modulation, the practice of charging different EPR fees based on the characteristics of the packaging. All of this sounds simple until you're knee deep in spreadsheets and the rules start to contradict each other.
The Multi-State Material Mapping Maze
Let's start with the challenge at the core material mapping. When Oregon became the first date to pass modern EPR legislation, it gave brands a single but detailed framework to follow. Colorado and California came, and each one with its own definitions of packaging categories and reporting timelines. You can't just cut and paste, unfortunately.
If you did all your homework in Oregon, you mapped your entire portfolio, figured out which skus apply, assign those materials and set up internal processes and you're good. Colorado uses a totally different set of categories. That means you're doing the mapping all over again. California, which has a reporting deadline in November, has a much more robust, different, there's just a lot more categories within California.
A challenge in EPR reporting can be the difficulty in gaining visibility into your sales data.
The way that it's different is that California has packaging categories plus packaging categories with a plastic component. What I mean by that is maybe you have a paperboard box with a plastic window like a pasta box or something like that. That would be reported under paperboard with plastic component versus a paperboard box that has a window but maybe no plastic component in it or has no window. That leads you to presume that the categories that have a plastic component might have a higher fee because California in particular has a source reduction requirement where the use of virgin plastic has to be reduced by 25% by 2030, I believe.
Anyway, the point is that each state has these nuanced categories. On top of that challenge, from a material mapping standpoint, the way in which these categories are defined is based on how packages are recycled, which is not necessarily how a business tracks the materials and their package because you're generally, as a company, thinking about how you're buying those materials, how you're procuring those materials.
You then put them together. If you use an ERP system, which I actually don't know what the ERP stands for, but it's basically a system that is used to track the inventory or business operations, especially in a manufacturing facility. SAP is an example of that or Oracle. Anyway, the point is you're generally tracking that you have like your finished good, and then you have your components of things that make up your finished good. That makes your bill of materials.
That's how you might be tracking based on how you buy, how you put the pieces together, and then how you sell, which is not necessarily how you one recycles that package. The material mapping can be very nuanced and difficult, but once you start to get this level of detail, there could be some opportunity, which we'll talk about a little bit more later.
B2B Packaging: State-By-State Reporting Differences
Another tricky part is reporting isn't one size fits all. Knowing which packaging category to report in and when isn't always easy to figure out. Let's say you're reporting a bottled product that has a plastic cap. It could be a plastic Coke bottle, but it could also be a spice container. If you don't instruct the consumer to remove the cap before recycling, there's this assumption that the cap will go back on and then it'll be thrown away.
Other categories of materials, you may not assume that it's going to be thrown away together, that there are two unique components and they would likely be thrown away separately. If you anticipate that they're going to be thrown away together, then you report them as one item. Another example is like a shipping box that has tape on it. You don't report the tape separately from the cardboard box because you don't normally pull that tape off of that cardboard box.
Sticking with the cardboard box example, though, if you use that cardboard box to ship something from your facility to a retailer and then the retailer throws that cardboard box away before they put it on the shelf, well then, in that case, that would be B2B packaging, not consumer facing packaging. Each state has a different way in which they treat B2B packaging, so business to business, as we covered earlier.
In Oregon, you would report the B2B packaging separately. There's a separate category for tertiary cardboard or tertiary flexible plastic, HDPE or what have you, so these tertiary or B2B scenarios. You would report them separately. In California, they are a covered material, but you would report them in the same category. You would not distinguish between B2B corrugate or cardboard and B2B flexible plastics. You would just put them in the corrugate or cardboard category and the flexible plastic category under the right material type.
Who's Obligated? The Tricky World Of Producer Responsibility
In Colorado, you don't report these items at all. It depends on the scope of the legislation, where these materials that you sell actually get mapped. It can be different depending on the state. This mapping exercise can take a bit of time. Finally, like who's even obligated for? These things can be different in each state and can also be different per type of material. You may be obligated for all of your packaging, but then let's say you also sell some food service packaging, but you may not be obligated for that food service packaging depending on the state.
In Oregon, food service packaging is the entity that sells the package, the food service packaging into the state first is the obligated party, whereas in Colorado and California, and likely California, it's the brand owner. If there's a branding on the food service package, then they will be obligated. If there's no brand on the food service packaging, then it might fall to the manufacturer who makes the package. They may not be the one who's finally giving it to the consumer, but if there's no brand on it, then they are, in fact, obligated for it. It can be very tricky and definitely recommend legal counsel for obligation and understanding your obligation.
I promise I’ll get to some opportunities, but the other challenge in reporting can be the fact that it's hard to have visibility to your sales data. What I mean by this is sometimes, companies sell their packaging through a retailer, and that retailer sells in their brick-and-mortar store to a final consumer. Not all of that final sales data is shared back with the original brand owner. They know how much they sold to their retailer, but they don't necessarily know how much the retailer has sold to in consumers.
There are some entities that do have that information and give it back to their brands, but a lot of times, it's only the big retailers or big brands that have access to that like Amazon and Walmart. They have their own like proprietary systems where they can share that state level data back, but it's not everywhere. It's not for everybody. It's not all the time, and it's not free.
The official guidance from Circular Action Alliance says you can take US sales and then divide it by the population. Let’s say this percentage of the population across the US is X, and so I should just apply that same factor to my sales. Not everybody sells in line with population density or population across the US, especially if you're a regional brand. You can start to look at maybe market share data and start to think about, “Do I know generally how much market share I have? Can I start to use that as a factor against my sales?”
Can you start to learn more from your retailers? Can you go directly to your retailers? In the long-term, brands and retailers are going to have to come together to figure out a smarter way to share data. It's not one off. It's not one by one, it's not cost prohibitive because that's what CAA is going to start requiring. They've not set a date for that, but they've made it very clear in their guidance that eventually, industry will have to get more accurate with this sales data challenge.
In the long-term, brands and retailers must collaborate to share data smarter. `
From Compliance To Opportunity: Unlocking Business Value
However, there's opportunity in this mess. There's a flip side to going through this exercise and then learning more about your packaging, learning more about your sales, and then starting to use that for business decisions. If you can get your arms around this level of detail in your portfolio and what's being sold where, then you can start to think more strategically about how this legislation is impacting your business. You can also start to unpack maybe some market information about why are you selling over-indexing in these particular states? What is it about your products that's nuanced in these various states? You can start to build that into your go-to-market strategies.
This also can play into how you can budget more accurately for EPR and maybe even start to think about your innovation pipeline. This is something that I'm really want to work with companies on. How do you redefine your innovation roadmap to get ahead and ultimately reduce your EPR fees in the long-term? This requirement about getting more accurate sales data starts to crack the door open to a better relationship with your retail partners. If you can start that conversation around sales transparency, you might also get insight into consumer behavior, geographic trends and more that can really drive that smart go-to-market strategy.
There can be opportunity in this compliance exercise, but it's not just an exercise. It is not optional. You are required to comply if you sell in these states. There are consequences, but they are varied across the state and they're not happening yet. In Oregon, non-compliance can lead to daily penalties up to $25,000 per violation. It's very clearly spelled out in the statute.
In California, the fines are less specific, but they do have the opportunity to kick your package off the shelf if you don't comply with moving into material that's recyclable. Colorado hasn't released final enforcement numbers yet, but there's already some signals that failure to register or report will be met with escalating action. These programs are public, they're required, and being flagged as non-compliant can also damage your reputation with retailers, customers, investors, and partners who expect responsible business practices. Even if you avoid immediate fines, not reporting could mean you miss the window to proactively manage your fee exposure, and then it can start to snowball.
Without accurate reporting, you could be overpaying for packaging that doesn't need to be reported or underpaying and triggering an audit. That brings legal headaches and unexpected costs. Non-compliance does put your business at risk. This is not the moment to stay under the radar. It's the moment to get visible, accurate, and start to get ahead in moving into opportunity.
You're Not Alone: Proactive Strategies For EPR Success
You're not alone. It's true that none of this is easy. The landscape is evolving, the deadlines are aggressive, the rules aren't always clear, but you're not alone. The producers that succeed in this new era of accountability will be the ones who get proactive about their data, ask hard questions about obligations, push for more transparency, and see this not just as a cost center, but as a strategic edge.
If you're nodding along or shouting in frustration, you're exactly who this show is for. Please stay tuned. We'll keep putting out content like this. I've got some more fun interviews planned as well to lighten some of the conversation. EPR, the train has left the tracks. It is chugging along. I just want to leave with why embrace reporting as an opportunity. It's what some of my other guests have said. You can either let change happen to you or you can be proactive about the change.
EPR has only gained momentum. I know there's a lawsuit out there against Oregon, but it's not against EPR as a legislation. It's against the definition of obligated producers. Somebody's going to have to be on the hook for this, and who knows where that lawsuit will go. Nonetheless, thank you for being here. Thanks for sticking with it. If you are banging your head against the wall trying to keep up with the regulations and how they're changing, just stay engaged on this show or check out our website, CSYImpact.com. You're not alone. We can do this.