Overview of extended producer responsibility

Extended producer responsibility (EPR) is a proactive business response to the threat of climate crisis and environmental degradation. Modern manufacturers not only face unpredictable consumer and social trends, but must also anticipate ever-evolving compliance requirements. To meet these demands, product designers are under enormous pressure to make it quick, make it customised, make it affordable… and make it environmentally friendly.

Every year—every month—it becomes more challenging and complicated for businesses not only to maintain and improve their sustainability practices but also to keep abreast of a barrage of ever-changing rules and environmental regulations. The more complex this space becomes, the more businesses are eager to find the right technological and strategic solutions to help them streamline their sustainable design and manufacturing processes.

Meaning of extended producer responsibility

Extended producer responsibility (EPR) is a waste and pollution management concept that encourages companies to design more sustainable and recyclable products and manufacturing processes. To be compliant, businesses must demonstrate their efforts towards achieving a circular economy model, including product reuse, buy-back, and recycling programmes. And while many companies are self-motivated to be better environmental stewards, EPR takes a more practical approach and recognises that the best environmental results can be achieved when manufacturers, rather than local authorities, are held responsible for the cost of sustainability—from raw materials sourcing to end-of-life and recycling.

The urgency and pressure to implement EPR compliance originated from the near-crisis levels of municipal waste in many of the largest urban centres. The exponential growth in e-commerce and increasing consumer expectations for choice and rapid fulfilment have accelerated the rise in municipal rubbish which, by 2050, is estimated to increase to 3.40 billion tonnes globally. And today, although 80% of the items currently disposed of in landfill sites are recyclable, only 20% of this content actually gets recycled.

Adding insult to injury are the growing levels of industrial and hazardous waste, prompting businesses and governments alike to call for a fundamental rethink of how products are used and produced. Forward-thinking companies are therefore reworking their product design processes, choosing environmentally friendly materials and sustainable packaging, and adopting circular models in response to (and anticipation of) increased government intervention.

Circular design and the move away from "take-make-waste"

Every day, the best businesses are implementing more stringent eco-friendly processes across their entire sustainable supply chains. Typically, this includes the reduction of petroleum and energy usage, reduced packaging, ethical sourcing of raw materials, and campaigns to encourage and enable customers to reuse and recycle. Yet, the vital role of product designers in achieving sustainability goals has—until recently—been somewhat of an afterthought.

The remit of a product designer has always been to create goods that best suit the customers’ needs and wants. What happens to those products when customers have finished with them has not traditionally been a designer’s concern—hence the longstanding "take-make-waste" design model. Many companies start with their existing products and processes and ask their designers and manufacturers to retrofit ways of making them greener. This is of limited effectiveness. In order to achieve a fully circular economy and supply chain, products must be initially designed with circularity in mind.

What is circular design?

Circular design is the practice of developing products—from raw materials to packaging—that are specifically crafted for easy recycling, reuse, or repurposing. Product designers are typically creative, resourceful, and innovative people. It is often at the designers’ drawing board—rather than the boardroom—where the best sustainability ideas are born. How is circular design achieved? Below are some of the basics.

Tips for more sustainable product design

“How do you eat an elephant?” goes the old adage. The answer is “one bite at a time”, which also describes the best approach to EPR and environmental initiatives. Below, we’ll look at the set of principles that product designers should strive for when designing EPR-compliant products. Many businesses may only be considering one or two of these principles in their current design processes. And that’s all right. The goal is not to be perfect today, it is to be committed today, and to demonstrate a workable and practical strategy for achieving EPR and sustainability in the shortest time possible.

• Can it be recycled, reused, or reclaimed? Products should be designed with end-of-life in mind. Recyclable components should be relatively easy to extract, ideally near their final region of use. Ultimately, it should be part of a circular economy where the same company is invested in accumulating and reusing its end-of-life products.
• Can materials be reduced? In both products and packaging, small is beautiful. Especially in a time of rising fuel and transport costs, smaller units mean more units per shipment and significantly reduced costs. Fewer material inputs also make downstream reclamation and recycling easier and cheaper.
• Is it difficult to take apart? “Design for disassembly” is a component of recyclability. Sustainable design seeks fixed and moving components that can be easily dismantled into their constituent parts, to facilitate recycling and repurposing of parts or raw materials.
• Is it modular? From flat-pack furniture to prefabricated homes, modularity is taking off. Even fashion is going modular, with a growing trend towards wardrobe items that can be taken apart and put back together for different purposes and seasons (detachable hoods and sleeves, mix-and-match shoe soles, and more).
• How long does it last? As a society, we have become comfortable with a culture of built-in obsolescence—to the point where designers have intentionally added cosmetic features to make “last year’s models” very visibly outdated. Today’s designers, however, are increasingly focused on creating more durable products and helping to develop a market for lasting durability over disposable cheapness.
• Can it be easily repaired? As consumers demand ever smaller and more powerful electronic devices, it is understandable that certain products are not designed for easy repair.

Eco-friendly products: The value of getting it right

Creating eco-friendly products is a win/win/win, for companies, consumers… and the planet. Businesses that meet consumer demand for sustainable products earn strong revenues and brand loyalty. In 2019, the NYU Stern School of Business established the Sustainable Market Share Index™, an in-depth analysis of consumer purchases marketed for their sustainable attributes. The research revealed that, while sustainability-marketed products make up only 16% of the market, they delivered almost 55% of the market growth in consumer packaged goods (CPG) from 2015 to 2019—despite the COVID pandemic.

While sustainability-marketed products make up only 16% of the market, they delivered almost 55% of the market growth in consumer packaged goods (CPG) from 2015 to 2019.

Sustainable Market Share Index™

These CPG products also commanded a price premium of 39.5% compared to conventionally marketed counterparts. Those eye-popping numbers should incentivise companies who fear that “going green” will be costly.

Companies that design environmentally friendly products—part of their corporate social responsibility—enjoy enormous reputational boosts as well as opportunities to benefit from subsidies (and not have to pay fines). In other words: businesses that adopt EPR and circular design principles experience increased resilience and efficiency across their entire value chain, and all the rest of us benefit from more environmentally friendly practices, too.

Plastics tax and the cost of getting it wrong

Global plastic production averages more than 300 million metric tonnes per year, compared to the 1.5 million metric tonnes produced in 1950. Of this, packaging materials comprise a staggering 45%. Among other shocking statistics on global plastics pollution, National Geographic research found over 5.25 trillion fragments of plastic in our oceans—much of it due to toxic micro-pellets released in the actual production of the plastics themselves. To address this global concern, governments around the world are implementing increasingly punitive plastics taxes. The European Union Packaging Levy , for example, covers all E.U. member states, charging them €0.80 per kilogram of plastic packaging waste that is not recycled.

In April 2022, the UK revised its Plastic Packaging Tax to fine companies whose products contain less than 30% recycled plastics. In the US, the Break Free From Plastic Pollution Act of 2021 is currently in legislation and, if passed, would make certain producers of plastic products financially responsible for collecting, managing, and recycling products after consumer use.

Supporting EPR with smart technology

To support EPR and other sustainability efforts, manufacturers must collect, manage, and understand an enormous amount of data and information—from ensuring the provenance of raw materials, to informing customers of environmentally friendly initiatives and recycling options. Compliance must be ensured, processes must be streamlined and automated, and designers and manufacturing teams must communicate and collaborate in real time.

To gain the speed, visibility, and sophistication needed to achieve EPR and sustainability goals, businesses are turning to cloud-connected, AI-driven software solutions that integrate with their existing systems to leverage the power of data.

These intelligent systems help businesses:

• Monitor global reporting requirements (for EPR, plastics, for example) in real time
• Automate reporting and compliance processes worldwide
• Gain on-demand access to new materials suppliers through a more transparent supply chain, and enable remote R&D and design teams to collaborate
• Leverage AI and machine learning to inform design specifications and expand creative design
• Integrate design teams with real-time customer feedback and input, allowing for faster adaptation
• Reuse existing data structures and integrate disparate data sets from myriad sources into a single, accessible system

Extended producer responsibility. Are you ready for the future?

The more unpredictable and complex compliance issues (and consumers) become, the more streamlined and efficient your organisation needs to be to compete and thrive. Smart supply chain and manufacturing software solutions are instrumental in achieving your goals—but people always come first. From your suppliers to your product designers and marketing teams, everyone in your organisation has something to contribute to sustainability, compliance, and customer satisfaction. It starts with a strong communication strategy, to break down silos and share ideas. And it remains an ongoing process, gradually moving your business towards a fully sustainable future.

SAP sustainability customers in action