Rewriting the Rules: Turning Extended Producer Responsibility (EPR) and Deposit Return Schemes (DRS) Into Growth Opportunities

Global circular economy and waste management laws are rapidly evolving. These regulations are becoming more comprehensive, interconnected and ambitious in scope, moving beyond simple recycling targets to encompass entire product lifecycles and supply chains. This legislative momentum reflects growing urgency to address climate change, resource depletion, and pollution - shifting from voluntary action to mandatory, systemic approaches that involve all stakeholders in the value chain.

EPR and DRS are now key tools in the U.K. and Europe's sustainability strategies. They increase producer responsibility for the entire lifecycle of their products and packaging, while also incentivizing consumers to participate in recycling efforts. While some view these changes as costly or complex, they can unlock new value if approached strategically.

What are EPR and DRS?

Extended Producer Responsibility (EPR) and Deposit Return Schemes (DRS) are becoming integral components of global sustainability initiatives. These policies, set to be implemented in various regions, aim to revolutionize waste management and promote circular economy principles.

EPR makes producers responsible for the environmental impact of their household products' packaging throughout their lifecycle, especially at the end-of-life stage. This includes paying EPR fees, which are to be modulated depending upon types and volume of packaging used as assessed by the Recyclability Assessment Methodology (RAM). The Department for Environment, Food & Rural Affairs (DEFRA) released in December 2024 the third round of its estimated base fees, with final fees to be confirmed in June 2025. Producers had to report their packaging data to the regulators by 1st April 2025 to prepare for full compliance, with higher fees expected in coming years. Non-household packaging will continue under the existing Packaging Recovery Note (PRN) system.

DRS adds a refundable deposit to single-use drink containers, incentivizing returns. Implementation is planned for England and Northern Ireland by October 2027, with Scotland using a separate framework. The scheme will cover plastic (PET), aluminum and steel containers between 150 ml and 3 liters. The companies that use the packaging must manage deposit costs and refunds and implement collection infrastructure like reverse vending machines.
EPR and DRS will impact producers, retailers, waste management companies and consumers. Understanding and adapting to these changes is crucial. Though often seen as costly or heavy on compliance administration, they can become the starting point for growth and broader opportunities if handled correctly.

Circular legislation as a springboard for business transformation

Circular legislation promotes the reuse, repair and recycling of materials to reduce waste and keep resources in use for longer. It can drive long-term transformation if approached thoughtfully.

Key considerations:

• Understand your material landscape: Assess current and future material needs through multiple lenses-supply chain risks (political situations, tariff wars, shortages), environmental impact (toxicity levels, bio & regenerative sources, circular design), innovation (material tracing and monitoring, digital platforms, recycling technologies), and access to existing or future infrastructure for reuse, recycling, and remanufacture. Identify critical suppliers and potential future partnerships to ensure a resilient supply system.
• Adopt circular business models for savings: The new fees and implementation costs associated with EPR and DRS can significantly impact your bottom line. Optimizing your processes and material flows through the lens of circular business models can reveal substantial cost-saving opportunities. For instance, closing the loop on key resources like water can lead to significant cost and energy savings. Explore innovative models such as product-as-a-service or sharing platforms to maximize resource efficiency and create new revenue streams. Circular business models emphasize flexibility, systems thinking, and value creation across the entire product and packaging lifecycle.
• Align material flows with net zero targets: This is a perfect opportunity to reconsider your material flow and tackle your net zero journey. Did you know that nearly half of our emissions (45%) come from the way we make and use products and food? It's like solving a complex puzzle where each piece benefits both your business and the environment. EPR and DRS are designed to address waste management and reduce the carbon footprint associated with material production, disposal and recycling. These initiatives intersect with carbon reduction goals by promoting recycling and reuse, reducing landfill emissions, lowering transportation emissions and incentivizing low-carbon bio-packaging. Combining these schemes with renewable energy in recycling can further amplify carbon savings, creating a powerful synergy between waste reduction and climate action.

Act now for a long-term advantage

Turn compliance into a catalyst for growth. Here's how to leverage EPR and DRS as drivers of sustainable ambition and competitive advantage:

1. Assess and analyze: Combine material impact assessments with life cycle analyses to gain a holistic view of your product and packaging environmental footprint. Use these insights to prioritize improvements on material security and resilience, and inform eco-design initiatives.
2. Optimize operations: Adjust your supply chain operations to accommodate new requirements while exploring circular business models. Engage in stakeholder collaboration to improve infrastructure and effective circular systems, reduce material use and facilitate easy disassembly and reuse.
3. Educate and engage: Use clear messaging to educate consumers and strengthen brand leadership in sustainable packaging.
4. Stay ahead of the curve: Continuously explore advanced recycling technologies and data and material tracking systems. Think innovation at the cross-industry, systems level for maximum impact and positive change.

By acting now, businesses can comply with regulations and lead in sustainability.

Jacobs can help you navigate EPR and DRS implementation. With capabilities across sustainability, circular economy, carbon reduction and regulatory compliance, we support your shift toward a more sustainable and responsible future.