Case study: Extended Producer Responsibility (EPR) — a leading company's implementation and lessons learned

Extended Producer Responsibility (EPR) shifts the financial and operational burden of end-of-life product management from municipalities and consumers back to the companies that design, manufacture, and sell those products. When Unilever restructured its packaging strategy across its UK and European operations to comply with evolving EPR regulations, the transformation required rethinking material choices, supply chain partnerships, and product design decisions that had remained unchanged for decades. The company's experience offers a detailed blueprint for how large consumer goods manufacturers can turn regulatory compliance into competitive advantage, while also revealing the persistent challenges that make EPR implementation far more complex than policy documents suggest.

Why It Matters

EPR regulation is accelerating globally. The UK's Extended Producer Responsibility for Packaging scheme, which came into full effect in 2025, requires producers placing more than 50 tonnes of packaging on the market annually to fund the full net cost of managing that packaging at end of life. The scheme replaces the previous Packaging Recovery Notes (PRN) system, which industry groups widely criticized for failing to incentivize recyclability or drive genuine material recovery. Under the new framework, producers pay modulated fees based on the recyclability and environmental impact of their packaging materials, creating direct financial incentives to shift toward easily recyclable formats.

The financial implications are substantial. DEFRA estimated that the new UK EPR scheme would transfer approximately £1.7 billion annually from producers to local authorities to cover collection, sorting, and recycling costs. For a company the size of Unilever, with annual UK packaging volumes exceeding 200,000 tonnes across food, home care, and personal care categories, EPR fees represent a material cost line item. The modulated fee structure means that packaging using hard-to-recycle materials (flexible films, multi-layer laminates, black plastic) incurs fees three to five times higher than easily recyclable alternatives (clear PET, HDPE, aluminium, cardboard).

Beyond the UK, the EU's Packaging and Packaging Waste Regulation (PPWR), adopted in 2024, sets binding recycled content targets (30% for PET bottles by 2030, 10% for other plastic packaging), mandatory recyclability requirements, and restrictions on overpackaging. France's AGEC law already imposes EPR obligations across 18 product categories, with "malus" surcharges of up to 20% for products that fail eco-design criteria. For multinational companies operating across European markets, the compliance landscape now requires coordinated packaging strategy rather than market-by-market adaptation.

The strategic context extends beyond compliance costs. Consumer research conducted by the Waste and Resources Action Programme (WRAP) in 2025 found that 68% of UK consumers consider packaging recyclability when making purchasing decisions, up from 42% in 2020. Retailers including Tesco, Sainsbury's, and Marks & Spencer have introduced own-brand packaging commitments that exceed regulatory minimums, creating supply chain pressure on branded goods manufacturers to match or exceed these standards.

Key Concepts

Modulated Fee Structures assign different EPR fee rates based on the recyclability, recycled content, and environmental impact of packaging materials. Under the UK scheme, clear PET bottles incur the lowest fees, while non-recyclable flexible packaging pays the highest rates. The modulation creates a price signal that internalizes externalities: materials that are expensive to collect, sort, and reprocess generate higher costs for producers, incentivizing redesign toward recyclable formats.

Design for Recyclability (DfR) applies engineering and material science principles to ensure that packaging can be effectively collected, sorted, and reprocessed through existing waste management infrastructure. Key DfR principles include: using mono-materials rather than multi-layer structures; avoiding problematic additives (PVC labels, carbon black pigments, non-water-soluble adhesives); ensuring pack components are easily separable by consumers; and selecting materials for which established recycling infrastructure exists at scale.

Producer Responsibility Organizations (PROs) are collective compliance schemes that aggregate EPR obligations across multiple producers. Companies can fulfil EPR requirements individually or join a PRO, which manages reporting, fee payments, and recycling target compliance on behalf of its members. In the UK, approved PROs include Valpak, Comply Direct, and Ecosurety. PRO selection affects both compliance costs and access to recycling data that informs packaging redesign decisions.

Material Circularity Indicators quantify the proportion of a product's material that comes from recycled or renewable sources and that returns to productive use after the product's life. The Ellen MacArthur Foundation's Material Circularity Indicator (MCI) provides a standardized framework ranging from 0 (fully linear) to 1 (fully circular). Tracking MCI at the product and portfolio level enables companies to measure progress toward circularity targets and identify priority areas for redesign.

Case Study: Unilever's UK Packaging Transformation

The Decision

Unilever's decision to undertake a comprehensive packaging redesign programme began in 2021, well before the UK EPR scheme's full implementation. The company had already committed to halving its virgin plastic use by 2025 and ensuring that 100% of its plastic packaging would be reusable, recyclable, or compostable by the same date. However, internal analysis revealed that achieving these targets through incremental changes was insufficient. Approximately 35% of Unilever's UK packaging portfolio by weight consisted of formats that would incur the highest modulated EPR fees: flexible sachets, multi-layer pouches, and non-recyclable closures. At projected modulated fee rates, these formats would generate an additional £40 to £60 million in annual EPR costs for the UK market alone.

The company assembled a cross-functional Packaging Sustainability Board comprising representatives from R&D, procurement, marketing, supply chain, and finance. This board was empowered to approve material substitutions, format changes, and supplier transitions that previously required separate approval from each function. The governance structure proved critical: packaging decisions that touched multiple business units (for example, standardizing bottle resin across home care and personal care brands) could be made in weeks rather than the 12 to 18 months that traditional approval processes required.

Execution

The transformation unfolded across three phases between 2022 and 2025.

Phase 1: Material Rationalization (2022-2023). Unilever reduced its UK packaging material portfolio from 47 distinct material types to 19. The company eliminated PVC from all packaging, removed carbon black pigments from HDPE bottles (which had prevented detection by optical sorters in recycling facilities), and standardized closures on full-PE designs that could be recycled alongside the bottle body. This phase required renegotiating contracts with 23 packaging suppliers and qualifying 11 new suppliers with capabilities in mono-material production. Dove body wash bottles transitioned from opaque HDPE with a PP closure and paper label to clear rPET with a PE closure and shrink sleeve, reducing the EPR fee category by two tiers.

Phase 2: Format Redesign (2023-2024). The company redesigned its highest-volume flexible packaging lines to eliminate non-recyclable multi-layer structures. Persil laundry capsule pouches, previously a PE/PA/PE laminate, were redesigned as mono-PE structures with barrier coatings that maintain shelf life performance. The transition required £8 million in new form-fill-seal equipment at three UK manufacturing sites and a 14-month qualification process to verify product stability, burst resistance, and consumer usability. Hellmann's mayonnaise squeeze bottles transitioned from multi-layer co-extrusion to mono-material PP with an EVOH barrier layer thin enough to pass through recycling streams without contamination.

Phase 3: Recycled Content Integration (2024-2025). Unilever committed to 50% post-consumer recycled (PCR) content across all PET packaging and 30% across HDPE packaging in the UK market. Achieving this required securing long-term PCR supply contracts with Veolia, Viridor, and Biffa, the three largest UK recyclers. The company invested £12 million in a joint venture with Plastic Energy for chemical recycling capacity, producing food-grade recycled plastic from previously unrecyclable flexible packaging waste. By late 2025, 72% of Unilever's UK plastic packaging contained PCR content, with an average recycled content of 38% across all plastic formats.

Measured Results

The programme delivered measurable outcomes across environmental, financial, and operational dimensions.

EPR Fee Reduction: Unilever's projected annual UK EPR fees under the modulated scheme are approximately £28 million, compared to an estimated £65 million had the company maintained its 2021 packaging portfolio. The £37 million annual saving exceeds the total programme investment of £31 million, achieving payback within the first year of full EPR fee implementation.

Virgin Plastic Reduction: Total virgin plastic use across UK operations declined by 41% between 2021 and 2025, from 84,000 tonnes to 49,600 tonnes annually. This was achieved through a combination of PCR substitution (contributing 60% of the reduction), lightweighting (25%), and format changes including concentrated refills (15%).

Recyclability: The proportion of Unilever UK packaging classified as "widely recyclable" under OPRL (On-Pack Recycling Label) criteria increased from 62% to 91%. The remaining 9% consists primarily of small-format sachets and specialty closures where recyclable alternatives are still in development.

Supply Chain Performance: Initial concerns about PCR supply reliability proved partially warranted. During 2024, PCR PET prices spiked 40% above virgin PET due to competition among FMCG companies securing supply ahead of EU recycled content mandates. Unilever's long-term supply agreements provided price stability, but the experience underscored the importance of diversifying PCR sources across mechanical and chemical recycling streams.

Lessons Learned

Start with data, not assumptions. Unilever's initial internal estimates of EPR fee exposure were 30% below actual projections because they relied on aggregate tonnage data rather than SKU-level material composition analysis. The company invested six months in building a comprehensive packaging database covering every component (primary packaging, secondary packaging, closures, labels, and adhesives) for each of its 1,400 UK SKUs. This granular data proved essential for prioritizing redesign efforts and modelling fee reduction scenarios.

Cross-functional governance is non-negotiable. Packaging decisions inherently involve trade-offs between material cost, product protection, consumer experience, brand identity, manufacturing line capability, and environmental performance. Without a governance structure that could adjudicate these trade-offs at pace, redesign programmes stall in functional silos. Unilever's Packaging Sustainability Board met biweekly with decision authority, reducing the average approval timeline from 14 months to 8 weeks.

Supplier capability determines the pace of change. The most significant delays in Unilever's programme came from supplier qualification timelines rather than internal decision-making. Transitioning to mono-material flexible packaging required suppliers to invest in new extrusion and lamination equipment, and many smaller suppliers lacked the capital for these investments. Unilever addressed this by offering long-term volume commitments and co-investment in tooling, but the process still required 18 to 24 months for complex formats.

PCR markets are immature and volatile. Post-consumer recycled plastic supply chains lack the price transparency, quality consistency, and contractual standardization of virgin polymer markets. Companies relying on spot market PCR procurement face both price volatility and quality variation that can disrupt manufacturing operations. Long-term offtake agreements with integrated recyclers, while more expensive than spot procurement, provide the supply security necessary for sustained high-PCR production.

Key Players

Leading Implementers

Unilever has invested over £350 million globally in packaging sustainability, with the UK programme serving as a model for rollout across European and Asia-Pacific markets.

Nestlé committed CHF 2 billion to sustainable packaging through 2025, with particular focus on paper-based alternatives for confectionery and dairy packaging in European EPR markets.

L'Oréal achieved 85% recyclable or refillable packaging across its portfolio by 2025, leveraging its partnership with Carbios for enzymatic PET recycling to secure high-quality PCR supply.

Compliance and Advisory

Valpak operates as the UK's largest PRO, managing EPR compliance for over 3,000 companies and providing modulated fee modelling tools that help producers forecast cost impacts of packaging changes.

WRAP provides the UK Plastics Pact framework, technical guidance on Design for Recyclability, and the Recycling Labelling Scheme (OPRL) that standardizes consumer-facing recycling information.

Ecosurety offers digital compliance platforms with real-time EPR fee tracking and material substitution modelling, helping mid-sized producers navigate the transition from PRN to full-cost EPR.

Recycling Infrastructure

Veolia UK operates 12 materials recovery facilities and three plastic reprocessing plants, providing integrated collection-to-pellet services for PCR supply.

Plastic Energy operates chemical recycling facilities converting mixed plastic waste into certified circular feedstock (TACOIL) for food-grade packaging applications.

Action Checklist

• Build a SKU-level packaging database covering all material components, weights, and recyclability classifications
• Model EPR fee exposure under modulated fee structures for your current packaging portfolio
• Identify the 20% of SKUs generating 80% of EPR fee costs and prioritize these for redesign
• Evaluate mono-material alternatives for multi-layer packaging formats, engaging suppliers on capability timelines
• Secure long-term PCR supply agreements with at least two recyclers to mitigate price and quality risk
• Establish cross-functional packaging governance with decision authority and biweekly cadence
• Register with an approved PRO and ensure reporting systems capture the data granularity required for modulated fee calculations
• Set measurable targets for recyclability percentage, PCR content, and virgin plastic reduction with annual milestones

FAQ

Q: How much does EPR compliance typically cost a large FMCG company in the UK? A: Under the new UK modulated EPR scheme, large FMCG companies with 100,000+ tonnes of annual packaging can expect fees ranging from £20 million to £80 million per year, depending on packaging material mix. Companies with predominantly recyclable packaging (PET, HDPE, cardboard, aluminium) will pay at the lower end, while those relying on flexible films and multi-layer structures will face significantly higher costs. Investment in packaging redesign typically achieves payback within one to three years through fee reduction.

Q: Should companies redesign packaging proactively or wait for final fee structures? A: Proactive redesign is strongly recommended. The UK EPR fee modulation is directionally clear even where specific rates remain under consultation: recyclable materials pay less, non-recyclable materials pay more. Companies that wait for final fee structures will face compressed timelines for supplier qualification, material testing, and manufacturing line changeovers. Unilever's three-year programme timeline reflects the minimum realistic duration for comprehensive portfolio redesign, and companies starting now will still face tight schedules.

Q: How do EPR requirements differ across EU member states? A: Significantly. France imposes the most granular modulation with bonuses and maluses across 18 criteria. Germany requires dual-system registration (Duales System) with fees based on material type and weight. Italy operates a consortium model (CONAI) with material-specific contribution rates. The EU PPWR will harmonize some requirements by 2030, but national variations in collection infrastructure, sorting capability, and fee structures will persist. Multinational companies should design for the most stringent requirements (currently France) to ensure compliance across all markets.

Q: What recycled content targets should companies plan for? A: Plan for 30% recycled content in all plastic packaging by 2030 and 50% by 2035, aligning with the EU PPWR trajectory. For PET bottles specifically, the 2030 target is 30% with an increase to 65% by 2040. Begin securing PCR supply now, as demand is growing faster than recycling infrastructure capacity. Companies that delay will face both higher prices and supply constraints as mandatory targets take effect.

Q: Is chemical recycling a viable pathway for meeting recycled content targets? A: Chemical recycling (pyrolysis, depolymerization, and dissolution) is essential for meeting ambitious recycled content targets, particularly for food-contact applications where mechanically recycled material faces quality limitations. However, chemical recycling capacity remains limited and costs are currently 1.5 to 2.5 times higher than mechanical recycling. Companies should maintain a diversified approach, using mechanical recycling for clear streams (PET, HDPE) and chemical recycling for mixed and contaminated streams that cannot achieve food-grade quality through mechanical processes alone.

Sources

• Department for Environment, Food & Rural Affairs. (2025). Extended Producer Responsibility for Packaging: Regulatory Impact Assessment. London: DEFRA.
• WRAP. (2025). UK Plastics Pact Annual Report 2024-2025: Progress and Challenges. Banbury: WRAP.
• Unilever PLC. (2025). Annual Report and Accounts 2024: Packaging and Sustainability Performance. London: Unilever.
• European Commission. (2024). Packaging and Packaging Waste Regulation: Final Text and Implementation Timeline. Brussels: Official Journal of the European Union.
• Ellen MacArthur Foundation. (2025). Global Commitment 2025 Progress Report. Cowes: Ellen MacArthur Foundation.
• OPRL Ltd. (2025). Recyclability Assessment Methodology: Technical Standard v4.0. London: OPRL.
• Plastic Energy. (2025). Chemical Recycling Technology: Commercial Performance Data and Scale-Up Roadmap. London: Plastic Energy Ltd.
• Eunomia Research & Consulting. (2025). Modulated EPR Fees: Impact Assessment for UK FMCG Sector. Bristol: Eunomia.