an employee-owned business

Kite Environmental Solutions

Guiding you through the Packaging Regulations 2020

Kite Environmental Solutions is a Government accredited Compliance Scheme for the Packaging Regulations.

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About Us Our scheme was founded in 2002 and is managed by an experienced and dedicated team

The cornerstone of Kite Environmental Solutions is our employee-ownership:

• Being employee-owned, everyone is focused on providing outstanding service, which is shown in the care we give our customers every day

• Our goal from the start is to help companies submit data efficiently by actively getting involved

in the assessment process year-on-year

• Utilising our specialist packaging knowledge & expertise to help you

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The Regulations The Producer Responsibility Obligations (Packaging Waste) Regulations 2007 and Amendments were originally introduced in 1997 in response to an EU directive. The objective of the Regulations is to increase the amount of packaging waste being recycled, which is funded by "taxing" companies who introduce packaging into the UK via their business activities.

The legislation aims to minimise the impact of packaging waste on the environment by increasing the amount of recycling undertaken within the UK by setting recycling targets for Packaging Waste. These targets are met by putting an obligation on to UK businesses who handle packaging to fund the cost of recycling. However this is not offset by the waste you have collected from your site, a factor that many businesses find frustrating.

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Who is obligated? The aim of the Regulations is to increase the recycling of packaging waste by making businesses responsible for the cost of recycling within the UK.

However not all businesses are obligated and you only need to comply with the Regulations if you meet all three of the following threshold tests:

1. You are a UK registered business that performs an activity on packaging 2. Have a turnover greater than £2 million in your last audited accounts 3. Handle more than 50 tonnes of packaging per year, excluding any packaging you subsequently

export

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Forms of packaging What is included in the 50 tonne threshold of obligated packaging:

• Packaging around imported raw materials, components or finished goods

• Packaging added to goods

• 1st use reusable packaging

• Packaging around UK finished goods supplied to the end user

Excluded from your obligation:

• Any customer or supplier owned packaging

• Any packaging that is reused in its original form

• Any packaging around goods exported out of the UK

How the Regulations work In order to meet the targets, the Government’s strategy was to ask reprocessors of material waste such as Paper, Glass, Aluminium, Steel, Plastic and Wood to start recycling more packaging waste. To encourage this, reprocessors who became licensed with the Government would be able to issue one Packaging Recovery Note (PRN) for every tonne of packaging waste that is recycled. Reprocessors can sell these PRNs as evidence of recycling, providing them with a new revenue stream. As a condition of their accreditation, reprocessors are required to invest the revenue from the sale of PRNs back into recycling (new machinery, infrastructure etc.), thereby enabling the reprocessors to recycle more and more packaging waste. By doing this, all the accredited reprocessors in the UK would collectively meet the Government’s business targets for recycling packaging waste, whilst increasing the volume of packaging waste recovered each year.

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Compliance Schemes

Compliance schemes like Kite’s, were written into the Regulations from the beginning to administer the compliance process for obligated businesses. Schemes take on the legal obligation of their members, to purchase PRNs. As a Scheme Kite would then submit a consolidated single return to the relevant Agency on an annual basis, to include the obligations of all its Members.

Demand for PRNs The Government sets annual recycling targets for businesses to achieve, which in turn creates the demand for PRNs. Companies who exceed the thresholds have an obligation to recycle a proportion of the packaging that they have introduced into the UK system. This proportion is calculated according to a set of equations based on an activity chain. Companies are not able to physically recycle their own waste to discharge their responsibilities, instead they have to offset their obligations using PRNs. There are two types of PRNs, these being recycling and recovery; A minimum of 92% of your PRNs must be recycling PRNs (where packaging has been reprocessed for re-use) and a proportion of this must be specific to those materials you have handled. A maximum of 8% of PRNs can be Recovery (where packaging has been converted into useful energy often called Energy from Waste).

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Calculating an obligation

A company’s obligation is made up of the following equation, which is used to determine the number of PRNs required:

The Regulations state that packaging is defined as anything used for the containment, protection, handling, delivery and presentation of goods. The different packaging material types are Paper, Glass, Aluminium, Steel, Plastic, Wood and Other.

PRN

obligation = National

target

82%

X Activity percentage

%

Packaging weight (tonnes)

X

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Activity chain

The activity percentage is derived from the packaging activity chain. The responsibility for the cost of recycling packaging waste is shared between different participants in the supply chain. The following example demonstrates these activities in relation to a tin of beans sold at a supermarket. The Regulations require companies to provided evidence they have recycled a proportion of the packaging they introduce into the UK according to the activities they have performed.

Additional obligations for importers Where companies import packaging either to use or around goods, they pick up additional obligations for activities that have not been accounted for in the UK. For example, if you bought a vase in a cardboard presentation box from Italy, and sold it via the internet directly to an end user, you pick up an obligation as a seller. However, as you directly imported the goods, you pick up an additional obligation for packer / filler, convertor and manufacturer, known as a rolled-up activity obligation.

End user 0% or 100% rolled up end user

Manufacturer 6%

Convertor 9%

Packer / filler 37%

Seller 48%

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National target

The national target refers to the UK target for the overall recovery of waste which is, set by the Government each year. This target is used to increase the overall demand for PRNs in the marketplace.

Packaging levels Where assessing packaging it is important to divide it into different functional groups. The Regulations identify 3 main groups of packaging:

1. Primary or Point of Sale (POS): This is packaging which forms the actual sales unit supplied to the end user, for example a tin containing beans

2. Secondary or Outer: This is packaging that contains a collection of the sales units, for example

an outer carton 3. Tertiary or Transit: This is packaging that groups together secondary packaging, for ease of

handling and transportation, for example a pallet

Point of Sale

Outer

Transit

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Optional for turnover

£2mil<£5mil

30 PRNs allocated per

£1mil turnover

Methods of compliance There are two ways in which companies can comply with the Regulations, either the Allocation Method or the Data Submission Method. We will advise on the most suitable method for your company.

Allocation Method Complying with the Packaging Regulations is difficult for any business and the Government recognised that for smaller obligated companies this can become prohibitive. As a result the Allocation Method was developed to simplify compliance for smaller companies with less resource, whose turnover is between £2 million and £5 million. Under this method the obligated company provides its turnover figure from the last set of audited accounts, to which 30 PRNs (in the predominant material handled) are allocated per £1 million turnover. For example if cardboard boxes form the majority material by weight then all the PRNs must be in Paper. The Allocation Method has to be adopted for a minimum of 3 years. However should your company’s turnover exceed £5 million then you will be automatically required to use the Data Submission Method.

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Data Assessment Method

This is compulsory for any company with a turnover of more than £5 million. The Data Submission Method requires companies to assess the obligated packaging they have introduced into the UK and complete a full packaging data return. This method aligns the tonnages of packaging handled by material with the activities the company has performed in the packaging chain. The data is collated in a data submission form, which is required for registration by the Government.

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Regulating Agencies The Environment Agencies (EA, SEPA, NRN & NIEA) regulate The Packaging Regulations. Their role is to police and enforce the Regulations, by auditing the data of registered companies and targeting any businesses that are not currently complying who they refer to as free riders. Companies registering for the first time can now remedy any previous year’s non-compliance via an Enforcement Undertaking (EU), rather than be faced with a criminal prosecution. An Enforcement Undertaking is a voluntary offer made by a business to put right the effects of not complying with the Packaging Regulations. When undertaken proactively, a company establishes the costs it didn’t pay in previous years, offering to pay 110% of these avoided costs, which are then donated to an environmental charity. This process can typically take 6 to 18 months from start to completion. If accepted, EU’s become legally binding and once fulfilled wipe the slate clean, avoiding a criminal sanction. Kite has made several EU offers on behalf of our Member companies, achieving a 100% acceptance rate. Companies should aim to get registered as quickly as possible. If you are concerned about any previous years when you should have been registered, please contact the team on 02476 420 080 for confidential advice and help.

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Joining our scheme Becoming a member If you would like to join our Scheme, please complete and return the Membership Application Form (see appendix) with details of the registering company. Any subsidiary or franchise details should be discussed with us prior to completing the form. All applications should be sent to:

Kite Environmental Solutions 186 Torrington Avenue Tile Hill Coventry CV4 9AJ

Compliance costs We work hard to minimise the cost of compliance to our Members. The fees involved are a combination of our scheme membership fee and the Environment Agency registration fee. Where we complete a data assessment on your behalf, the standard consultancy rate would apply. We take on the legal obligation of our members and will purchase the PRNs you require, once your obligation has been calculated. This is the evidence that shows you have contributed to financing the recovery and recycling of packaging materials in accordance with the Regulations. Members are invoiced on a quarterly basis for their PRNs and consultancy, spreading the cost of compliance across the whole year. The registration costs will depend upon your company structure and the method(s) of registration used, so please contact us on 024 7642 0020 for advice regarding the most economical option.

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Application Form

Kite Environmental Solutions Ltd

Membership Application Form

KES Number K E S

NPWD Number N P W D

(office use only)

Contact Details

Name Position

Tel Mobile

Email

Address

Postcode

Details of Registering Company

Company Name

t/a

Registration No. SIC code /

(available from companies house)

Registered Office Address

Postcode

Subsidiary / Franchise Details

No. Subsidiaries to be registered No. Franchises to be registered

(please discuss with Kite prior to completing to ensure subsidiaries / franshises are accounted for as per the Regulations)

Declaration

Signature Position

Print Name Date

The information provided is accurate and correct in material fact. For Groups of companies within the UK (if applicable) the

Member hereby warrants that the Member has authority of each other Group company as of the date of this agreement, to

apply for Membership of the Scheme on behalf of itself and each other Group Company ("Group Member").