Navigating US Extended Producer Responsibility: What Your Business Needs to Know Now video (30m)

my name is Leah Jaggars, and I'm the senior education manager here at Worldly. But I am not the most important person in this, webinar today. So I want introduce Ammi Borenstein from Snaplinc Consulting. He's here today to talk about the extended producer responsibility legislation, in the US. And excuse me. I'm getting a frog in my throat. I'm going to pass it to him to start his presentation, but I'm here for Q and A, and we'll be kind of monitoring things on the back end. So with that, hand it over to Ammi. Thank you, Leah. And, I think you are the most important person here. I get my inbox filled up with Leah from Worldly all the time with great information. So that that counts for a to everyone if that's too much. But No. No. No. It's perfect. It's good stuff. It's not junk. Good. So Alright. I'll be quiet now. Good afternoon, evening to, everybody on one side of the ocean, and, good morning to everybody on the other. I'm going to go ahead and share my screen, and we can get started. I am going to go pretty briskly today in the interest of time, mainly because there's a lot to cover, I think many of you know, with regard to EPR. And we're going to cover US. We're going to touch on Canada. We're going to take a quick glance at what's happening in Europe, and away we go. So just a moment about me. My name is. As Leah alluded to, I'm based in Seattle. I've been thirty plus years in the apparel sector with leadership roles of multiple brands. One of the proudest things that I say in context like this is an early co-creator of what ultimately became the Higg Index. I've been in ESG leadership roles for twenty years and, CEO and founder of Snaplinc Consulting. At Snaplinc, we are a full service, sustainability consultancy with, nearly ten years, of service. We work with a global team across multiple sectors, and that's not why you're here. So, so let's talk about what's happening with EPR in twenty twenty six, and and and we'll obviously go slightly, beyond that. I think everybody here is familiar with these concepts, and and familiar with this information, but it is moving so fast, that even as a professional whose job it is to keep up with this, it's oftentimes very, very difficult to keep up. So, so I think we know what EPR is at its core, which is it shifts end of life responsibility from municipalities to companies. And the reason is that municipalities are completely overwhelmed by waste, and they're pushing back. And this is not just packaging. They're overwhelmed by waste of all types, but packaging is the first category that they're targeting. Seven US states have enacted packaging, EPR. Oregon and Colorado, I think as many people know, are already, collecting fees. Couple invoices actually, into the process in Colorado. California textile EPR, means that EPR, is not just packaging anymore. It opens a second front for apparel, footwear, and home textiles and, essentially, all textile items. And the compliance window is tightening. Multiple, whoops, registration r, and reporting deadlines, are converging in the next six months. So there there's just an unbelievable amount of movement all at once. And what's behind the complexity in in addressing this? Well, number one, enforcement is very active and increasing. So we're seeing public registries. So, your customers, your competitors can see if you've complied or not. We're seeing selling restrictions. You can be banned from state of Oregon, state of Colorado today if you haven't complied. And we're seeing penalties that range from a thousand dollars a day all the way up to fifty thousand dollars per day. So pretty extreme levels of penalties, are are part of this. Another critical challenge right now is that fragmentation is is structural. So the states have different requirements, different deadlines, not to mention Canadian provinces. They all use different definitions, material categories, reporting formats, and reporting portals. The same packaging oftentimes gets reported differently, in in nearly every jurisdiction. This is not just EPR, but a broad regulatory perspective, which is converging deadlines. There are just a stunning amount of deadlines happening right now. For purposes of this conversation, the big date to watch is May thirty first. I think we have six states five states, six states, with reports due on May thirty first. So if you have not started, I would recommend the minute we're done with this webinar, you get started. And the reality is there are so many regulations coming so quickly that you are not alone in feeling that you are not staffed or structured to absorb all of this. It's it's just the way of the world right now. So the challenge, really, the core challenge is interpreting requirements correctly and absorbing the workload and navigating across multiple jurisdictions at once. Not an easy place to be, at the moment. So let's let's dive one layer deeper. So let's talk about framework and and what's behind EPR. And, again, I I I know many of you understand these concepts, at at varying levels, but what we want to do here is basically set the foundation, in these first few slides and then build, beyond as we go forward. So who is a producer? So by default, the brand owner is is generally considered the producer. If your brand is on the product, assume that you are the producer. And and one thing I should call out, and that's, irrespective of where you're headquartered. You could be headquartered in Europe selling in Oregon, and you are considered the producer. Private label, I know there are a number of folks on this call who do private label work. So private label shifts responsibility. And, generally, the company's brand is on the product, so maybe the retailer or a third party brand is typically considered the producer. Corporate structure matters as well. These regulations are written actually to support subsidiaries and separate entities. So if you have different tax IDs across maybe sister companies under, similar corporate group or or ownership, by default, you're required to report separately, which can be challenging. And there are, opportunities to report collectively, but that takes, quite a bit of effort. The dual obligations in, California, also create some complexity around who's a producer. And by dual obligations, we need packaging, and then as alluded to earlier, textiles. And definitions vary. You really have to pay attention to what's what across the different jurisdictions. They have different scope as far as what's covered, who covers it, and which thresholds apply. So very, very challenging. So what must be reported? So what's covered in the in the regulation? So packaging components, first and foremost, in most of the EPR programs that we're talking about today. So that includes printed paper, secondary packaging, tertiary packaging. In state of Oregon, they count pallet wrap. So we work with clients to actually assess, you know, how many units fit on a pallet, how many pallets are they shipping in which jurisdiction. I mean, this is there there is substantial complexity. Whoops. My next header is out of order there. But and b two b packaging, as I alluded to, are in some programs and out of other programs, and we'll talk about that in some greater depth. So reporting typically includes total packaging, by weight and by material type, the packaging format, so rigid, flexible. Right? So we we typically, in the past, have, organized ourselves by number five, you know, PP or PET. But, actually, these reg, regulations go quite a bit deeper. What these regulations now cover are sixty plus categories in Oregon and Colorado of packaging material, ninety five or so categories in California of what is considered packaging material. So no no more number seven or number five. You really have to break it down, quite a bit further than that. And then there are some very robust emerging, and future expectations. So that looks like, redefined recyclability classifications, post consumer recycled content requirements and disclosure and proof, labeling requirements, and environmental impact attributes. We're seeing some of the programs, for example, Oregon, introduced in its later stages, an LCA or water use, component. And one thing I should mention, in a few slides, we have a resource that we provide at Snaplinc. We have a QR code for that. So, if if you want to pull out your phones and and get ready, it's about six or seven slides away. Okay. So let's go now next into, state by state of the most, relevant and earliest ones, and then we'll lightly touch on Canada. And one thing the other thing I should say, we will be passing this, deck out after this presentation, so don't feel like you have to get every note down. I am going very quickly, and the reason is just so much to cover. Okay. So Oregon leads in environmental depth and complexity. They are the first to collect fees from producers. So I would imagine nearly everybody on this call should have received invoices in July and invoices in January, and your next report is due May thirty first twenty twenty six. Broadest scope so far of any US program because of the inclusion of b to b packaging, which is different from Colorado. And the eco modulation requirements are pretty high. So eco modulation is the concept of shifting to more recyclable materials and dematerialization. And and partly what they're doing is they're essentially taxing packaging for purposes of creating a financial incentive for you to change your materials and or dematerialize your packaging. And and by the way, it's already working. You know, I do this for a living. I pay very close attention not just to the regulations, not just to the needs of our clients, but also to what's happening out in the world. And if you watch in sort of about a hundred small ways at retail, in particular, the amount of packaging is actually coming down. I would say it's pretty small right now. These regulations are pretty new, but we definitely see it out there. I have specific examples if anybody's interested. So enforcement is live in Oregon. If you have not filed, there's a substantial chance you've gotten a letter from, first from CAA, then by the state. You know, we're helping clients now who've already gotten two warnings from the state. And with penalties up to twenty five thousand dollars a day, they're not joking around. And then there is a legal challenge that's important to mention in the state of Oregon, which is the National Association of Wholesalers. If you are a member of that organization, then you technically do not, at the moment, have to report in the state of Oregon. We do not recommend waiting. Based on our experience in doing this type of compliance work for many years, it's unlikely that these regulations will be struck down in total. They will adapt. They will adjust, but there are so many states right now that, waiting seems like a dangerous move, ultimately. And we'll learn more about that, this coming summer, July twenty twenty six. Okay. Let's head to Colorado. So Colorado actually, is focused on simplicity and transparency. So they excluded b two b packaging. That definition is not super well defined, but CAA has a good document on their website about California pack I'm sorry, Colorado packaging, so you can, try to wade through that. There is simplicity but uncertainty as I alluded to a moment ago. The PRO is indeed Circular Action Alliance. It's the exclusive administrator. Key requirements have been determined, so producer registration and auditing. Modulation factors are coming. They're still under development, so we don't know what they're what they will be, but we have some thoughts. And penalties are in place. Colorado actually ladders up. They start about a thousand dollars a day, and they ladder up to twenty thousand dollars per day for repeat violators. So it's something, again, you want to pay close attention to. Okay. California. California, big surprise. It is the most expensive and most aggressive model and not yet finalized. So very, very challenging at the moment. Lot of guessing going on around California. So the regulations are not finalized, but the deadlines have not moved. So that window of finalization, meaning knowing what to do and reporting is getting tighter by the day. Cal Recycle withdrew draft regulations twice with the final rule still pending, and the program launch still is Jan one twenty twenty seven, by which time California needs to be collecting about five hundred million dollars in annual producer fees. So a lot of moving parts. Wish we had more answers, but I would say mostly what we have right now are questions. The baseline reports were due for twenty twenty three in November of last year. Those are loosely required, I will say, but we recommend getting started because once the regulations get finalized, those will definitely get required. And that's a great way to build training wheels around how to do the California reporting, which as which as I mentioned, has about ninety five material categories. We also are going to see an annual source reduction report from the state of California and an individual source reduction plan, coming up. Those are specialized reports unique to California, and, and require a fair amount of work to really indicate what have you done so far and, what are you going to do to mitigate your packaging, impacts. CAA is the approved, PRO. We're hoping in the next month or so we're going to see that plan come out. And one thing I just want to note that is likely to fold into this program, also actually experiencing a legal challenge at the moment, is s p three four three, which, regulates recyclability claims. So that's going to lace in very tightly to this s b fifty four, California EPR program. The reason I put that out there is typically people don't alert marketing teams about this type of work. They're talking to product teams and sourcing teams and logistics teams. Let your marketing team know they need to be familiar with s b three four three. And then penalties, as you can imagine, California is with the highest fifty thousand dollars, per day per violation plus loss of market access. Additionally, we're watching actually about seven other states in total, but four are coming fast. So all four of these states, Washington, my home state, Maryland, Maine, and, sorry. Maryland, Minnesota, and Maine, are all requiring action this year, some of them quite soon. So, Washington, Maryland, and Minnesota are requiring what they call simplified. I should have put that in quotes, supply reports. Yes. They are simpler than the full blown Oregon, Colorado, California reports, but they are still quite, detailed and require a pretty comprehensive audit. Those are also due May thirty first twenty twenty six. So, again, coming fast. There are program specific requirements by state. So in Washington, you need to register with the PRO July first. Maryland also need to register July first. Minnesota was July first of last year. So if you've not registered for Minnesota, that's something you want to do now. And Maine is, I would say, sort of pretty distant forth on this list. The program's in place, but they're, taking longer than expected to, to get it fully fleshed out. And then we are also watching, New York, New Jersey, Illinois, North Carolina, Hawaii, and Rhode Island. So the list of states is long. Assume this functionally becomes a log of the land, because that's how this is playing out. Okay. Let's touch on, Canada for a moment. So, we I do not quite as deep dive into Canada, but it's important to know the provincial programs in Canada are much more mature and fully operational. Some of them are four and five years old. So if you've not reported in Canada previously, you definitely want to pay attention to that, and I have a lot to share, but surface level sharing. But just trying to get you off the ground. So key provinces, Ontario has produced responsibility with several PROs. British Columbia has a very, very mature model and very strong enforcement. We're actually seeing audits for, data submissions that were three years ago that they're finally getting to audit, and and finding errors. So very challenging to have put these together for the first time ever three years ago, and now be audited three years later. So keep good documentation. Quebec recently expanded to include, e-com and timing. I mean, they're already in place, And many of them share a May thirty first deadline with US states, further contributing to the crunch and surge of, activity that's going to have to happen over the next few weeks, within your company if you do business US and Canada. There is some intersection with federal regulations. So there's a Canadian EPA plastics reporting, which you should be doing already, and some pending compostability guidelines. So Canada is extremely active. Pay close attention. I will not drag you through this chart, here live, but I wanted to include it because it's one of the biggest questions we get, which is thresholds by region. Lot of detail, lot of footnotes. And, again, you'll get this presentation at the end, and you can, go ahead and and climb through that, chart at that time. So that's packaging EPR, but we really do need to talk about a few other things in this process. Number one is California textile EPR, and then I'll lightly touch on Europe before we dive into some case studies. So California, EPR is the first US textile law creating a new category, of obligation. So it's a second parallel compliance system, different PRO, different, deadlines, different timelines. It includes apparel, footwear, bedding, towels, basically, as I mentioned, anything textile. It is separate from packaging, EPR, and a different PRO called Lambda USA. It intersects directly with product development Right? I mean, it's probably a lit this statement here is probably a little early. But if you're doing material selections for a new collection that you anticipate being in your line for the next, you know, two, three, four years, you you need to pay attention to what's required, under this law. Material selection, durability, decisions will determine your obligation cost and timeline. So regulations by July twenty eight and enforcement by July twenty thirty. So, again, a little ways out for an average product development cycle, but oftentimes, we build collections that are meant to last several years. And so, you do not want to, you you want to just go in eyes wide open to this. And there will be penalties and a, public list of compliant producers. And we have not talked about Europe. So there are many existing and emerging, packaging and textile EPR programs in Europe. Many of them are converging around what's called PPWR. You will find more about PPWR. You will hear more about PPWR because the deadline is this coming August. We have a bunch of, PPWR resources on our website. So EU wide, regulation, covers recyclability, reuse, labeling, and packaging reduction. So there is a a an empty volume measurement and reduction requirement. So how much empty space you have in packaging. So not just the packaging itself, but the air inside now needs to be measured. So So it'll fundamentally reshape packaging design and compliance. And there is also packaging EPR in nearly every member state. I think twenty one, member states have packaging EPR, and that's been established for quite a while, and you should have those programs in place, if you are selling in Europe. And then textile EPR, as you would expect, is emerging here and is also emerging, in Europe as well. So we're going to quickly go through some case studies, and then and then we'll wrap up. I'm a little bit over time, but so keep going fast. Okay. So a couple of, possible scenarios. I actually had more case studies, built, that I'm not going to share with you today, but I will include those in the in the final deck. So there'll be a couple extra in there. So let's say, which I'm sure many on this call are, you're an apparel apparel brand with multistate direct to consumer and wholesale. Right? So you are selling through your own channels, whether that's retail or web and wholesale to retailers. So as I mentioned before, if your brand's on the product, you are generally considered the producer in every jurisdiction. So the things to think about is that they trigger the same producer obligations. Shipping materials are counted, but in a wholesale arrangement, that's probably your retailer that's responsible for that. And the real practical takeaway is you need to know where your wholesale partners are selling your products. And and as an example, if you ship from Oregon to Nevada I mean, Nevada DC ships into Oregon via your retailer, you need to know that. The good news is folks, like Amazon and Walmart have that data available. Many retailers do, now. So case study number two, let's say you're an, importer with dual, California obligation. So obligation. So textile articles coming into California. So the key concept is really you have to now report and register twice. Once for the packaging, once for the textile. So these are two different programs, different PROs, definitions, structures, and timelines. July one twenty twenty six is that first, registration deadline for textiles. You should already be registered for packaging, and you will be considered the producer. And, again, you have a very short amount of time, twelve weeks to register with Land Belt USA. Number three. Let's say you're a home goods brand selling in US and Canada. So let's say you sell bedding and towels into five states, three provinces. Same thing. Right? This isn't, the these scenarios aren't really deep, rocket science. They get into more, nuanced scenarios when you get into things like private label, but you do have to pay attention to registering at CAA, registering across the myriad, PROs within, Canada, and, and that May thirty first reporting deadline. So build one internal packaging data system, and I'll touch on that in a minute. Doing it state by state, province by province is is, very challenging. So let let's talk about now what? So packaging data is fragmented. Fix that first. Nearly every single client who we have worked with on this, that's the number one thing. It's either fragmented or it's nonexistent. Right? They sorta know there's a hang tag, but they might not know, is it, paper laminated with plastic? How much does it weigh? How many hang tags? Right? So there's a lot there to consider. Start figuring out how to pull in data from all your various systems, standardize your key fields like weight, material, and recyclability, and connect that to sales by state, by channel, and fulfillment. Interestingly, we find that third bullet point to be by far the most difficult because distribution footprints are fairly fairly network, fairly labyrinthine at this point. Right? You ship to one DC in one state, it ends up in another state. You ship to a distributor. You don't even know where it goes. So that's that's challenging. Compliance is cross functional. Get reliable and and usable data at scale across your organization. Assign clear ownership and governance. You have to. You can't do this by feel and and and and at the last minute anymore. And build for continuity. Right? I mean, you're going to have to, report across US and Canada, not to mention Europe. I mean, I think global jurisdictions that we track with EPR requirements right now, packaging EPR, are forty three jurisdictions. So if you are a global brand, you have to build your programs for scale. Embed reporting into your annual planning and workflows because this is a surge. Right? May thirty first, if you have to file ten reports, that's going to keep a lot of people busy within your organization. Some of the resources that are out there, I mean, Worldly does webinars, such as this, and resources on the website and the platform. At Snaplinc, I mentioned, get your phone ready. So there it is. And we'll have that QR code again, and we'll leave that up on screen at the very end. But that is a link to a thirty page ebook that we produce that is US only. We don't touch Canada. We don't touch Europe in there, and the main reason is it's thirty pages just getting into the into the US. Our latest updates on that book were up to four or five updates rounds of updates so far because so much detail. Latest update was just yesterday, so that's pretty fresh. And I apologize. We're at seven thirty. We're in the home stretch. We also, if you sign up on our site, you'll get regular email blog updates. And then the PROs are an incredible resource, CAA, Lambell, and the various Canadian PROs. So why this matters? Compliance truly is now an operating posture. EPR regulations are no longer episodic or optional. They are here to stay, and they are vast and robust. Data is a foundation. You have to get your data organized across packaging, soon textiles. You have to get that organized. The fragmentation enhances the burden and requires intentional strategy. Material decisions can manner your manager exposure early. So we're obviously solving for today first, but we pretty soon have to pivot to solving for tomorrow. And you have to shift from reaction to, architecture. One more slide about the work we do, and I'm done. Seven thirty one. Sorry. Didn't leave a lot of time for questions. But I'll leave that screen up for just a moment for anybody who missed the QR code first round. Awesome. Thank you so much, Ammi. Oh, I don't know if you see the emojis, but we had a little celebrate emoji. So I know we're a little over time. If you do have any questions, please feel free to either submit them into the q and a box, and we can always follow-up via email afterwards. Or feel free to email, you know, Worldly or me directly if you want to reach out to him. So thank you so much for, providing this information. I think it's super helpful and, helps our customers get a sense of what's going to, you know, come their way soon. So, I appreciate your time today, Ammi. And My pleasure. Yeah. Excellent. Appreciate everybody who, attended today. I'll be sending the recording along with the resources that we mentioned, prior. So see that in a little bit. And, again, thank you all so much, and I hope you all have a wonderful rest of your day. Thank you. Thank you.