THE NATIONAL PACKAGING COVENANT

1. THE NATIONAL PACKAGING COVENANT MOVING FROM REGULATION TO CO-OPERATION

2. THE NATIONAL PACKAGING COVENANT A new approach to the life cycle environmental management of packaging How will your Company maximise its benefits?

3. INTRODUCTION • Regulatory approaches to management of packaging waste are being replaced and augmented by voluntary mechanisms • Benefits come from a more co-operative approach which, although outcome oriented, can be more flexible and reduce overall cost • The future is for a more comprehensive ‘total system’ approach based on better understanding of waste realities and the nature of consumption

4. OVERSEAS TRENDS • Germany – Packaging Ordinance (DSD) (1990) • European Packaging and Packaging Waste Directive (1994) • OECD ‘Guidance Manual’ for EPR (2001) • Canadian “Shared Responsibility” • American ‘market based’ approach including ‘Pay as You Throw’ • Packaging Covenants in NZ and The Netherlands

5. EUROPE • Fees for the German DSD now exceed DM 4 billion p.a. • Total system costs exceed twice that figure • Total fee costs in Europe exceed US$10 billion p.a. • Costs passed on through higher prices which erode consumer purchasing power and reduce employment • Environmental outcomes less than optimal

6. GERMANY • Weight based fees ranging from DM 0.15 – DM 2.95/Kg (paper) (plastic) - Volume based fee from 0.1 pF to 1.2 pF per unit

7. DANISH PACKAGING TAX Aluminium 35c/Kg PVC/EPS 32c/Kg Steel 26c/Kg Glass 26c/Kg HDPE/PET 19c/Kg Flexibles 5c/Kg Paper 0.5c/Kg

8. CANADA“Shared Responsibility” • Industry Funding schemes being developed at provincial level • CDL in all provinces for beer and soft drinks

9. EARLY APPROACHES - Australia - • Regulatory - Vic Resource Recovery Act • Voluntary ANZECC agreements • Based on concept of ‘a waste hierarchy’ and focused on post consumer packaging • Performance ‘targets’ and industry funding a common feature • Lacked flexibility/equity • Gave businesses responsibilities for outcomes beyond their control

10. INDUSTRY PLANS • Tended to make industry take the role of driver of change in a product area or segment when the system as a whole needed improvement • Contribution focused e.g. NSW Industry Waste Reduction Plan • No matching mechanism for other actors in the overall chain • State based rather than National

11. NATIONAL PACKAGING COVENANT • Holistic approach • Voluntary in nature • National in scope • Focuses on fixing the system not the symptoms • Based on ‘Shared Responsibility’ – do what you can in your own sector or stage and the system benefits from the sum total of action at each stage

12. SHARED RESPONSIBILITY

13. NPC – WHAT IS IT? In August 1999, after 3 years of discussion and negotiation Australia’s governments (federal, state, local) and representatives of the packaged goods industry signed the National Packaging Covenant. The Covenant is a voluntary, self regulatory scheme which takes a nationally consistent approach to the life cycle management of packaging. It covers the three tiers of government and all companies in the “packaging chain” from raw material production through to retail.

14. WHAT AND WHO DOES IT COVER? What • All consumer product packaging and paper • In store packaging and multipacks Who • Raw material producers • Packaging Manufacturers • Packaging Users (fillers/markets/brand owners) • Wholesalers & Retailers • Paper Manufacturers/Suppliers

15. WHY SHOULD I SIGN? • It supports a voluntary approach to the regulation of packaging • It puts the company in control of what it can contribute to environmental improvement • It allows the company to focus on its OWN business rather than post consumer recycling • It is a low cost approach to regulatory compliance • It avoids being caught up in the compulsory regulatory mechanism (NEPM) – which is a costly alternative • IT PROVIDES A POSITIVE BOOST TO COMPANY ENVIRONMENTAL IMAGE

16. WHAT ARE THE BENEFITS? • The Covenant process has resulted in identification of clear roles and responsibilities for government and industry • This includes the recognition that local government is responsible for recycling collection and its cost • It recognises the need to make recycling “market based” i.e. NO INDUSTRY subsidies or contributions to collection and sorting costs required • It allows companies to focus on the things they can improve within their own business

17. WHAT HAPPENS IF WE DON’T SIGN? • Brand owners who don’t sign (or fall out of the Covenant process) must comply with their state’s version of the NEPM for Used Packaging • This is a regulation that will require the company to recover product packaging from consumers (or pay for it) to the level achieved by the rest of the system • It also has extensive data provision requirements • Failure to comply attracts heavy financial penalties • COVENANT SIGNATORIES ARE EXEMPT FROM THE NEPM

18. WHAT HAPPENS IF WE SIGN? • The company must, within 6 months submit a Covenant Action Plan • This outlines the company’s voluntary commitments to the Covenant – from a menu of options • Report progress annually • Commit to the Covenant’s principles and the Packaging Environmental Code of Practice • Contribute to the National Packaging Covenant Transitional Arrangements

19. COVENANT ACTION PLANSTypical First Commitments • Plant/facility waste audit • Minimise production waste • Labeling for recyclability • On-pack litter warnings (where appropriate) • On-pack community education of packaging benefits

20. COVENANT TRANSITIONAL ARRANGEMENTS • A program jointly funded by government and industry aimed at improving the cost effectiveness and sustainability of council recycling collections and the development of markets for collected materials • This will facilitate the withdrawal of subsidies • $34.9 million over 4 years • Contribution according to turnover and place in marketing chain

21. TYPICAL CONTRIBUTION LEVELS(Packaging Users) Company Contribution Turnover Year 1 Years 2,3 & 4__ 1-3 Billion $20,000 $30,000 750m – 1 billion $10,000 $15,000 500-750 million $7,000 $10,500 250-500 million $4,000 $6,000 100-250 million $2,000 $3,000 75-100 million $1,000 $1,500 50-75 million $600 $900 25-50 million $500 $750 Less than 25 million $500 $500

22. NEXT STEPS • Industry -vs- individual action plans • Promote broader participation • Promote real change within your company