Extended Producer Responsibility: How can finance help?

Waste management and recycling in the UK is a dynamic, ever-changing industry. Change is being driven by regular legislative interventions to stimulate the sector, boost recycling rates and in some respects to change accountabilities.

For businesses active in recycling, waste management, reprocessing and resource use; these ever-shifting sands present challenges but also offer the chance to get ahead by anticipating what’s coming is a live opportunity.

Today, the industry turns over more than £11bn and employs around 19,000 people. These activities ensure that huge volumes of material discarded every day are collected and managed effectively. Yet recent history tells us the frameworks that govern how resource management runs in the UK are subject to change.

Despite the steps that have been made, it is the shortcomings of the current system that are creating this uncertainty and need for change. Recycling rates have stalled in part due to the pressure from the global markets pushing pricing down in the UK system (recycled plastic is one example).

Under the current regime, investment in infrastructure is stimulated by the producer-manufacturers that sell product in the UK effectively being responsible for paying for extra recycling infrastructure through producer responsibility legislation that distributes the funds raised across the sector.

But now Extended Producer Responsibility is promising to change things again, and right across the UK’s manufacturing base.

Extended Producer Responsibility

EPR will incentivise a range of activities including:

consumers to collecting materials at source
local and national authorities directing materials to recycling and reuse facilities
more recycling and reuse facilities
producer-manufacturers to use the recycled and reused materials

The incentive for facilities that carry out recycling and reuse lies within the revenue they can achieve for their raw materials. So this is a potential new revenue stream for those with the right facilities in place, whether a producer or a waste management/recycling business.

There is much to be resolved for the legislation to deliver sufficient certainty, but it does mean that recycling and waste businesses, and producer-manufacturers, should be alive to the need to make investments in infrastructure at short notice. There may be attractive tax breaks in the mix too.

How can an asset finance solution help?

At LDF we understand that Investments in infrastructure and technologies will play a key role in delivering on many of these ambitions, and access to finance is crucial to achieving the industry-wide transformation that is envisaged and captured as every business transforms itself. These technologies are expensive and difficult for many businesses to afford as a one-off, upfront cost. An asset finance programme enables the sale by enabling your business to provide a leasing quotation for all or part of the purchase, helping your customer achieve the solution they need within their budget.

This is an excerpt from our Recycling and Waste Management Sector paper, download How Finance can help Recycling and Waste Management Equipment Suppliers to learn more.