Packaging recyclability is becoming a financial consideration for producers as extended producer responsibility (EPR) systems increasingly link packaging waste fees to the materials and formats placed on the market.
The UK’s packaging extended producer responsibility (pEPR) scheme provides one of the clearest examples. From the 2026–27 assessment year, packaging disposal fees are being modulated according to recyclability.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
Under PackUK’s current approach, red-rated packaging is subject to a higher fee multiplier, rising from 1.2 in 2026–27 to 1.6 in 2027–28 and 2.0 in 2028–29. Green-rated packaging receives a discount, while amber-rated packaging remains at the base fee.
The mechanism is intended to change packaging economics. A format that is harder to recycle can carry a higher producer responsibility cost than one that performs better within established recycling systems.
Similar pressures are emerging across the EU. The Packaging and Packaging Waste Regulation (PPWR), which entered into force in February 2025 and generally applies from August 2026, introduces recyclability requirements and provides for producer responsibility contributions to be modulated according to recyclability performance.
For producers, the implications go beyond regulatory compliance. Packaging recyclability can increasingly influence material selection, procurement, product development and investment decisions.
How EPR is changing the true cost of packaging
Packaging has traditionally been specified by balancing material cost, product protection, manufacturing performance, appearance, weight and convenience. EPR adds another consideration: what happens to the packaging after use.
The principle behind eco-modulation is straightforward. Packaging that is more difficult or costly to collect, sort and recycle should not necessarily carry the same producer responsibility cost as packaging that can move efficiently through established recycling systems.
In the UK, the Recyclability Assessment Methodology (RAM) is designed to assess packaging against this broader definition of recyclability.
Rather than considering only whether a material can technically be recycled, the methodology looks at how packaging moves through collection, sorting and reprocessing and whether the resulting material has an established end use.
PackUK updated the methodology in July 2026 with RAM 2027, which applies to the 2027 reporting year. The methodology considers whether packaging can move through established collection, sorting and reprocessing systems and whether the resulting material has an established end use.
This distinction matters.
A packaging format may be technically recyclable under controlled conditions but still face problems if it is not widely collected, cannot be reliably identified by sorting equipment, is incompatible with available reprocessing systems or lacks a viable market for the recovered material.
As those factors become linked to EPR charges, packaging design decisions can have financial consequences long before a pack reaches the waste stream.
The result is a broader definition of packaging cost. The purchase price of a material is only one part of the calculation. Producers increasingly need to consider EPR charges, conversion and production costs, equipment compatibility, product protection and the potential cost of redesign as regulatory requirements develop.
For procurement teams, this can change the calculation when comparing packaging materials. A lower-cost material may not necessarily be the lowest-cost option if it attracts higher EPR charges or creates a greater risk of future redesign.
For companies selling the same products across several markets, packaging specifications capable of meeting increasingly demanding requirements in multiple jurisdictions may also reduce the need for separate regional formats and make supply chains easier to manage.
Why some packaging is harder to recycle
Moving towards greater recyclability is not simply a matter of replacing one packaging material with another.
Packaging performs multiple functions, and those requirements can place limits on the materials and structures that can be used.
Food packaging illustrates the challenge. A pack may need to protect its contents from oxygen, moisture, light or contamination while surviving distribution and maintaining product quality throughout its intended shelf life.
Achieving those properties can require combinations of materials that are difficult to separate or reprocess.
Flexible plastic packaging is one of the clearest examples. WRAP estimates that flexible plastics account for nearly a quarter of UK consumer plastic packaging, while only 7% is currently recycled. It describes the recycling system for these materials as fragmented and identifies packaging design, collection and recycling infrastructure as areas requiring action.
Multilayer structures can create particular difficulties. Different polymers, barrier layers, adhesives, inks, coatings and aluminium components can affect whether packaging can be successfully sorted and reprocessed.
UK recyclability guidance identifies several of these characteristics as potential barriers. Under the RAM, certain carbon-black pigments in flexible plastics can result in a red assessment, while aluminium foil layers can also result in a red assessment for flexible plastic packaging under specified conditions.
Adhesives, labels, sleeves and barrier materials can affect assessments in some applications.
Fibre-based packaging presents a different set of challenges.
Paper and board benefit from well-established recycling systems, but coatings, laminates and other materials can change how packaging behaves during recycling.
UK guidance therefore distinguishes conventional paper and board from fibre-based composites and other modified formats for which recycling options may be more restricted.
Broad material categories such as “plastic” or “paper” therefore reveal relatively little about the recyclability of an individual pack. The design of the complete packaging system matters.
An increasingly important distinction is emerging between packaging that is technically recyclable and packaging that can be recycled at scale through an established system.
Collection systems, sorting technology, reprocessing capacity and markets for recycled materials all form part of that equation. This creates a challenge for producers because packaging development cycles can extend over several years, while recycling infrastructure and regulatory requirements continue to evolve.
The EU’s PPWR reflects this shift. It establishes recyclability performance grades from 2030 and introduces requirements for recycling at scale from 2035. From 2038, packaging will generally need to achieve grade A or B to be placed on the EU market.
For producers, designing a theoretically recyclable package may therefore no longer be sufficient. The packaging also needs a realistic pathway through collection, sorting and reprocessing into a useful secondary material.
That increases the importance of cooperation across the packaging value chain. Brand owners, packaging manufacturers, converters, material suppliers, retailers and recyclers all have a role in understanding how a proposed format will perform beyond the factory gate.
What changing EPR rules mean for packaging strategy
The regulatory shift creates risks for existing packaging specifications, but it also creates opportunities for companies able to develop packaging that combines product performance with better recyclability.
For producers, recyclability increasingly needs to be considered near the beginning of product and packaging development rather than treated as a final compliance check.
Understanding how individual components affect sorting and recycling can help identify problems before a specification is locked in. Working with suppliers, converters and recyclers during development can also provide a clearer picture of whether a proposed structure is compatible with established infrastructure.
This can change the role of packaging procurement. Instead of comparing materials primarily on price and performance, companies may increasingly need to assess their total cost over the life of a packaging format, including EPR charges and the potential cost of regulatory-driven redesign.
For packaging manufacturers and converters, eco-modulated EPR systems could increase demand for structures and components that combine product protection and production efficiency with improved recyclability.
Materials and formats capable of moving through established collection, sorting and reprocessing systems are likely to become more commercially attractive as eco-modulated EPR systems increase the financial differentiation between recyclable and difficult-to-recycle packaging.
That does not mean producers can simply choose the least complex packaging available.
A pack still needs to protect its contents, meet food and product safety requirements, run efficiently on filling and packing equipment, survive transport and deliver the performance expected by customers. In some applications, complex structures may remain necessary.
The strategic question is whether that complexity can be justified — and whether the resulting packaging can satisfy the recycling requirements of the markets in which it is sold.
This is why recyclability is becoming a wider business issue. It affects not only sustainability teams but also packaging development, procurement, operations, regulatory affairs and finance.
As pEPR, the PPWR and similar systems develop, producers will increasingly have to account for what happens to packaging after use as part of its total cost.
Companies that understand the packaging’s end-of-life pathway before a specification is locked in will be better positioned to manage EPR charges, avoid costly redesigns and determine when more complex packaging structures remain commercially justified.
