Scotland is leading the way in the fight against waste. In efforts to combat throwaway culture, the Scottish Government has committed Scotland to being the first part of the UK to introduce a "deposit return scheme" akin to those already running in Germany, Denmark and the Netherlands. The scheme will cover all drinks sold in plastic, metal, and glass containers.
How will it work?
Under the proposals, every time a drink is sold in Scotland (whether in a plastic, metal or glass container) a deposit of 20 pence will be added to the price. All "retailers" must then offer a return point at their premises where the container can be returned in exchange for the deposit. The term retailer has been given a fairly broad definition in the proposed regulations, covering online retailers and vending machines, as well as large supermarket chains and small convenience shops. The enforcement powers will lie with the Scottish Environmental Protection Agency (SEPA), who will have a wide-ranging remit.
Producers will be required to register with SEPA every year and make arrangements for the collection of containers from return points. The government has imposed ambitious collection targets, starting at 70% in 2021 and climbing to 90% with effect from 1 January 2024.
Retailers will be obliged to ensure that effective arrangements are put in place for the return of drinks containers.
There will also be added labelling requirements applicable to both producers and retailers.
Implementation and enforcement mechanisms
The draft regulations are expected to become law in April 2020, and come into force in 2021. Some retail groups have expressed concerns about the proposals, particularly smaller retailers who have raised doubts about their ability to comply with the legislation in such a short space of time. Based on the recent environment committee report it looks likely that the proposals will be the subject of negotiation between the Scottish Government and retail groups to assuage such concerns.
Any major changes to the proposals, other than the value of the deposit, appear unlikely. The Scottish Government has indicated its intent to press ahead with the scheme which appears to garner high levels of public support and with COP26 being hosted in Glasgow this means this legislation is likely to be implemented in some shape or form.
Any initial increase in costs as a result of the scheme might be softened by the recent announcement by Scotland's First Minister, who has confirmed that retailers who install reverse vending machines (i.e. machines for accepting and processing returned bottles) will not be subject to business rates increases.
The scheme will be backed up with a robust range of enforcement mechanisms, including civil enforcement measures and criminal penalties for non-compliance. In their current form, the regulations include a power for SEPA to enter and inspect retail premises, along with penalties that can extend to an unlimited fine.
The scheme will lead to significant changes for producers and retailers. These changes present a new set of unique challenges, many of which are legal in nature.
Quite what the challenges will be depends on the detail of the regulations, once it is finalised. However, the scheme will certainly impact retailers and producers in novel ways.
- There is a requirement to register with SEPA by 1 March every year (N.B. this includes retailers who import drinks produced outside the UK), or alternatively, to appoint a scheme administrator to carry out its statutory duties.
- New pricing arrangements to include the 20p deposit in the sale price.
- New labelling and barcoding for items sold in scheme packaging to include the deposit price.
- Ongoing obligations to meet specified collection targets.
- Ongoing reporting requirements to SEPA regarding their products.
- Retailers must ensure the deposit price is included in the product price and in-store labelling must make it clear the deposit value is separate from the price.
- A legal obligation for all retailers to accept the return of containers and to provide deposit refunds to customers. Staff training will be key.
- Retailers (particularly those operating large-scale retail businesses) may be expected to install reverse vending machines to process returns. This will inevitably necessitate negotiations with landlords under the current terms of their leasing arrangements.
- Retailers will be obliged to hold containers that are returned until arrangements are made by the producers to collect the containers, which will lead to businesses being required to enter into a swathe of new contractual arrangements.
- The scheme is expected to go live in 2021 but preparation is key.
- A mandatory deposit of 20p will be added on to the sale price for all relevant drinks containers.
- All producers must register with SEPA by 1 March every year (and pay the registration fee).
- All retailers must operate a collection point for 'scheme articles'.
- The collection of deposited containers from retailers is mandatory for all producers who must also meet annual collection targets.
For more information contact Caroline Colliston, Partner, on the details below.