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Navigating Recycling Evidence Costs: How to explain the PRN system to your finance team

With packaging compliance costs fluctuating dramatically over recent years, we understand that you may find yourself in the position of guiding your business in its understanding of the changing costs (whether higher or lower than previous years), and how to factor those changes into budgets. In this article, we aim to provide you with the necessary tools to effectively communicate the complexities of the Recycling evidence (PRN) market costs to your finance team, helping them to understand the system, its fluctuations and the impact of new regulations.

Understanding the PRN system

Firstly, it is important that your finance team understands the fundamentals of the PRN system. PRNs and PERNs are the mechanism through which businesses obligated under the packaging regulations comply with legislation. Compliance in this system is achieved by purchasing volumes of PRNs determined by the amount of packaging they have placed on the UK market, and the recycling target for that particular material. They play a crucial role in the meeting of recycling targets set by regulatory bodies.

PRNs are sold on an open market which means that prices fluctuate according to supply and demand. The PRN system is designed so that when there’s a shortage of packaging recovery notes, the price of the recycling evidence will increase, stimulating the market, subsequently increasing the level of recycling; higher prices usually mean more recycling is being done.

Prices for each grade can also fluctuate due to economic, political and social variables. The Clarity team negotiate this volatility for our clients, and aim to keep them informed of these changes, in order to offer you the most cost-effective and low risk solutions.

Explaining Fluctuations

Fluctuations in PRN costs are not uncommon, and it is essential to communicate this to your finance team. PRN prices are influenced by various factors such as market demand, material availability, and regulatory changes. Changes in recycling targets, updates to environmental policies, or alterations in waste management practices can all impact the pricing of PRNs. Supply and demand is the most significant factor when it comes to PRN pricing, the PRN system is designed to support the UK recycling network, so, when PRN prices are high, the market is stimulated therefore increasing the level of recycling being done. By explaining the dynamic and responsive nature of the PRN system, you can help others in your company understand what your invoice achieves.

Sharing the impact of regulatory change

The recent legislative reform from the 2007 packaging waste regulations to Extended Producer Responsibility represents a huge change in the packaging compliance regulations, number of producers in the system and increasing costs. When comparing the two systems, one of the main differences is the point of compliance and where it falls in the supply chain. Under the current system of Shared Responsibility, the financial burden of packaging compliance is shared between 4 different producer types, all taking on a different percentage of the responsibility of packaging waste disposal. In the new system there is a single point of compliance where responsibility for each piece of packaging falls on one producer, namely the brand owners and importers.

The single point of compliance means that those producers who will have a financial obligation under the new system are likely will face increased PRN costs as well as a Local Authority Waste Management fee if they produce packaged goods used in households. Changes in legislation can also alter recycling targets which directly influence PRN prices. By sharing this information, you can support your finance team in understanding the rationale behind cost adjustments and provide context to the changes in budget required.

Providing Support and Resources

The team at Clarity are committed to supporting our members in navigating challenges posed by changing regulations. Our dedicated Compliance Managers are delighted to offer support meetings with relevant teams in your organisation to help you in preparing your business for Extended Producer Responsibility for packaging effectively. These sessions will explain allocating sufficient resource such as staffing and finance, to managing the cost implications of the news regulations.

Effectively explaining recycling evidence costs to your finance team requires a balance of empathy, clarity, and support. By providing them with a comprehensive understanding of the PRN market, its fluctuations, and the impact of new regulations, you empower your team to make informed decisions about packaging.

Acting as an extension of your team, Clarity is here to assist you every step of the way, ensuring that your business remains compliant and prepared for the challenges ahead. Together we can navigate the complexities of Extended Producer Responsibility and Recycling evidence (PRN) costs.

Book a free Extended Producer Responsibility for Packaging consultation call with one of our packaging compliance experts using the form below

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