The SAP Solution Transforming How Businesses Navigate Plastic Regulations

NORTHAMPTON, MA / ACCESSWIRE / August 14, 2023 / Regulations regarding plastic waste are expanding at a dizzying pace. The United Kingdom established plastic taxes in 2022, followed by Spain in 2023. The United States is intensifying its regulatory efforts, with more than 100 extended producer responsibility (EPR) laws implemented to date.

Meanwhile, in its quest to make all packaging reusable or recyclable by 2030, the United Nations is preparing to launch a plastic treaty in 2024. At the same time, businesses themselves are furthering their commitment to sustainable practices through voluntary agreements, such as those proposed by the Ellen MacArthur Foundation and the United Nations Environment Program (UNEP).

Consumers are taking up the issue as well. According to UNEP, 91% of consumers express concern over plastic waste. A study by Trivium Packaging and Boston Consulting Group indicates that 73% are willing to spend more for eco-friendly packaging.

Compliance with these new regulations can be a challenging and expensive task for businesses of all sizes. Many smaller to mid-range organizations lack in-house expertise on these issues, often resulting in either rudimentary monitoring or expensive outsourcing. Larger companies may find the immense scale of the task daunting and default to costly shortcuts.

"With the complexity that they face and the sheer volume of business they have across multiple products and multiple countries, many organizations tend to be conservative to avoid fines," explains Darren West, product expert for Circular Economy Solutions at SAP. "As a result, they will more or less approximate what taxes they need to pay, and overestimate to add in some contingency."

Driving Up Accuracy, Driving Down Costs

For consumer goods giant Henkel, the quest for an effective solution to its plastic waste challenge began in its tax department. Triggered by the advent of plastic taxes across the UK and EU, Henkel's tax experts embarked on a project aimed at addressing compliance from a fiscal perspective.

On the IT side, the team was immediately faced with some significant hurdles. First, to comply with new regulations and avoid penalties, it needed a system that could monitor, measure, and report its products' plastic data. Amidst a limited market of solutions, finding the right tool for its needs was no easy task - one made more difficult due to the newness of the regulations. And it needed to aggregate and organize the essential master data for accurate reporting without excessively complicating or inflating the cost of its IT infrastructure.