Corporate report

Compliance monitoring and enforcement activity 2022

Updated 3 May 2023

Applies to England

This report provides a statement on the monitoring and successes during 2022 for the packaging regime.

1. Executive summary

The Environment Agency published its 2022 policy and monitoring targets in the Packaging producer responsibility monitoring 2022.

Using an intelligence led and risk-based approach, we conducted compliance monitoring of accredited reprocessors and exporters, packaging producers and compliance schemes.

In 2022:

• the final UK total recycling obligation was 8,253,814 tonnes (an increase of 392,293 tonnes on the 2021 final UK obligation)
• all UK schemes met their annual obligations (the UK scheme obligation was 7,896,695 tonnes)
• 93% (355 out of 382) of UK packaging direct registrants purchased all their packaging recycling notes (PRNs) to offset the UK’s annual packaging obligations - all but 9 direct registrants with the Environment Agency purchased their PRNs to meet their obligations (this obligation was 14,233 tonnes)
• the carry over PRNs decreased from 502,702 tonnes into the 2022 obligation year to 141,012 tonnes into 2023

During 2022, we monitored:

• all 5,697 registered producers, with 47 audits performed
• all 21 registered schemes, with 4 audits performed
• 438 of our accredited sites, with 176 audits performed

This work included:

• assessing performance and behaviour of businesses to identify potential non-compliance
• assessing and determining applications for accreditation and approval
• assessing and determining registrations
• investigating producer ‘drop offs’ (previously registered producers who do not re-register)
• investigating ‘free-riders’ (unregistered obligated producers)
• validating submissions
• assessing and investigating late or missing submissions
• assessing and analysing PRNs and packaging export recycling notes (PERNs)
• assessing and analysing waste records and issuing of PRNs and PERNs
• assessing and determining certificates and statements of compliance
• gathering intelligence and data trend analysis
• risk profiling
• identifying and monitoring businesses that pose a risk to the environment and the packaging regime
• conducted audits of compliance schemes, producers and accredited reprocessors and exporters

In 2022, we received 462 applications for accreditation and approved 438 operators. These were assessed and determined before being processed and risk profiled.

Where we identified non-compliance, we followed our enforcement and sanctions policy and associated guidelines to determine the appropriate enforcement action. During 2022, our various interventions resulted in disrupting approximately 53,800 tonnes of packaging waste, with an estimated evidence (PRN and PERN) value of £10.4 million.

In 2022, we:

• suspended 21 accredited operators
• cancelled 4 accredited operators
• refused 14 applications for accreditation
• caused 6 companies to withdraw their applications for accreditation
• investigated 3 producers for failing to comply with their producer obligations (for 2021 non-compliance but work done in 2022)

We accepted a total of 16 enforcement undertakings from packaging producers in 2022. This resulted in £309,000 in financial contributions to environmental projects.

1.1 Auditing 2022

Audits	2021 actual	2022 actual	Percentage difference
Producers	26	47	+80.8%
Accredited operators	216	176	-18.5%
Compliance schemes	9	4	-55.6%
Total	251	227	-9.6%

In 2022, we audited 227 persons – a decrease of 9.6% on 2021. In 2022, we concentrated on increasing the audits we performed for the other regimes we regulate within Producer Responsibility Regulatory Services. Namely our waste electrical and electronic equipment (WEEE) and batteries regimes. There was a small reduction in audit numbers for packaging in 2022 compared to 2021 which was a record year for packaging audits. We also established a new training team which will help train new officers faster and allow them to perform audits more efficiently. This will help make greater use of available resource.

2. Monitoring and enforcement

2.1 Monitoring registered producers

We continued to monitor producers who are registered directly with us and those registered through compliance schemes.

Our monitoring programmes are risk-based and we do not differentiate between:

• direct registrants
• those registered through compliance schemes
• those registered with different compliance schemes

At registration stage, we assessed the submitted information and data from all 5,697 registered producers. This included comparing data submissions with those from previous years. We reviewed and validated all direct registration applications to make sure the national publication contains accurate data. We sought explanations and corrections where we deemed submitted data to be inaccurate.

Our officers audited 47 producers in 2022.

We concentrated on the compliance monitoring of our producers ready for the Extended Producer Responsibility for Packaging regulations. Twenty-one more audits were conducted compared to 2021. We also expect that producer audits will continue to rise. For more information see the EPR consultation government response.

Every year before the end of the compliance period we provide advice and guidance to direct registrants that have not purchased sufficient evidence to meet their obligations. This work supported all but 9 direct registrants meeting their obligations in full for 2022.

2.2 Monitoring of unregistered producers (freeriders and drop offs)

Where we investigated and identified an obligated producer as not being registered (‘free riding’), our initial approach was to bring the producer into compliance. Alongside this we also investigate the severity of the non-compliance and determine the most appropriate enforcement responses. These were in line with our enforcement and sanctions policy. In certain cases, we accepted an enforcement undertaking offer.

An enforcement undertaking is a form of civil sanction. We accepted a total of 16 enforcement undertakings from packaging producers in 2022. This resulted in £309,000 in financial contributions to environmental projects, bringing the overall amount paid to environmental projects through enforcement undertakings to over £7.3 million since 2011.

The largest enforcement undertakings in 2022 were for:

• T I Midwood & Co Limited at just over £48,600
• Sazerac UK Limited at £45,000
• Softcat PLC at over £35,800
• NCR Limited at just over £35,300

After the registration deadline in April 2022, we had 591 businesses (in England) that failed to re-register.

We worked alongside packaging producer compliance schemes to contact these businesses and bring them into compliance. As a result of this work:

• 566 businesses either re-registered or were identified as no longer being obligated
• 37 warning letters were issued to companies failing to register by the regulatory deadline

The remaining 25 businesses had a combined obligation in 2022 of 5,909 tonnes. This represents 0.07% of the total UK obligation. Where businesses failed to register, the Environment Agency will consider its enforcement options in line with our enforcement and sanctions policy.

2.3 Monitoring of compliance schemes

In 2022 there were 21 approved packaging compliance schemes registered with the Environment Agency. We monitored all approved compliance schemes by:

• validating, assessing, and analysing information and data submitted at registration, and after resubmissions
• assessing and investigating late or missing submissions
• monitoring PRNs and PERNs
• assessing statements of compliance
• risk profiling

Our aim is to always check conditions of approval have been complied with and to identify and address any failures.

We conducted quarterly desktop monitoring of all 21 compliance schemes throughout 2022. This also involved a discussion about their compliance position and ability to meet their recycling obligations (where appropriate). We audited 4 packaging compliance schemes during 2022. All our approved schemes submitted a statement of compliance and met their obligations for the 2022 compliance period.

2.4 Monitoring of accredited reprocessors and exporters

The Environment Agency accredits and monitors the activities of reprocessors and exporters of UK packaging waste. This activity involves an initial site inspection to determine the application and compliance monitoring activity during the period of accreditation. Accreditations must be renewed each year.

Our monitoring is intelligence led and risk-based and can be carried out by desk-based activity, remote inspections or site visits.

During 2022 we monitored 176 operators for compliance through site inspections or remote auditing. This resulted in 20 suspensions and 4 cancellations. A 9% increase in suspensions and cancellations compared with 2021.

We communicated these decisions to industry. This was to:

• inform them of reduced availability of evidence onto the market
• send a deterrent message on the consequences of non-compliance

Our priority is to identify non-compliance, including possible fraudulent activity, and encourage compliance. This enforcement activity has helped to inform decisions on applications for accreditation.

We estimate our efforts have prevented the non-compliant management of approximately 53,800 tonnes of packaging waste with an associated evidence (PRN and PERN) value of £10.4 million.

2.5 Impact of the COVID-19 pandemic

We continue to recognise that the COVID-19 pandemic has changed the way many organisations operate, including the Environment Agency. Throughout 2022 we continued to be fully operational.

Within the Environment Agency, we have adapted our ways of working and embraced remote compliance monitoring and auditing of the customer groups we regulate. The regulatory activities we were able to perform in 2021 were directed by the COVID-19 restrictions in place at the time. By the end of 2021 we had restarted the majority of our field and site-based regulatory activities in a coordinated and safe manner to:

• protect people and the environment
• support those we regulate

The effects of the pandemic meant resource available to do audits and to support officers who did have capacity was still reduced in 2022, but not to the extent as in the previous 2 years.

We will continue to review the use of remote auditing procedures moving forward and will maintain some remote auditing combined with our physical field and site-based regulatory activities. We continue to target our monitoring activities using an intelligence and risk-based approach.

We contacted many of our producer responsibility customers to gauge whether they were still operational during the pandemic and at what capacity. This informed our compliance monitoring activities, risk profiling and added to our intelligence picture. We also dedicated resource to helping operators who might be struggling during the pandemic by offering advice and support.

As lockdown measures eased, we returned to a more ‘business as usual’ approach to any non-compliances we identified.

2.6 Impact of regulation reform

The Environment Agency has worked closely with Defra and the other environmental regulators to support the development and implementation of the Extended Producer Responsibility for Packaging regulations.

2.7 Successes

Refusing applications is a valuable tool. It gives us the opportunity to prevent potentially non-compliant companies entering the regime before non-compliance is committed and illegitimate revenue from the packaging waste regime can be claimed. Twenty companies were stopped from entering the regime this year, either due to their applications being refused, or our actions causing these companies to withdraw their applications.

We also succeeded in compliance monitoring of accredited reprocessors and exporters. This resulted in:

• cancelling 2 exporter accreditations and 2 reprocessor accreditations - either the seriousness or type of breach meant they could not be brought back into compliance
• issuing 39 suspension notices for breaches of conditions - 21 resulted in an operator being suspended and 3 were later reinstated to the regime having fulfilled the conditions of the notice
• sending 16 warning letters resulting from offences identified - a threefold increase from 2021
• issuing 54 suspension notices for failure to submit quarterly returns or revenue report -notices give 4 days to submit before suspension, only 1 of these ended up resulting in suspension
• reducing the number of businesses failing to re-register after the April deadline from 591 to 25
• continuing to develop our use of financial investigators and the recovery of monies accrued by operators because of non-compliant activity

Through improvement of processes and closer working amongst teams, we have been able to act on non-compliance promptly.