Fostering corporate responsibility in curbing plastic waste

Phan Tuan Hung, director general of the Department of Legal Affairs under the Ministry of Natural Resources and Environment

Plastics are a crucial environmental issue in Vietnam’s sustainable development. How much of the plastic waste generated in Vietnam is recycled at the moment and what initiatives are under way to improve the situation?

Plastic waste is a global environmental problem, not just in Vietnam. As a developing country, Vietnam has many environmental issues that need attention in its sustainable development strategy, including plastic waste.

There are many organisations and research groups that provide data on the amount of plastic waste discharged into the environment as well as on how much plastic waste is recycled in Vietnam. However, the reliability of this data is limited, especially as Vietnam has a large informal waste collection and recycling force that is widely involved in the solid waste management process. Moreover, it is very difficult to collect recycling data in craft villages.

A 2020 report by IUCN-EA-Quantis group estimated that Vietnam recycles around 15 per cent of its plastic waste. Although still modest, the figure is higher than the global average of 9 per cent. However, most of the recycled plastic waste in Vietnam is imported while only 5 per cent are domestically generated. This means that Vietnam is not only recycling its own waste but also that of other countries, including developed ones.

There are two main issues affecting plastic waste recycling in Vietnam. First, since we are importing waste, the demand for domestic plastic waste for recycling is reduced, which means that much of the domestic plastic waste ends up on landfills. Second, we are still lacking a mandatory recycling target that could boost recycling and promote the circular economy in Vietnam.

Therefore, in addition to the existing policies such as the environmental protection tax and eco-labels for plastic packaging we have recently been developing several policies to address both issues.

Decree No.40/2019/ND-CP amending the decrees guiding the Law on Environmental Protection (LEP) 2014 has set out restrictions and a roadmap to cut scrap imports, promoting alternative waste sources for recycling.

Meanwhile, articles 54 and 55 of the new LEP 2020 introduce Extended Producer Responsibility (EPR) to establish mandatory recycling targets and financial contributions for various industries that use plastic as a component for packaging, electronic equipment, vehicles, tyres, and others.

Compared with other tools, EPR has the important advantage that it can be applied to many different types of waste.

Vietnam has been approaching the Extended Producer Responsibility (EPR) concept for 15 years, but there are still many misunderstandings about it. What is EPR about, and how does this mechanism change manufacturers’ responsibility on plastic waste?

EPR is an environmental policy approach based on the polluter-pays principle, in which the producer’s liability extends across the product’s entire life cycle. By shifting the financial responsibility for the disposal of products from residents and municipal governments to manufacturers and importers, EPR requires businesses to collect discarded products and packages for recycling according to the required rates and specifications.

This will promote businesses to improve product design and come up with eco-friendly packaging that is more convenient to collect and recycle, thereby helping to reduce waste, increase recycling, and reduce related costs. EPR generates a cash flow from the producer to finance collection, recycling, communication, and consulting activities which also create economic opportunities for enterprises in the environmental industry in Vietnam.

In other words, EPR encourages businesses to create a circular economy for their products and packaging, helping to reduce plastic waste.

The idea of ​​EPR was first introduced in Article 67 of the LEP 2005, with requirements for the recalling and disposal of certain types of products after use. The initial objective was to find a solution to dispose waste products and to solve the pollution problem caused by informal recycling in craft villages. At the time, the development of EPR regulations was met with opposition and controversy leading to legal regulations without mandatory targets for recycling.

This led some businesses to dodge obligations by erecting technical and financial barriers for consumers returning discarded products.

At present, five of the EPR’s six target categories – like batteries and accumulators, electronic devices, tyres, and others – are subject to EPR implementation under the prime minister’s Decision No.16/2015/QD-TTg on recalling discarded products. However, the current regulations do not set a mandatory recycling rate, so there is little pressure on businesses to comply and as such, EPR remains largely a part of voluntary corporate social responsibility action. This informality has lead to misunderstandings and an incomplete understanding of what EPR is.

The EPR approach necessitates the establishment of a Producer Responsibility Organisation (PRO) in Vietnam. How will such an organisation be formed and how will the Ministry of Natural Resources and Environment support its operations?

The choice of how to implement EPR is up to the manufacturers and importers. The Law on Environmental Protection 2020 has given manufacturers and importers several options to choose formats to fulfil their recycling responsibility. They can either organise recycling by themselves, through hiring a qualified recycler, or authorising a third party to organise the recycling; or they can financially contribute to the Vietnam Environmental Protection Fund.

A PRO is authorised by manufacturers and importers who will decide its model and way of operation. The MoNRE only defines the criteria for a PRO to represent manufacturers and importers in the performance of authorised obligations. For an organisation to become a PRO, it must be selected and authorised by manufacturers and importers, in addition to meeting the specified criteria outlined in the regulations.

I believe PRO, as international experience, will play an important role in the EPR system in the future. PRO will be invited to join the National EPR Council as well as EPR Platform which are channels to support PRO as well as manufacturers and importers.

The EPR will put additional burdens on the business community, forcing them to take responsibility for their products throughout their entire life cycle. What roadmap will the MoNRE follow to introduce these added responsibilities?

The EPR is a policy tool that has been widely applied around the world to transfer part of the financial burden for solid waste treatment from taxpayers and local authorities to manufacturers and importers, and is not a new regulation in Vietnam.

In addition, many foreign-invested manufacturers and importers such as Unilever already have experience in implementing EPR in developed countries. They, as well as large domestic enterprises, have expressed strong commitments and are pioneering the implementation of EPR as members of the Packaging Recycling Organization Vietnam (PRO Vietnam).

Since last April, we have formed an EPR working group to enhance the participation and dialogue among relevant industry representatives in the process of developing EPR regulations under the LEP 2020, while connecting other organisations and parties supporting EPR implementation in Vietnam.

The draft decree detailing several articles of the LEP 2020 also provides a roadmap for the implementation of EPR for each specific product and packaging category. The required recycling rate will gradually increase to ensure businesses can adapt. The rate will then be decided by the National EPR Council, after consulting representatives of participating manufacturers and importers.

The draft decree detailing several articles of the LEP 2020 also provides a roadmap for the implementation of EPR for each specific product and packaging category based on the life of the products. The required recycling rate will gradually increase to ensure businesses can adapt. The rate will then be decided by the National EPR Council, after consulting representatives of participating manufacturers and importers.

What policies are the government and the MoNRE applying to ensure the effective implementation of the EPR?

We develop and propose three mechanisms to monitor the market and issue sanctions in case obligations are not fulfilled, and to inform and monitor the community, consumers, and civil organisations.

Firstly, for the monitoring mechanism – in addition to the fact that enterprises have to report on the total amount of products and packaging placed on the market – the recycling results must be audited. The results will then be compared with data of relevant management agencies, such as data on revenue and tax payments from the General Department of Taxation.

All reporting activities will be carried out through the electronic EPR portal to form a large database. Sharing the data among relevant regulatory agencies will simplify reporting and ensure effective supervision.

Through this type of monitoring, we can also identify free-riders – those who benefit without paying the actual fees – in the EPR system and connect with competent authorities for handling these cases. Free-riders not only impose financial burdens on EPR-compliant parties but also create unfair competition between businesses. If these free-riders are not managed, more businesses will choose to avoid compliance and become free-riders themselves, undermining the whole EPR system.

All activities such as registration, e-portal construction, data management, and monitoring will be operated by the Vietnam EPR Office.

Secondly, non-compliance will result in 30 per cent additional fees and another 10 per cent for recurring violations. The penalty needs to be higher than the recycling cost to make sure violation is not financially viable as an option. Other specific sanctions for violations related to EPR are being developed in the draft decree.

Finally, the public information mechanism is designed following the provisions of the LEP 2020. Manufacturers and importers must affix the national recycling symbol on labels and packaging so that consumers can tell which products are in the EPR system. This will increase public awareness of the EPR system and inform consumers about a company’s EPR policies and responsibilities attached to each product and packaging. This will help consumers understand how EPR works and they will also be able to monitor the performance of manufacturers and importers.

In addition, the National EPR Council members include representatives from the Vietnam Standard and Consumers Association and representatives of environmental and social organisations who participate in setting the recycling rate applicable for businesses. This is probably the most powerful mechanism to promote the role of the community and social and environmental organisations in the decision-making process to help ensure the actual implementation of EPR.