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The New Covenant… Its Key Features… What It Means

The New Covenant… Its Key Features… What It Means. Gavin Williams Chief Executive Officer Packaging Council of Australia Thursday, 11 August 2005. The New National Packaging Covenant. July 1 Australian Environment Ministers approved a new Covenant.

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The New Covenant… Its Key Features… What It Means

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  1. The New Covenant…Its Key Features…What It Means Gavin Williams Chief Executive Officer Packaging Council of Australia Thursday, 11 August 2005

  2. The New National Packaging Covenant • July 1 • Australian Environment Ministers approved a new Covenant. • It replaces the first Covenant which commenced in 1999. • Over 640 signatories - all governments (except NT), some local governments and approximately 600 companies. • Key Features of the new Covenant: • Five year life span (2005 - 2010). • Targets - 65% national recycling target - (new). Material specific “sub-targets” - (new). • “Action” against companies that don’t meet their obligations. • Small business “exemption” - still to be announced. • Mid term review (2008) - (new).

  3. Why The Covenant Approach? • Industry has supported the Covenant: Why? • Other options less palatable - European policy – prescriptive. • Concern about fragmented State-by-State approach. • Involves the entire supply chain - not just packaging manufacturers. • Industry requirements: • A national approach. • Policy stability/certainty. • Flexibility - not a policy “strait-jacket”. • Cost effective outcomes. • “Neutrality” on packaging materials - eg. plastics. • The involvement of the entire supply chain and Governments • Not just an issue for packaging manufacturers.

  4. The New Covenant - The Structure • Essentially the same as the first Covenant. • A two-tier “co-regulatory” approach. • Covenant - Voluntary. • The Regulatory Safety Net (NEPM) - “take-back” obligations on brandowners (including franchises). • Tackles “free loaders”. • Exemption for “small business”. • Tiers not equal – Covenant flexible/NEPM tough. • Encourages companies to sign the Covenant. • The NEPM is an essential component - “the glue, the stick, the whip”. • To be used more regularly in this Covenant. But will it?... • Supply chain pressures…position of retailers.

  5. The New Covenant - The Objectives and Requirements • Tighter, tougher, more detailed and more demanding. • The new Covenant: • establishes targets. • promotes improved product design. • encourages reduction, re-use and recycling of packaging materials. • aims to increase recycling of materials currently not recycled or recycled at low rates. • seeks to reduce the amount of packaging going to landfill. • Aims to reduce the littering of packaging. • Companies that sign the Covenant will be required to: • Contribute to an industry fund. • Produce an Action Plan which contains specific actions, quantifiable targets and addresses KPIs.

  6. The New Covenant - Targets Ministers wanted targets. The 2010 targets are as follows: • 65% “overarching” national recycling target for used packaging; • “All sectors to work together to achieve these targets including companies in the packaging supply chain manufacturers, waste collectors, local governments and recyclers, the Australian and all state and Territory governments”. • Not an industry target…but industry will be held responsible if target is not achieved. • Specific materials - Contribution as follows: • paper & cardboard - 70-80% (currently 64%) • glass - 50-60% (currently 35%) • steel - 60-65% (currently 44%) • aluminium - 70-75% (currently 64%) • plastics - 30-35% (currently 20%) • Recycling of “non-recyclable” packaging to increase from 10% to 25%.

  7. The New Covenant - Industry Funding • Funding - Industry will seek to raise $15m ($3m pa over 5 years) for Covenant projects and administration. • Supplemented by government funds. • Industry Contributions to Funding Arrangements • Transitional Arrangements Contribution Schedule – Commencing August 2005

  8. Turnover is defined as follows: • Raw Material Supplier • Total sales of raw materials used in the manufacture of consumer packaging in Australia including industrial packaging. • Packaging Manufacturer/Household Paper Supplier • Total sales of packaging/household paper into consumer applications in Australia including Industrial packaging and sales for public events, e.g. for sporting events. • Packaging User • Total sales of packaged finished goods sold into the consumer marketplace in Australia, including industrial applications and sales for public events e.g. for sporting events. • Wholesaler/Retailer • Total sales of packaged finished goods. Contributions for home brand products are in addition to this contribution. • Household Paper Supplier • Total sales of paper products for household use by manufacturer or distributor of such products.

  9. Action Plans • Companies need to address KPIs and include specific actions and targets in their Plans. • Specify actions to increase recycling (all companies). • Total weight of consumer packaging sold & total weights of products packaged (brandowners). • Amount of post consumer recycled content in packaging (packaging manufacturers). • Total weight of non-recyclable packaging sold (brandowners). • On-site collection/recycling facilities (all signatories). • Resources used to produce packaging (pack. manufacturers). • Improvements in design, manufacture, marketing & distribution of packaging (all companies). • Safety, hygiene, protection issues (all companies). • Establish baselines for measuring “continuous improvement”.

  10. Issues for Companies • Does your company sign the Covenant? • Not obligatory. • Potential for customer/supply chain pressure. • Do you adopt a “wait and see” attitude? • Cost and resourcing issues. • Who do you appoint to be responsible for the Covenant? • Handles internal issues, reporting data collection, develops Action Plan. • Implements company adoption of Environmental Code of Practice. • Provides advice on customer concerns/issues. • “Education” of staff - particularly marketing/sales reps. • Relationship with your customers: • Your “brandowner” customers will look to you for solutions/reassurance. • What advice do you provide them? • Possible shift in material usage. • Pressure to move away from “non-recyclable” materials. • CEO to sign off on Action Plans.

  11. The Outlook • Covenant MK II is more onerous and demanding. • Significantly stronger data collection and reporting. • Will this Covenant deliver? - The outcome is less certain. • Will targets be achieved? • Will performance show clear improvement? • Will Governments enforce NEPM? • Response of companies - eg. retailers • “Failure” - or a mixed response - will see Governments look at other - and tougher - policy responses. • The political reality is that industry will bear the consequences of “failure”. • We need to work hard to make this Covenant deliver.

  12. www.packcoun.com.au

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