Waste not, want not: Embracing the EU’s circular economy mandate

Understand how EU Regulation 2025/40 presents an opportunity for businesses to enhance sustainability while avoiding penalties. Learn how proactive compliance can lead to a more responsible and financially sound packaging strategy. 

In brief

• EU Regulation 2025/40: all packaging to be reusable or recyclable by 2030, enforcing Extended Producer Responsibility (EPR).
• Cost Implications: increased financial liabilities for producers, but potential cost savings for those using recycled materials.
• Sustainability Focus: mandates eco-friendly design and recyclability assessments, urging quick adaptation to avoid penalties.

On the 22nd of January 2025, The European Commission promulgated Regulation 2025/40 (“The Regulation”) on packaging and packaging waste, repealing previous Directives and requiring that organisations benchmark existing strategies and controls against the new standard. 

This article discusses the pivotal changes outlined by The Regulation regarding recycling and circularity targets, highlighting changes, challenges, new cost considerations, and defined assessment milestones to assist businesses in achieving a truly circular economy.

One size fits all: what the new regulation means:

Regulation EU 2025/40 (“The Regulation”) is directly applicable and binding to all EU member states without the need for national transposition. This standardisation aims to help businesses that operate in multiple member states, by limiting nuances of interpretation, and making centralised governance of extended producer responsibility possible for multi-nationals.

The Regulation aims for all packaging to be reusable or recyclable by 2030, aligning with Ireland's National Waste Management Plan. However, this goal is deemed unlikely given that several member states may not meet the 2030 deadlines.

A key change is the implementation of Extended Producer Responsibility (EPR) schemes. This means member states must create effective packaging and waste management strategies focused on waste prevention and innovative design, following the "polluter pays" principle. EPR has been active in Ireland for years, with one Producer Responsibility Initiative (PRI) for each of the identified sectors.

Under EPR, Producers—whether manufacturers, importers, or brand owners—are responsible for their imported and generated waste. They bear the financial burden of collecting, sorting, recycling, and disposing of waste, which drives more sustainable designs and reduces overall waste, with cost savings becoming an incentive.

Right now, producers report their waste to the applicable sector PRI, which assesses the total waste in the sector and charges producers fees based on their share of recycling targets.

Alongside The Regulation, local EPR regulations are changing. New rules require calculating financial liability based on the recycled plastic content in packaging, rather than flat fees. This will significantly affect EPR liability calculations. Additionally, certain packaging formats, including many single-use plastics, will be banned. The Commission aims to enforce recyclability assessments for producers and promote the use of recycled materials in packaging.

While previous directives lacked clear definition of who in the packaging lifecycle owned financial liability, the Regulation now establishes the responsible producer for domestic, cross-border and online/distance sales, ensuring that businesses can’t hide behind foreign-based manufacturers to avoid financial liabilities. 

The newly adopted lifecycle approach considers the environmental impacts of packaging from initial design and production through use and eventual disposal or recycling. This holistic view helps identify opportunities for reducing waste and improving sustainability at each stage of the product lifecycle. 

Sustainability and design checkbox:

Adopting this new approach brings important considerations for producers aiming to design sustainably. The Regulation highlights the need for environmentally friendly packaging and introduces mandatory recyclability assessments.

Key Points:

The Commission will publish guidelines for minimising packaging volume and enhancing recyclability. These will form the basis of packaging efficiency exercises and module design requirements aiming to reduce material use (by volume and weight) and adopt packaging that is easily disassembled for recycling or reuse. 

The Regulation will also likely have an impact on existing recycling programmes administered by PRIs, now requiring that recycling represents the reintroduction of post-consumer waste into products of a similar or higher value than the original product, to curb downcycling trends.

How it will impact your business (cost and operations)

The impact here will depend on your operations and waste management maturity. Consumer and retail sectors will face immediate effects, while telecommunications, media, and technology will feel the impact of extended producer responsibility (EPR) regulations for waste electrical and electronic equipment (WEEE) in the medium to long-term.

Short-term EPR costs will rise due to lifecycle and recyclability assessments. However, a shift to a recycled content approach may ease financial burdens for companies already adopting recycled packaging, presenting an opportunity for R&D in sustainable materials.

The regulation introduces producer-level targets tied to specific product types, necessitating better governance and promoting circularity mechanisms like deposit return schemes. 

Initial costs for packaging assessments may affect product margins but could be offset by savings in logistics as more products are shipped together. EU-wide regulations will enhance the scalability and affordability of sustainable packaging innovations, reducing liabilities from EPR regulations and creating investment opportunities.

The regulation also promotes compostable plastics, requiring certain packaging types to be compostable within two years. 

A focus on reusable packaging will allow consumers to refill their own containers without extra charges. By 2030, at least 20% of take-away beverages must be in reusable packaging, increasing to 80% by 2040.

Food packaging must comply with the European Chemicals Agency’s PFAS (Per- and polyfluoroalkyl substances) restrictions.   Companies must verify their packaging solutions against these limits.

Stricter environmental labelling will require full material disclosures within 3.5 years and reusable packaging indications within 4, challenging transparency from suppliers.

With an 18-month transition period starting from August 12, 2026, businesses should begin gap assessments and integrate circularity into their sustainability strategies now to avoid non-compliance risks, which carry severe penalties.

Collaboration across industries and regulators is essential. While short-term financial liabilities may arise, there are opportunities to optimize costs rather than passing them to increasingly cost-sensitive consumers. The Regulation reflects evolving stakeholder expectations and lays the groundwork for sustainable packaging investments.

By proactively adapting to these regulations, businesses can ensure compliance and lead the way to a sustainable future for packaging and waste management