Source reduction is another mechanism in EPR legislation to mandate more sustainable packaging alternatives. For example, California SB 54 mandates source-reducing plastic covered material by 25% – by weight and component count – by 2032 from the baseline year of 2023. SB 54 provides interim targets as well for 2027 and 2030 and has stipulated minimum targets in each period for reuse and refill. To support compliance efforts, CAA has recently provided additional guidance on individual source reduction plans to be submitted by each producer, outlining their plan to reduce single use plastic packaging and food service ware. Altogether, there are five pathways for source reduction identified:
- Shifting from single use to reuse/refill
- Eliminating a plastic component altogether
- Shifting to a recyclable or compostable nonplastic material
- Right-sizing (e.g., concentrating, light-weighting, shifting to bulk formats)
- Increasing the use of post-consumer recycled content (PCR)
Changes made to packaging materials and formats in support of California source reduction requirements will also contribute to EPR fee mitigation in other states as well. Design decisions to reduce packaging volumes and switch to more sustainability-advantaged alternatives can achieve both source reduction objectives and eco-modulation benefits – ultimately resulting in lower EPR fees.
3. Lessons learned from early EPR reporting: governance and data matter
As companies enter the next reporting cycle in May, year two is an opportunity to mature processes, strengthen governance and build toward scalable, repeatable compliance.
In year one, the most common errors EY professionals observed stemmed from unclear producer responsibility and misunderstood ownership across selling models (e.g., what constitutes a covered material, how to treat tertiary packaging and how to apply exemptions). Companies should establish a repeatable decision tree for identifying producer responsibility across all selling models (e-commerce, distributor-supplied, private label, contract manufacturing, etc.). In parallel, suppliers should be engaged early, particularly contract manufacturers and packaging vendors, to validate material composition, formats and reporting expectations. This alignment can reduce duplicate reporting, incorrect attribution and unnecessary fee exposure.
EY professionals observed many companies treating EPR as a US-only challenge given the novelty of the inaugural requirements. To support scalability, companies should implement a global EPR governance and operating model. Fragmented ownership generally increases risk as more jurisdictions come into force. Year two should formalize a single, accountable EPR leader who drives cross‑functional, global coordination spanning sustainability, legal, procurement, finance, tax and data teams, supported by defined decision rights, escalation pathways and data controls. Standardized processes for interpreting regulatory updates and reviewing data accuracy can enable consistency, eliminate redundancy and position organizations to adapt quickly as requirements evolve.
Finally, many companies used manual approaches like spreadsheets, which proved to be a major pain point in year one. Moving forward, technology is key. Centralized data repositories, automated material‑level calculations, validation rules, audit trails and system integrations with enterprise resource planning (ERP) are important, along with product lifecycle management (PLM) and packaging spec systems. AI can further support gap‑filling, calculations and reporting efficiency. These investments often reduce errors, accelerate reporting and free teams to focus on strategic mitigation – including eco-modulation, design optimization and scenario planning.
