Sustainability Perspectives: Tackling packaging regulation in 2026

0:07What we've noticed is that regulation is moving from corporate level down to product level. So if we think about you are now this ESPR, the Eco Design for Sustainable Product Regulation, the focus is not on the company's amount of water usage or the company's amount of carbon consumption it's down at the product level it's asking questions about what does this product do where is it sourced how durable is it how do i recycle it um you know where do the ingredients come from it's really really detailed product level information um now the opportunity is then And if you've got all that data, you can then make some fantastic claims and you can improve that product and you can prove it, which means that you can bring your consumers on board.

1:01You can differentiate. You can have that storytelling with your customers.

1:14Darren West: Hello and welcome to another Sustainability Perspectives podcast. My name is Elisabeth Skoda. So packaging regulation has been changing and evolving all over the world and notably in Europe with the PPWR and beyond that, EcoDesign for Sustainable Products Regulation, which is also linked to the requirement for a digital product passport. There is a lot for companies in the packaging industry to be mindful of and to unpack. But yeah, fortunately, there are experts out there who can help with these challenges. And today I've got one such expert with me, and I'm pleased to welcome back Darren West to the podcast.

1:50Darren West: He's global leader for circular economy solutions at SAP. And yeah, together we'll take a look at common struggles companies face, what regulations to look out for and ways to tackle them. And we'll also explore how SAP's AI-driven solutions can help with sustainability regulations. Welcome, Darren. Thank you very much for joining me on the podcast today. Thanks, Elizabeth. It's nice to be back. And yeah, I'm looking forward to the discussion. Yeah, to get us started, broadly, what would you say are the core challenges around packaging regulation and compliance approaches? So if we look at how the regulations have evolved over time, if we look at EPR and now Now, PPWR, as you mentioned, what you're seeing is all these different rules with different definitions and different fees and different metrics.

2:43And that's just EPR. And now we've layered on top of that PPWR where you've got new requirements that you have to measure. Like, you know, for example, you have to find a document of compliance for substances of concern, for example. And there'll be more and more of this over time. So I think it's just the sheer fragmentation and complexity of the data, because often the data that you need to gather to answer these questions of the regulations is scattered around in different places, in different silos in the business. And that becomes a challenge. It's just like sometimes that data exists in your system, but it's in lots of different places and you have to therefore put some effort into pulling it into one place.

3:25or you may have gaps in that data. And so you are talking to your suppliers to pull that data in. And it becomes quite a management challenge. And that's not gone away, it's just got harder, I think. That's the essence of the challenge now for packaged goods.

3:43Darren West: I'd like to zoom in on Europe a little bit. And now that the PPWR has become applicable, how would you judge companies' readiness to deal with the legislation? yeah this was interesting we've been talking about ppwr for some time i think we talked about it last time i was here as well um we noticed there were two distinct camps there were those that were very convinced that ppwr was a big thing and they needed to get ahead of it um and there was another quite large group roughly 50 50 who thought it would go away and it would be postponed and well now the 12th of august has been and gone and we are into uh the time of recording.

4:21It's, you know, we're in September, October time now. So we are saying this has started to bite, right? PPWR is here, it's not going away. And I think a lot of companies are now frantically figuring out, oh, dear, what do I need to do? There is a window of opportunity, because the member states have not yet issued the fine structure. So I think that now is a really good time if you've not started to gather your data properly to really start understanding what data am I missing? And I think you should consider PPWR not only as a problem, but also an opportunity, because what you can do by gathering all this data together is to consolidate a lot of operations.

5:04As I said, it's often spread around different parts of the business, but by pulling it all into one place, you can consolidate, you can get some significant cost savings. We've seen clients who have managed to save something like 70 % in operational costs just by pulling data into one place and being a bit more systematic about how they use data. And then it will also help you to prove that you are compliant against these new regulations when potentially there are fines and bans if you're not able to show that.

5:37Darren West: You mentioned a certain lack of readiness. from your positions what are the main reasons for that and the risks associated with it as well I think the biggest gap is in connecting regulation to operational data so the sorts of things you need to know are like for every single packaging composition that you have your primary secretary and tertiary you need to understand all those materials that are in it where they came from down at the skew level where you're selling to and often the evidence as I said it's held in different places um and that lack of readiness and that not being able to to address that means that you could potentially face a ban or a fine in the future and I mean talking maybe even February 2027 could be the time when those those bans and fines really start to kick in now i think that the first time companies get their head around this i think the eu will give them a warning but they will be looking in the future towards finding a scapegoat who you know if you get warned and then you still don't do something about it i think then then things will start to get quite serious so now is the time really to assess where are my gaps and where are my risks and then pull that data into one place and and what we do in sap for example is if we have solutions that can assess all of that and very quickly highlight where are the areas of most risk that you need to really quickly address.

7:09So you can look for your hotspots. You know, where do I get the most bang for my buck in terms of making a change that will really dramatically improve either my EPR fees or my PPWR compliance?

7:23Darren West: We'll look a bit more into detail a bit later in the podcast. But before we do that, I wanted to also move a bit beyond Europe, where legislation also keeps evolving and changing. And obviously, of course, companies sell into different markets with evolving rules. And yeah, how can companies better deal with that? Yeah, this is interesting. If you reflect how kind of EPR and then now PPWR has evolved over time. So I think EPR for packaging really started out in Europe and then Canada. And then we saw it hit, you know, the North American market with the US states embracing packaging EPR. And of course, it's certain states in Asia and Southeast Asia, Japan, for example, all having EPR as well.

8:09And this is expanding. It's becoming a global thing. But again, the same problems as we talked about a few minutes ago still exist. There are different rules, different metrics, different targets. So it's really hard now to tackle this global issue of EPR compliance and PPWR at a local level. Because most companies don't manufacture packaging, you know, different packaging for different individual country markets. They will do it for a large number of markets. So it makes sense to be able to aggregate all those requirements into one place and then assess the packaging against those requirements.

8:48And that way you can then start to map out, okay, what are the obligations I need to meet in different areas? and again then small changes that you might make could improve your position so so one of the things i often tell people is actually if you do consolidate your data into one place and you do have global systems that can start to analyze this stuff there are opportunities that you could save money so for example through things like eco modulation and the ppwr will enforce this across all of the European states, as an example, then you are able to start to make some changes in your designs that could then save you money because you've triggered something that says, okay, you're now a much more sustainable product.

9:34You're not going to get the sort of fees that you would have for something that's less sustainable. So there's opportunities out there by consolidating and looking holistically across different global markets for you to kind of improve, and this has a bottom-line impact.

9:49Darren West: I'm sure companies like to hear that as well. positive bottom line impact um yes and i wanted to look again beyond the ppw at the eco design for sustainable products regulation which is also linked to the requirements for a digital product passport um and yeah how would you say does this affect the packaging industry yes it's interesting this i've had some clients already start to ask me about this if you think about a piece of packaging with, say, a QR code on it, you might use that. Most brands will use that to tell a story about your brand. So a consumer could scan that QR code and find out a little bit more about the product, or you might do a promotion, right?

10:30You might say, oh, you can get a voucher or you could get, you know, some other freebie from scanning the QR code and building a relationship with the brand. And then on top of that, you would have, you know, recipe information or nutritional information of like what is in this product and it'll tell you all about it. And of course, you could also then do the packaging. So if you have to explain what the packaging is made of, the EPR and the PPWR compliance and all of this stuff, you can do that through the QR code. So there's three different applications right there of having one QR code on your pack that can do multiple things.

11:10And so what we're seeing with the digital product passports and things like ESPR, it's an opportunity for you to consolidate multiple use cases or multiple business problems into one thing. And I think that's really exciting. So the QR code becomes the doorway, if you like, to more interesting things.

11:32Darren West: Linked to that, I also wanted to ask you from your position, what would you say makes a good digital product passport strategy? It's similar to what we were talking about a while ago with EPR and PPWR, is that the ESPR for consumer goods in particular hasn't come out yet. So it's starting with iron and steel. We will see fashion goods coming on board, so textiles, for example, footwear, this kind of stuff. These are starting to be discussed. But already customers are thinking, oh, how can I take advantage of a DPP? because you can use it right now to tell a story and tell something about your brand and have that relationship with your consumers even ahead of the ESPR regulation coming out.

12:17So what makes a good strategy would be start to think about what am I going to need for digital product passports and what is out there already around ESPR because there's quite a lot of material out there. You will find there's certain data fields that you need to start to collect. Maybe you don't have that data. So do a readiness assessment. And, you know, SAP has that kind of service with our partners. But there's many companies out there that will help you with a DPP readiness assessment. And then look at, OK, well, how can I start to collect that data? How can I start to fill those gaps? But think about going beyond compliance.

12:56So think about what else can I do with this QR code? Like I mentioned, you can solve so many business problems through that single QR code. And, yeah, bringing all of what we discussed together, how can AI solutions help tackle the challenges companies face today? yeah ai is it's an emerging topic and you can imagine in technology everybody's talking about ai right now but um what i think we've noticed is um that that regulation is moving from corporate level down to product level so if we think about you are now this espr the Eco Design for Sustainable Product Regulation. The focus is not on the company's amount of water usage or the company's amount of carbon consumption.

13:51It's down at the product level. It's asking questions about what does this product do? Where is it sourced? How durable is it? How do I recycle it? Where do the ingredients come from? It's really, really detailed product level information. now the opportunity is then if you've got all that data you can then make some fantastic claims and you can improve that product and you can prove it which means that you can bring your consumers on board you can differentiate you can have that storytelling with your customers of course if you haven't got the data it becomes a challenge and a lot of companies right now are struggling to get the data this is where ai can really help and we're developing ai tools here at sap which grab data from sap systems of course but also non-sap systems so we pull this data into one place we do the readiness assessments and checks we can then suggest improvements like okay how about you know you want to improve the recyclability or product you should do this and then the designers can go oh that's a great idea yeah i can see how that impacts ppwr or epr or you know recyclability or whatever and then execute that and the data then flows back into the core system and this is what i mean about going beyond compliance it's like dpp is a great thing for understanding all about how your products are built and having that discussion with your customers about how your products are built.

15:25But then if you start to think about, well, now I've got all that data, what useful things can I do with it? That's an even bigger opportunity for you. So what I think will happen with AI is it's really hard to do that manually right now. And what I think will happen with AI is that you can grab that data, you can ask the AI agents and train the AI agents to help you on that journey so that you can now do so much more at the product level and that's really exciting so if you're a packaging engineer or an r &d person or a product design or a marketing person this is going to be really interesting you can do all these things now

16:03Darren West: at the product level yes that sounds like um things are could become even more interesting in the in the future on that note um i wanted to wrap up this podcast by um looking to the future a bit and asking you what developments you foresee in the coming months or even years perhaps, particularly around legislation and AI. I think it'll start to consolidate. So as we just talked about with AI, it gives you the opportunity to actually grab all this data, do something useful with that data at the product level. And that's where the thrust of the regulation is going. The clue, for example, in ESPR is in the name.

16:43It's eco-design. It's right there. It's fairly obvious. This is where the focus element is. But then if you're able to do that for one regulation, you could do it for others. So I can foresee the future evolving quite quickly where you, up until now, are having to make these decisions on a regulation by regulation level. But what if you were to start thinking about your product? You're a product designer or packaging engineer, let's say. And you're going, oh, what if I make this change? What's the impact on EPR and PPWR and ESPR? But then you can go, oh, how does it impact all these other regulations that I need to worry about?

17:23How does it impact, you know, kind of my overall carbon footprint? Or, you know, you can really start to see how AI can all of a sudden answer multiple questions at the same time and optimize for that. So I think it unlocks some really interesting discussions. So it goes beyond sustainability. it goes into almost business strategy you know you you can have agents running around coming up with great ideas that still the humans need to check so i think of it a bit like having hundreds and hundreds of really really smart assistants that you still have to check you know because you know they may not have been around the business long enough but they will come up with some really clever ideas and they will be able to check things for you a lot faster than you would be able to do that manually.

18:13And that will unlock the ability for you to really innovate a lot faster in multiple dimensions. So I see AI as unlocking a lot of use cases simultaneously. It helps you solve for EPR, PPWR, ESPR, but also other regulations as well in the future.

18:31Darren West: great so yeah we'll see how things have developed maybe if we speak again in a year from now thank you very much for being on the podcast there and that was a really interesting conversation thank you and thank you yes and I hope to be back next year I should add that if you'd like to hear more from Darren or indeed from SAP the company will be at the sustainable packaging summit which will take place in Utrecht in the Netherlands from November 10th to November 12th. If you go to our website, packagingeurope.com, you'll find a link to the summit page and you'll be able to get tickets from there.

19:12Darren West: And yeah, like I usually say as well, make sure you subscribe to our podcast so you don't miss out on any of the latest episodes. Thanks very much, Darren. And thank everybody for listening. Goodbye.

19:36Thank you.

20:00Thank you.