Corporate report

Compliance monitoring and enforcement activity 2023

Published 6 December 2022

Applies to England

This report sets out the compliance monitoring activities and successes during 2023 calendar period for the packaging regime.

1. Executive summary

The Environment Agency published its 2023 policy and compliance monitoring targets in the Packaging producer responsibility monitoring plan 2023. During 2023, we monitored:

• all registered producers, totalling 5,461, with 131 audits performed
• all 20 registered schemes, with 2 audits performed
• all of our accredited sites, with 211 audits performed

Using an intelligence led and risk-based approach, we conducted compliance monitoring of all accredited reprocessors and exporters, packaging producers and compliance schemes

This work included, but was not limited to:

• assessing performance and behaviour of businesses to identify potential non-compliance
• assessing and determining applications for accreditation and approval
• assessing and determining registrations
• investigating producer ‘drop offs’ (previously registered producers who do not re-register)
• investigating ‘free-riders’ (unregistered obligated producers)
• validating submissions
• assessing and investigating late or missing submissions
• assessing and analysing packaging recycling notes (PRNs) and packaging export recycling notes (PERNs)
• assessing and analysing waste records and issuing PRNs and PERNs
• assessing and determining certificate and statements of compliance
• gathering intelligence and data trend analysis
• risk profiling
• monitoring businesses that pose a risk to the environment and the packaging regime
• completed site inspections through pre-arranged or unannounced visits.

Where we identified non-compliance, we followed our enforcement and sanctions policy and associated guidelines to determine the appropriate enforcement action. During 2023, our various enforcement interventions have resulted in disrupting approximately 215,709 tonnes of packaging waste, of what we regard illegitimate evidence with an estimated PRN value of £34.4 million.

In 2023 we assessed and accredited 386 applications. All of which were checked by our national processing team before being processed and risk profiled.

Furthermore, in 2023, we:

• suspended 9 accredited operators
• cancelled 6 accreditations
• refused 32 accreditation applications
• caused 17 companies to withdraw their accreditation applications

We accepted a total of 23 enforcement undertaking offers from packaging producers in 2023 to deal with their non-compliant positions. This resulted in £1,387,526 in financial contributions to environmental projects that protect, restore or enhance the natural capital of England.

In 2023:

• the final 2023 UK total recycling obligation was 7,939,063 tonnes (a decrease of 314,162 tonnes from the 2022 final UK obligation)
• all UK schemes met their 2023 recycling obligations (the UK scheme obligation was 7,618,374 tonnes)
• UK packaging direct registrants (354 out of 357) have purchased 99.9% of all their PRNs to offset the UK’s 2023 packaging obligations
• all but 1 direct registrant with the Environment Agency purchased their PRNs to meet their obligations (this obligation deficit was 633 tonnes)
• carry over PRNs increased from 141,012 tonnes into the 2023 obligation year to 376,850 tonnes into 2024.

1.1 Auditing 2022

	2022 actual	2023 actual	Percentage difference
Producers	47	131	+178.7%
Accredited operators	176	211	+19.9%
Compliance schemes	4	2	-50%
Total	227	344	+47.1%

In 2023 focus shifted towards auditing the producers we regulate within Producer Responsibility Regulatory Services. Audit numbers in general increased in 2023 compared to 2022. We identified the need to ensure officers are continually developing their monitoring and auditing skills. We have invested in a dedicated training team which is realising benefits through an increase in efficient and effective monitoring & auditing and allowing us to increase our performance metrics.

2. Monitoring and enforcement

2.1 Monitoring of registered producers

We continued to monitor producers who are registered directly with us and those registered through compliance schemes. Our monitoring programmes are risk based and we do not differentiate between direct registrants and those registered through compliance schemes.

At registration stage, we assessed the submitted information and data from all registered producers. This included comparing their data submissions with those from previous years. We reviewed and validated all direct registration applications to make sure the national publication contains accurate data. We sought explanations and corrections where we deemed submitted data to be inaccurate.

Our officers audited 131 producers in 2023.

Forthcoming regulation change has meant there was a renewed focus on the compliance monitoring of our producers, with 84 more audits conducted this year than in 2022. We envisage that producer audits will continue to rise as we approach the upcoming implementation of the new Extended Producer Responsibility (EPR) for Packaging. Further details of which can be viewed in the EPR consultation government response.

Every year before the end of the compliance period we provide advice and guidance to direct registrants that have not purchased sufficient evidence to meet their obligations. This work supported all but 9 direct registrants meeting their obligations in full for 2023.

2.2 Monitoring of unregistered producers (freeriders and drop offs)

Where we investigated and identified an obligated producer as not being registered (‘free riding’), our initial approach is to bring the producer into compliance. Alongside this we also investigate the severity of the non-compliance and determine the most appropriate enforcement responses. These were in line with our enforcement and sanctions policy. In certain cases, we accepted an enforcement undertaking offer.

An enforcement undertaking is a form of civil sanction. We accepted a total of 23 enforcement undertakings from packaging producers in 2023. This resulted in £1,387,526 in financial contributions to environmental projects, bringing the overall amount paid to environmental projects through enforcement undertakings to over £8,739,000 since 2011.

The largest enforcement undertakings in 2023 were for:

• Encirc Limited at just over £606,981
• Puig UK Limited at £208,039
• Lacka Foods Limited at over £133,127
• Addo Food Group Limited at £104,000

After the registration deadline in April 2023, we identified that 765 businesses (in England) that had not registered again for the 2023 period.

We worked alongside packaging producer compliance schemes to contact these businesses and bring them into compliance. As a result of this work, 709 businesses either re-registered or were identified as no longer being obligated with 31 Warning Letters issued to companies for failing to register by the regulatory deadline.

The remaining 56 businesses had a combined obligation in 2022 of 12,529 tonnes. This represents 0.002% of the total UK obligation. Where businesses failed to register, the Environment Agency will consider its enforcement options in line with our enforcement and sanctions policy.

2.3 Monitoring of compliance schemes

In 2023 there were 20 approved packaging compliance schemes registered with the Environment Agency. As a minimum, we monitored all approved compliance schemes by:

• validating, assessing, and analysing information and data submitted at registration, and after resubmissions
• assessing and investigating late or missing submissions
• monitoring PRNs and PERNs
• assessing statements of compliance
• risk profiling

We conducted quarterly desktop monitoring of all 20 compliance schemes throughout 2023, which also involved a discussion about their compliance position and ability to meet their recycling obligations (where appropriate). We audited 2 packaging compliance schemes during 2023. All our approved schemes submitted a statement of compliance and met their obligations for the 2023 compliance period.

2.4 Monitoring of accredited reprocessors and exporters

The Environment Agency accredits and monitors the activities of reprocessors and exporters of UK packaging waste. This activity involves an initial site inspection to determine the application and compliance monitoring activity during the period of accreditation. Accreditations must be renewed each year.

Our monitoring is intelligence led and risk based and can be carried out by desk-based activity, remote inspections or site visits.

During 2023 we monitored operators for compliance through site inspections or remote auditing resulting in 9 suspensions and 21 cancellations. This is a 25% increase in suspensions and cancellations compared with 2022.

We communicated these decisions to industry. This was to inform them:

• of reduced availability of evidence onto the market
• to send a deterrent message on the consequences of non-compliance

Our priority is to identify non-compliance, including possible fraudulent activity, and encourage compliance. This enforcement activity has helped to inform decisions on future applications for accreditation.

In 2023 we have targeted high value materials and disrupted an estimated PRN value of £34.4 million. This equates to a disrupted tonnage of 215,709 tonnes.

2.5 Successes

We refused applications for accreditation from 20 companies in 2023, either due to their applications being refused, or our actions causing these companies to withdraw their applications.

We had further success with the compliance monitoring of accredited reprocessors and exporters undertaken by the Environment Agency and our teams. This resulted in actions taken with the support of Producer Responsibility Regulatory Services, including:

• cancelling 2 exporter accreditations and 2 reprocessor accreditations where either the seriousness or type of breach meant they could not be brought back into compliance
• 39 suspension notices issued for breaches of conditions. Of these 21 resulted in an operator being suspended. 3 were later reinstated to the regime having fulfilled the conditions of the notice. Sending 3 warning letters resulting from offences identified. 54 suspension notices were issued for failure to submit quarterly returns or revenue report. Notices give 4 days to submit before suspension – only 1 of these ended up resulting in suspension
• reducing the number of businesses failing to re-register after the April deadline from 591 to 25

Through improvement of processes, we have been able to act on non-compliance promptly.

Environment Agency investigators are undertaking a number of high value investigations relating to PERN fraud. We have received additional resourcing allowing increased capacity, a focus on criminality linked to organised crime, and greater collaboration with law enforcement partners such as the Police and the National Crime Agency.

In working partnership with Police forces throughout the country, 14 persons have been arrested during 2023 in connection with PERN fraud and remain under investigation. Investigations are focussed on those committing high value fraud, their professional enablers and money launderers.

We worked closely with internal lawyers and external Counsel and hand in hand with a dedicated team of accredited financial investigators and money laundering subject matter experts. Proactive financial disruptions are one effective tool in the fight against organised crime, and over £650,000 has been secured by account freezing orders and restraints during this period.

Anyone with information about PERN fraud or those involved in the laundering of the proceeds of crime is encouraged to contact prores_investigationteam@environment-agency.gov.uk or Crimestoppers.