Why Extended Producer Responsibility and the Circular Economy Demand Boardroom Action

Radha Curpen, Sharon G.K. Singh, Laurie Wright and Claire Lingley, McMillan LLP

The concept of extended producer responsibility, or EPR, which makes producers responsible for their products along the entire lifecycle, including at the post-consumer stage, is not new. However, as efforts to promote a more circular economy ramp up, public pressure has placed a heightened onus on corporations, and thus their directors, to take responsibility for the products they place into the marketplace and to bear the costs, both economical and environmental, of increased recycling obligations. The potential to mitigate climate change stressors, paired with the argument that such policies prompt better competition and lead to benefits for consumers and broader economic gains, has resulted in policy makers across the globe heeding public calls to put in place measures to support and move towards a more circular economy, one that is based on the reuse and regeneration of materials and products.

Legislation has been enacted around the world, including in Canada, establishing EPR regimes. There is also an emergence of legislative measures, also referred to as “right to repair” legislation, that seek to advance consumer accessibility to repair purchased goods. While separate regulatory frameworks, EPR regimes and “right to repair” legislation form part of the foundation of a circular economy.

Setting the Stage – The Legislative Framework

Canada

In Canada, waste management responsibilities are shared across federal, provincial and territorial governments. At the provincial level, there are a variety of EPR programs in place, aimed at shifting the responsibility and financial cost of recycling certain materials to the producers of such materials.

In British Columbia, the province has implemented an industry-led ERP approach, which requires producers of regulated products to manage their products’ lifecycle, including end-of-life management pursuant to the Recycling Regulation. The BC government has also developed an Extended Producer Responsibility Five-Year Action Plan¹, culminating next year in 2026, to advance recycling and EPR initiatives and build a better way to deal with waste. Key priorities included expanding categories of products to include hybrid and electric vehicle batteries and other battery types, mattresses and foundations, and emerging electronics and more moderately hazardous products. As stated in the Action Plan, a study in 2016 of B.C.’s EPR system found that in a single year, the program recovered “$46 million worth of materials and reduced greenhouse gas emissions by over 200,000 tonnes.”²

In Ontario, the province recently enacted the Blue Box Regulation³, which makes producers fully accountable and financially responsible for the disposal of their recycling of their products and packaging. Under the Blue Box Regulation, a person is considered a “producer”, and thus responsible, if they supply Blue Box material (packaging, paper products or packaging-like products) comprised of paper, glass, metal or plastic, or a combination of these materials to consumers in Ontario. The definition of producer encompasses a wide range of retailer categories. For example, a producer first includes a resident brand holder (retailers who carry their own brand-name product lines). If there is no brand holder in Canada, the obligation will fall to the resident importer. In even further cases, retailers which supply products to customers may be considered a “producer” and thus held responsible.

And to flag, these regulations do have teeth. This past year, Ontario issued two administrative monetary penalties (AMPs) for $340,457.04 and $119,475.18 – the first AMPs issued for non-compliance with the Blue Box Regulation.

In Quebec, there are three key elements of its EPR regime: (i) a regime applicable to containers subject to a deposit; (ii) a regime for other containers, packaging and printed matters; and (ii) a regime applicable to the other categories of products. A significant reform of this regime is currently underway, seeking to harmonize recycling rules and expand the products and entities captured under the current framework.

In terms of the “right to repair”, Bill C-244 “An Act to Amend the Copyright Act”, received Royal Assent on November 2024. Tied into a separate regulatory regime from EPR, i.e., consumer protection legislation, Bill C-244 allows individuals and service providers the right to bypass, remove or deactivate any measures that restrict their ability to repair their technical or electric devices. Motivated in part by the desire to increase competition across industries, Bill C-244, if implemented, may assist in reducing the environmental impact of technological waste and encourage longer device lifecycles.

Provincially, Quebec has similarly amended its consumer protection framework in 2023, becoming the first Canadian province to enact “right to repair” legislation. The amended Consumer Protection Act requires, among other things, merchants and manufacturers to make available, for a reasonable time, the information necessary to maintain and repair goods, replacement of parts, repair services or information required to repair must be available available at a reasonable price, and the installation of replacement parts must not cause irreversible damage to the goods.

European Union

Across the pond, the EU has long-established a comprehensive EPR framework, including the Waste Framework Directive (2008/98/EC)⁴ which serves as the cornerstone of EU’s waste management legislation, the Packaging and Packaging Waste Directive (94/62/EC), which mandates that the producers are responsible for the collection, recycling and disposal of packaging materials, the Waste Electrical and Electronic Equipment Directive (2012/19/EU), which obligates producers to finance the collection, treatment and recycling of electronic waste, and the End-of-Life Vehicles Directive (2000/53/EC), which requires producers to design vehicles with dismantling and recycling in mind.

Most recently, the European Union also recently implemented its “Directive on Repair of Goods”, which came into force on July 30, 2024. Mirroring in some respects Bill C-244, the Directive on Repair of Goods aims to make repair services more accessible, affordable and attractive to consumers, encouraging repair of products over replacement and enhances consumers rights related to product repair. It represents yet another piece in the EU’s strategy towards a circular economy, focusing on extending product lifecycles and encouraging the repair and reuse of goods.

Future Trends

Tackling Fast Fashion

As with many regulatory shifts, we can often look to the EU and the UK as signals for what we can likely expect to see in Canada. When it comes to EPRs, that means tackling the textile industry.

McKinsey & Company reported that in 2020, the fashion industry was responsible for approximately 2.1 billion tonnes of greenhouse gas emissions, accounting for about 4% of the global total.⁵ In 2019, the total textile waste, covering clothing and footwear, home textiles, technical textiles and post-industrial and pre-consumer waste amounted to 12.7 million tonnes in the EU.⁶ Of the collected textile waste studied in the EU, only 32% is recycled within the EU, and around 8% is re-used within the EU, while the rest is exported.⁷

While not a complete solution to the problems posed by certain elements of the fashion industry, there are shifts towards enacting legislation across Europe (and also North America), that directly addresses the textile industry.

Currently, the EU has tabled an amendment to the Waste Framework Directive⁸ which aims to introduce mandatory EPR schemes for textiles, textile-related and footwear products across members states. Targeted directly at the textile industry, the amendments will make textile producers responsible for the costs of textile waste management, requiring producers to pay fees to help fund the textile waste collection costs. The level of those fees will be based on the circularity and environmental performance of textile products, referred to as “eco-modulation” whereby member states can require higher fees for companies with “fast fashion” industrial and commercial practices. In France, the French Circular Economy Law (2020) and the Climate and Resilience Law (2021) impose obligations on producers marketing clothing, footwear and household linens, and require producers of such products to manage the end-of-life phase of these products.

Looking to the United States, in 2024, California enacted the Responsible Textile Recovery Act⁹, establishing the first EPR program for textiles in the United States. This law, which became effective on January 1, 2025, requires producers of apparel and textiles to form and join a producer responsibility organization by July 1, 2026, which will be responsible for developing and implementing a plan for the collection and recycling of textiles, aiming to reduce waste and promote sustainable disposal methods.

Harmonized EPR Programs

In addition to the recent emphasis on textiles, we are also seeing countries move towards harmonizing EPR programs, aiming to create cohesive internal markets and reduce administrative burdens on producers operating in multiple countries.

Admittedly, when it comes to Canada’s market, this is a challenge. As the Canadian Council of Ministers of Environment (“CCME”) acknowledged in their recently published, “Guidance to Facilitate Consistent Extended Producer Policies and Programs for Plastics”¹⁰ jurisdictions in Canda are varied in terms of location, size, infrastructure, priorities and waste policies, and thus may require tailored EPR programs. That said, consistency of definitions, the roles and responsibilities of key players, program accessibility, targets and ways to measure program performance will provide crucial additional benefits for industry players across jurisdictions.

Beyond that, the move to harmonize EPR programs is emblematic of the larger efforts internationally to move towards a more circular economy and highlights the increased focus and responsibilities that regulators and the public are placing on industry.

What Does This Mean for Boards? Key Considerations

While EPR and “right to repair” regimes are only one subset of measures that seek to address hurdles to a critical economy and the impacts of climate change, they have far reaching consequences across a corporation’s operations, supply chain and everyday management, which must be considered by boards going forward if they wish to remain at the forefront of their industry.

Firstly, in the face of our globalized operations, boards must ensure that management understands the impacts of EPR and “right to repair” regimes on the company, including impacts to their clients and vendors along the supply chain. Failure to comprehensively understand and take adequate measures to plan for these requirements could result in material consequences, including consequences related to non-compliance with law, but also the consequences for failure to realize potential business opportunities. This is also especially pertinent given the heightened crackdown on greenwashing across the globe. Boards must be equipped with the knowledge and ensure management can sufficiently substantiate any claims made regarding EPR and repairability of their products.

Boards may also want to consider allocating the capital and the resources necessary to align with emerging EPR and “right to repair” programs and standards, particularly if they wish to remain competitive in global markets. This could include anticipating and adapting to future regulatory trends, such as stricter EPR and “right to repair” requirements.

Second, while harmonization efforts may streamline certain EPR processes, companies may face increased costs associated with meeting standardized EPR requirements, such as redesigning products for recyclability or contributing to waste management funds. Boards should ensure they have the resources in place to address these potential increased costs.

Lastly, EPR programs, “right to repair” and the circular economy present unique opportunities for boards to implement foundational shifts in their supply chain strategies and operational practices. This may come in the form of utilizing sustainable, recyclable or biodegradable materials that meet EPR requirements, implementing processes to minimize waste, enhancing recycling or reuse across the supply chain, as well as dedicating resources to innovate and develop products better suited for durability and repair.

 

¹Ministry of Environment and Climate Change Strategy, “Advancing Recycling in B.C. – Extended Producer Responsibility Five-Year Action Plan”  https://www2.gov.bc.ca/assets/gov/environment/waste-management/recycling/recycle/extended_producer_five_year_action_plan.pdf (“Action Plan”)
²Action Plan, p. 4. 
³Blue Box Regulation, O. Reg. 391/21,  https://www.ontario.ca/laws/regulation/210391 
⁴European Commission, Directive 2008/98/EC, 19 November 2008: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02008L0098-20180705.
⁵McKinsey & Company “Fashion on Climate: How the Fashion Industry Can Urgently Act to Reduce Its Greenhouse Gas Emissions” August 26, 2020: https://www.mckinsey.com/~/media/mckinsey/industries/retail/our%20insights/fashion%20on%20climate/fashion-on-climate-full-report.pdf 
⁶European Commission, Proposal to amend Directive 2008/98/EC on waste: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52023PC0420# (“Proposal to Amend Directive 2008/98/EC”). 
⁷Proposal to Amend Directive 2008/98/EC.
⁸Proposal to Amend Directive 2008/98/EC.
⁹Responsible Textile Recovery Act of 2024 (SB 707). Sacramento, CA: California State Legislature. 
¹⁰Canadian Council of Ministers of the Environment, “Guidance to Facilitate Consistent Extended Producer Responsibility Policies and Programs for Plastics”, https://ccme.ca/en/res/eprguidanceen.pdf