On 15 August 2024, the Environment Agency announced that Budweiser Budvar UK Ltd (“Budweiser Budvar”) had agreed to make a charitable contribution of £414,003.54 by way of an Enforcement Undertaking following its failure to comply with the Producer Responsibility Obligations (Packaging Waste) Regulations 2007 (as amended) (the “Regulations”). 

The Enforcement Undertaking was offered by the company after the Environment Agency (“EA”) found Budweiser Budvar had omitted to register as a producer of packaging waste for a period spanning 18 years, between 2004 and 2021. The EA’s investigation revealed that the company had not taken the necessary steps to ensure the recovery and recycling of its packaging waste, as mandated by the Regulations.

The Regulations require businesses which handle a certain amount of packaging to register with an approved compliance scheme, report their packaging data, and finance the recovery and recycling of packaging waste. Complexities can arise for companies seeking to navigate their various duties in respect of issues such as determining their ‘relevant function’ as a producer, or where members of a company’s group carrying out certain activities under the Regulations reside outside of the UK. Failure to comply with the Regulations carries criminal connotations and liability for a fine, although the EA may choose to impose civil sanctions, such as Fixed or Variable Monetary Penalties (which Burges Salmon has previously discussed in its Environment Matters Podcast) instead.

In these circumstances, the EA was prepared to accept an Enforcement Undertaking in lieu of a potential prosecution. An Enforcement Undertaking is a legally-binding, voluntary agreement proposed by a company (or an individual) in the circumstances where the EA has reasonable cause to suspect that an environmental offence has occurred. It is one of the civil sanctions available to the EA for a range of environmental offences and allows an offender to put right the effects of their non-compliance and any impact (if applicable) on third parties.  The value of the contribution made by Budweiser Budvar to the environmental charity Keep Britain Tidy equated to 130% of the financial gain made by the company by, in the EA’s words, ‘(not paying) its rightful share towards the recycling of its packaging’. 

This case demonstrates that the ramifications of an company’s ignorance as to its respective obligations – or simply getting it wrong - can be severe. Whilst the financial value of the undertaking represented the sums saved by the company in not recycling or recovering packaging waste over a period of 18 years (plus a penalty of 30% and EA costs), increased public and regulator scrutiny of the amount of packaging waste generated by businesses, coupled with the impending Extended Producer Responsibility (“EPR”) regime in 2025 (which makes changes to the existing packaging regulations and makes packaging producers responsible for the full net cost of managing the packaging they place on the market) means that a business’s failure to comply with the applicable regulatory obligations could soon add up. It is therefore crucial that a company understands its regulatory obligations in order to avoid a similar situation to Budweiser Budvar.

If you are concerned about the implications of the Regulations or the forthcoming EPR to your business, please contact Michael Barlow or the wider environmental team.

Written by Philippa Shepherd.