Tackling Free-Riding of EPR Systems in Online Sales

4th March 2019

Our report with the Organisation for Economic Co-operation and Development (OECD) has estimated that up to 10% of the Electronic and Electrical Equipment (EEE) bought on digital marketplaces in Europe avoid contributing to legislation designed to compensate for the environmental burden of these products.

The sellers of products that avoid Extended Producer Responsibility (EPR) fees, otherwise known as ‘free-riders,’ make sales that are estimated to account for 5% to 10% of the online market for EEE. This means that between 460,000 and 920,000 tonnes of goods placed on the market each year are not covered. Environmental schemes that try to address the impact of the waste equipment (WEEE)lose tens, if not hundreds, of millions of euros as a result.

The new study, Extended Producer Responsibility (EPR) and the Impact of Online Sales, compares EEE producer responsibility schemes around the world. The report specifically looks at the different systems in the EU, Switzerland and parts of the US, Canada and Australia. It also identifies the likely extent of free-riding and the various means to minimise it, including existing good practice and potential future policy options.

Mark Hilton, report author and our Head of Sustainable Business, explained:

“While EPR systems have helped to increase collection and recycling rates, as well as generating financial resources to pay for these activities, governments are grappling with a number of issues that hinder their effectiveness and efficiency. One of these issues is free-riding, which the fast expansion of online sales in recent years has been exacerbating. The sellers often have no physical, legal entity in the country where the consumer resides, and are not registered with EPR schemes, avoiding fees and take-back obligations. It’s not just a problem in terms of small overseas sellers as the large multi-seller platforms based in the EU are also not obligated, as technically they neither import nor sell. These are all areas that need addressing if we are to retain effective and fair EPR schemes.”

Peter Börkey, Senior Policy Analyst at the OECD and one of the co-authors of the report explains:

“This report is an important addition to the recently updated OECD Guidance on Extended Producer Responsibility. Free-riding in EPR systems requires urgent action from governments and industry stakeholders as it is threatening the economic viability of these systems. This report provides an overview of the interventions that are currently being discussed by stakeholders.”