Should companies bear the cost of cleaning up their plastic waste?

In 2023, the Philippines became the first country in Southeast Asia to impose penalties on companies over plastic waste, requiring large businesses to cover an initial 20 percent of their plastic packaging footprint. That figure is set to rise to 80 percent by 2028. For a nation that generates an estimated 1.7 million metric tons of post-consumer plastic waste annually, according to the World Bank, the law represents a significant shift in who pays for the mess — and it has already removed nearly half a million tons of waste from the environment in its first year.

These numbers frame a larger question that extends well beyond the Philippines: should companies bear the cost of cleaning up their own plastic waste, or should taxpayers and local governments continue to foot the bill? The country’s Extended Producer Responsibility (EPR) law offers a real-world test case, complete with early successes, notable complications, and lessons for other nations considering similar measures. You can read more about the broader context of urban pollution challenges in Metro Manila to see how waste management fits into the bigger picture of environmental policy.

How the EPR law shifts responsibility from taxpayers to producers

The core idea behind Extended Producer Responsibility is straightforward: the companies that design, manufacture, and sell plastic packaging should also be responsible for what happens to it after the consumer is done. Before the EPR Act, the cost of collecting, sorting, and disposing of plastic waste fell almost entirely on local governments and, by extension, taxpayers. The law, officially Republic Act No. 11898, mandates that enterprises with assets exceeding PHP 100 million develop and implement programmes for the efficient recovery, recycling, and disposal of plastic packaging waste. This includes everything from flexible sachets and labels to rigid beverage containers and polystyrene products.

What makes the Philippine law notable is that it does not ban any plastics — including the ubiquitous single-use sachets that are commercially unviable for recycling. Instead, it forces companies to pay for the collection and processing of those very materials. The law removed 486,000 tonnes of plastic waste from the environment in 2023, exceeding its first-year target. Environment Undersecretary Jonas Leones described it as part of a broader strategy to reduce the environmental impact of plastic pollution, particularly given the Philippines’ status as one of the largest contributors to marine plastic waste globally.

The real-world consequences of plastic pollution and who currently pays

The health and economic costs of plastic waste are not abstract. The Endocrine Society found that the health cost burden from endocrine disrupting chemicals (EDCs) found in most plastic — including food packaging — is over $250 billion a year. These chemicals, which include PFAS, phthalates, most bisphenols, formaldehyde, mercury, and lead, have been linked to infertility, cancers, obesity, diabetes, cognitive problems, autism, and ADHD. Micro- and nano-plastics in human bodies are correlated with pancreatic and prostate cancers, dementia, and heart attacks.

In the Philippines, the situation is particularly acute. Prior to the EPR Act, the country was identified as one of the world’s largest contributors to marine plastic litter, with an estimated 2.7 million tons of plastic waste generated annually, according to data cited by Arowana Impact Capital. Approximately 20 percent of this waste leaked into the ocean. Existing waste management policies, such as the Ecological Solid Waste Management Act of 2000, faced implementation challenges due to inadequate infrastructure, insufficient funding, and limited public awareness. The EPR law is designed to channel private money into exactly these gaps. For a closer look at how marine pollution affects the region’s biodiversity, see our coverage of efforts to save the Coral Triangle from plastic waste.

The economic argument for shifting costs to producers is also compelling at the local government level. In New York, for example, supporters of similar legislation estimate that the state’s Packaging Reduction and Recycling Infrastructure Act (PRRIA) would save municipalities $46 million over the first 10 years by reducing the volume of waste needing disposal. The logic is the same everywhere: when companies internalise the cost of waste management, they have a financial incentive to use less packaging and design for recyclability.

What gets overlooked in the debate over producer responsibility

→ Scroll right to see all columns

The plastic credits mechanism and its limitations

One of the most innovative — and controversial — features of the Philippine EPR law is the plastic credits system. Companies can outsource their obligations to producer responsibility organisations, many of which use credits to verify that a metric ton of plastic has been removed from the environment and either recycled, upcycled, or “co-processed” — burned for energy. PCX Solutions, one of the country’s biggest players, offers local credits priced at around US$100 for collection and co-processing of mixed plastics to over US$500 for collection and recycling of ocean-bound PET plastic. The model is intended to channel money into the underfunded waste collection sector and encourage collection of plastic that is commercially unviable for recycling.

But the system has a significant catch. While PCX credits cannot be claimed against plastic that is landfilled, they do allow for waste to be burnt, with the ash then used for cement. Environment Undersecretary Leones acknowledged this limitation: “It’s still linear, not circular, because you’re destroying the plastic and you’re still generating virgin plastic.” In other words, the credits fund waste removal but do not necessarily reduce the production of new plastic. This is a crucial distinction that often gets lost in public discussions about EPR.

Upstream reduction remains the harder challenge

PCX Solutions managing director Stefanie Beitien put it bluntly: “Upstream reduction is not really easy. There is no procurement department in the world that accepts a 20 per cent higher packaging price just because it’s the right thing to do.” The EPR law does not ban any plastics, including the popular but difficult-to-recover single-use sachets common in the Philippines. This means companies can continue producing hard-to-recycle packaging as long as they pay for its collection and processing. The law’s focus on weight-based targets also creates a perverse incentive: companies may switch to heavier packaging materials to meet recovery targets more easily, rather than reducing overall plastic use. For more on how businesses are approaching these challenges, see our piece on innovative green solutions being tested in the Philippines.

The cost pass-through debate

A common argument against EPR laws is that companies will simply pass the cost on to consumers through higher prices. Consumer Reports, in a memo supporting New York’s PRRIA, pushed back on this assumption, calling it “a cynical one.” The organisation noted that large producers with over $5 million in revenue — the only companies affected by the law — already repackage their products regularly and that these are simply costs of doing business. Moreover, the argument goes, companies will save money by using less material, offsetting some of the compliance costs. In the Philippines, Mondelez has opted to jump directly to offsetting 100 percent of its plastic footprint. “It costs company budgets… but that’s really something that we just said we would commit to do for the environment,” Mondelez Philippines corporate and government affairs official Caitlin Punzalan told AFP.

What companies and consumers need to know about EPR compliance

Understanding your obligations under the law

For businesses with assets exceeding PHP 100 million, the first step is registering an EPR programme with the Department of Environment and Natural Resources (DENR). The programme must outline how the company will recover and recycle a percentage of its plastic packaging weight, starting at 20 percent and increasing incrementally to 80 percent by 2028. Companies must also submit annual compliance reports audited by independent third parties. Failure to register by the end of the year can result in fines of up to 20 million pesos and even revocation of operating licences. As of May 2024, 917 companies had registered, contributing to the diversion of approximately 124,986 tons of plastic packaging waste — meeting the 20 percent target for 2023.

Choosing between direct action and plastic credits

Companies have two main paths to compliance. They can invest directly in their own collection and recycling infrastructure, or they can purchase plastic credits from accredited producer responsibility organisations like PCX Solutions. The credit route is often cheaper and faster, but it comes with the reputational risk of funding incineration rather than true circularity. Direct investment gives companies more control over how their waste is handled but requires significant upfront capital. The choice depends on a company’s budget, sustainability goals, and tolerance for scrutiny.

What consumers should watch for

For individual consumers, the EPR law does not impose direct obligations, but it does change the landscape. The law is intended to reduce the amount of plastic waste that ends up in streets, rivers, and oceans. In practice, this means better collection services in some areas and potentially higher prices for packaged goods as companies pass on compliance costs. Consumers can support the system by properly segregating waste and participating in local collection programmes. The law also calls for the elimination of the 12 worst chemical offenders in packaging, including PFAS, phthalates, and bisphenols, which means safer packaging over time. For a broader perspective on how individual actions fit into national policy, read about local heroes combatting pollution across the Philippines.

Future-phase developments to watch

The EPR law’s targets ramp up significantly in the coming years. The 80 percent recovery rate ceiling by 2028 will require a massive scaling of infrastructure and participation. The DENR is expected to strengthen enforcement mechanisms, and there is ongoing discussion about extending obligations to smaller enterprises. Internationally, the Philippines’ experiment is being watched closely as countries negotiate a global treaty to tackle plastic pollution. The success or failure of the Philippine model could influence how other nations design their own EPR systems.

Frequently asked questions about plastic waste responsibility

What the Philippine experiment means for the future of plastic waste

The Philippines’ EPR law is still in its early stages, and its long-term impact remains uncertain. What is clear is that the law has already shifted the conversation from whether companies should pay for plastic waste to how they should pay. The plastic credits system has channelled money into underfunded waste collection sectors and supported informal waste workers, but it has also raised questions about whether burning plastic for energy counts as a genuine solution. The law’s success will ultimately depend on enforcement, infrastructure investment, and whether companies can be persuaded to reduce plastic use at the source rather than simply paying for cleanup. If this was useful, you might also want to read how urban growth is testing sustainability efforts in Philippine cities.

Sources

Paradise at risk: tourism’s environmental toll in the Philippines — Examines how tourism contributes to plastic waste and what destinations are doing about it.

To tackle plastic scourge, Philippines makes companies pay. The Straits Times, 2024.

Large producers, not taxpayers, should bear the cost of packaging waste. Syracuse.com, 2026.

Beyond plastic: how the Philippines EPR law is reshaping corporate waste responsibility. Arowana Impact Capital, 2024.