The Philippines now requires large companies to take financial and operational responsibility for the plastic waste their products generate, a policy shift that makes it the first country in Southeast Asia to impose penalties on businesses over plastic pollution. Under the Extended Producer Responsibility (EPR) Act of 2022, obliged enterprises must recover or offset a rising share of their plastic packaging footprint each year, with fines reaching up to PHP 20 million for non-compliance. This means that for the first time, the cost of managing plastic waste is being shifted from local governments and taxpayers back to the producers who design and distribute the packaging.
The Department of Environment and Natural Resources (DENR) reported that the country exceeded its 40 percent target for 2025, registering a national diversion rate of 56 percent last year. More than 246 million kilograms of plastic waste had been diverted by 1,017 entities that registered their EPR programs as of January 2026. That figure represents actual waste collected, recycled, upcycled, or co-processed — not just pledges. The Philippines generates roughly 1.7 million metric tons of post-consumer plastic waste annually, according to the World Bank, with about a third ending up in landfills and 35 percent discarded on open land. The EPR law is designed to reverse that trajectory by making the companies that produce plastic packaging pay for its end-of-life management. For a deeper look at how plastic waste disproportionately affects low-income communities, read our analysis of the Philippine pollution crisis and inequity.
How the EPR law shifts responsibility to producers
The core idea behind the EPR Act (Republic Act No. 11898) is straightforward: companies that design, manufacture, and distribute plastic packaging should bear the cost of managing the waste it becomes. Before this law, local government units shouldered most of the burden of collecting and disposing of plastic waste, even though they had no control over how products were packaged. The law requires obliged enterprises to establish EPR programs that cover the full lifecycle of their plastic packaging, from design to recovery. A large enterprise under the law generally means a business whose total assets exceed the medium-enterprise threshold under the MSME framework, commonly referenced as assets above PHP 100 million, excluding land. The law does not ban any plastics, including single-use sachets, but it forces companies to account for every kilogram they put into the market.
What the 2025 compliance data reveals about implementation
The 56 percent diversion rate for 2025 exceeded the statutory target of 40 percent, but the numbers tell a more complicated story than a simple success headline. Of the plastic waste recycled, upcycled, and co-processed in 2025, more than 56 percent were flexible plastics and over 55 percent were rigid plastics, according to the DENR. That distinction matters because flexible plastics — including sachets, pouches, and multi-layer packaging — are commercially unviable for traditional recycling and often end up being burned for energy in a process called co-processing, where the ash is used in cement production. The law allows this as a compliance method, but environmental groups have raised concerns that co-processing does not truly eliminate plastic waste and may release harmful emissions.
Around half of the eligible companies under the law have launched EPR programs so far, meaning over a thousand more must do so or face penalties. The law removed 486,000 tonnes of plastic waste from the environment in 2023, according to Environment Undersecretary Jonas Leones, which topped the first-year target. But the real test will come as the recovery obligations ratchet up from 50 percent in 2025 to 80 percent by 2028. Each step requires companies to either collect more waste or invest in alternative packaging materials, and the infrastructure for both remains limited in many parts of the country. For more context on how the government is pushing companies to fund waste management, see our article on how the Philippines urges companies to fund plastic waste management.
What gets overlooked in the EPR framework
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| Compliance Year | Recovery Target | Penalty for Non-Compliance (First Offense) | Penalty for Missing Target |
|---|---|---|---|
| 2023 | 20% | PHP 5M–10M | Fine or 2x cost of shortfall |
| 2024 | 40% | PHP 10M–15M | Fine or 2x cost of shortfall |
| 2025 | 50% | PHP 15M–20M | Fine or 2x cost of shortfall |
| 2026 | 60% | PHP 15M–20M + permit suspension | Fine or 2x cost of shortfall |
| 2027 | 70% | PHP 15M–20M + permit suspension | Fine or 2x cost of shortfall |
| 2028+ | 80% | PHP 15M–20M + permit suspension | Fine or 2x cost of shortfall |
The plastic credits loophole and what it means for real waste reduction
The law allows companies to outsource their obligations to producer responsibility organisations (PROs), many of which use a mechanism called plastic credits. These credits let a company buy a certificate verifying that a metric ton of plastic has been removed from the environment and either recycled, upcycled, or co-processed. PCX Solutions, one of the country’s largest PROs, offers local credits priced from around US$100 for collection and co-processing of mixed plastics to over US$500 for collection and recycling of ocean-bound PET plastic. While PCX credits cannot be claimed against plastic that is landfilled, they do allow for waste to be burned. This creates a situation where a company can meet its legal obligation without actually reducing the amount of plastic packaging it produces — a distinction that critics say undermines the law’s intent to drive upstream design changes.
Why flexible plastics remain a structural challenge
The law covers flexible plastics including sachets, labels, laminates, and multi-layer packaging, which are among the most common packaging formats in the Philippines due to their low cost and convenience for low-income consumers. But these materials are extremely difficult to recycle because they consist of multiple layers of different plastics and aluminium fused together. Most recycling facilities cannot process them, which is why co-processing has become the default recovery method. The law does not require companies to phase out these hard-to-recycle formats, only to recover a percentage of them. That means a company could theoretically continue producing millions of sachets each year as long as it pays for an equivalent amount to be collected and burned. For a broader look at the country’s waste crisis, read our piece on the Philippines’ plastic waste crisis.
The gap between registered entities and active programs
As of January 2026, 1,017 entities had registered their EPR programs with the EMB, but the DENR has acknowledged that not all registered companies are fully operational. Some have submitted program plans without implementing actual collection or recovery activities. The DENR has identified priority areas for 2026, including improvements in digital monitoring systems, capacity-building within institutions, and the standardization of audit frameworks to enhance transparency. Without robust verification, there is a risk that reported diversion figures overstate actual environmental impact. The law requires independent third-party audits of compliance reports, but the quality and consistency of these audits vary.
What companies need to do to comply with the EPR law
Register your EPR program with the EMB
Every obliged enterprise must register its EPR program with the Environmental Management Bureau. The registration process requires submitting a program plan that details how the company will recover or offset its plastic packaging footprint, including collection methods, partner organisations, and timeline. Companies that fail to register face fines of PHP 5 million to PHP 10 million for a first offense, escalating to PHP 15 million to PHP 20 million and automatic suspension of business permits for a third offense. The registration must be renewed annually and updated whenever the program changes significantly.
Calculate your plastic packaging footprint accurately
The recovery target is calculated based on the weight of plastic packaging a company puts into the market. This includes all covered plastic types: flexible and rigid packaging, plastic bags, polystyrene, sachets, labels, laminates, and multi-layer packaging. Companies need to establish a measurement system that tracks the weight of each packaging type they distribute, which often requires coordination with suppliers and manufacturers. The footprint calculation forms the baseline for determining how much waste must be recovered each year. Underestimating the footprint can lead to non-compliance if the recovery target is not met.
Choose between direct recovery and plastic credits
Companies have two main compliance pathways. They can set up their own collection and recycling programs, partnering with local governments, waste pickers, or recycling facilities. Alternatively, they can purchase plastic credits from accredited PROs like PCX Solutions. The choice involves trade-offs: direct recovery gives companies more control over where and how waste is managed but requires significant operational investment, while plastic credits are simpler to administer but may not result in actual reductions in plastic production. Companies should evaluate which approach aligns with their long-term sustainability goals and budget, keeping in mind that the cost of credits varies by plastic type and recovery method.
Submit audited compliance reports annually
RA 11898 requires obliged enterprises to submit annual compliance reports certified by an independent third-party auditor. The auditor must verify the accuracy of the reported plastic product footprint, recovery data, and overall EPR program compliance. DENR Administrative Order No. 2024-04 introduced specific compliance reporting and audit guidelines. Companies should engage an accredited auditor early in the process to ensure their data collection systems meet audit requirements. Late or inaccurate submissions can trigger penalties even if the recovery target was met. For practical solutions to plastic waste management, explore our guide on fighting plastic pollution in the Philippines.
Frequently asked questions about the EPR law
Does the EPR law apply to small businesses? ▾
What happens if a company misses the recovery target but still registers a program? ▾
Can companies use plastic credits from other countries? ▾
Does co-processing count as recycling under the law? ▾
Are single-use plastic sachets banned under the EPR law? ▾
How does the DENR verify that reported diversion figures are accurate? ▾
What to watch for as the EPR law matures
The EPR law represents a significant shift in how the Philippines manages plastic waste, but its effectiveness will depend on enforcement, verification, and whether companies use the flexibility in the system to genuinely reduce plastic use or simply pay for offsets. The 2025 data shows that the law can drive measurable waste recovery, but the rising targets — 60 percent for 2026, 70 percent for 2027, and 80 percent from 2028 — will test whether the current infrastructure and compliance model can scale. Companies that invest in redesigning packaging to use less plastic or more recyclable materials will be better positioned than those that rely entirely on credits and co-processing. If this was useful, you might also want to read how water pollution connects to the broader environmental challenges facing the Philippines.
Sources
Fighting marine pollution to save the Coral Triangle — Explores how plastic waste from land-based sources damages marine ecosystems and what conservation efforts are underway.
Toxic chemicals and foul water in the Philippines — Examines how industrial and household waste, including plastics, contaminates water sources and affects public health.
DENR cites EPR partners as plastic waste recovery hits 56%. Daily Tribune, 2026.
A Guide to the Extended Producer Responsibility (EPR) Law in the Philippines. Keslio, 2025.
To tackle plastic scourge, Philippines makes companies pay. The Straits Times, 2024.
