Sustainable packaging: how retailers can cut waste, cut costs and meet new regulations

Packaging is no longer just a cost line or a brand surface. For retailers, it is now a regulated material with pricing in place for how it is designed, used and disposed of.

The numbers show the scale of packaging waste being generated. The UK alone generated roughly 12.7 million tonnes of packaging waste in 2024, of which only around 8.2 million tonnes were recycled (Defra, UK statistics on waste). Across the EU market, 79.7 million tonnes of packaging waste were generated in 2023, which works out to around 178 kg per person (Eurostat, 2025).

Sustainable packaging is how retailers turn that pressure into a competitive advantage. When done well, it can reduce waste, lower compliance fees, and even improve margins, all while supporting the move to a circular economy.

In this blog, we explain what sustainable packaging means, why it matters for retailers right now, and what practical steps procurement and sustainability teams can take to reduce waste, cut costs and stay compliant.

Let’s dive in.

What is sustainable packaging?

Sustainable packaging is packaging designed to use fewer resources, create less waste, and stay in circulation for as long as possible.

It covers the full lifecycle. From the materials used, how much is used, how easily it can be recycled or reused, and what happens to it at the end of life.

When it comes to sustainable packaging, you will often hear these three related terms used side by side:

• Eco-friendly packaging: describes the material itself, for example, recycled, recyclable or lower-carbon options.
• Circular packaging: the system around it, where packaging is reused, recycled and fed back into the supply rather than thrown away.
• And sustainable packaging: the broadest of the three, combining material choices and circular design with measurable environmental performance.

The shared goal is simple. Keep materials in use and out of landfill, in line with circular economy principles. With consumers more eco-conscious than ever, businesses must ensure any green claims being made against packaging are legitimate. For more guidance on the Green Claims Code, please visit The Green Claims Code website.

Why sustainable packaging matters for retailers now

For retailers, sustainable packaging has moved from a moral choice to a commercial and regulatory one. Three drivers are playing a key role in adoption:

The cost driver: packaging Extended Producer Responsibility

The biggest change is who pays. Under Extended Producer Responsibility (EPR) for packaging, producers now cover the full cost of managing household packaging waste in the UK. Under the old system, producers funded only around a tenth of that cost (House of Lords Library).

In the first year of the scheme, fees were flat base rates per tonne of material. For example, £423 per tonne for plastic and £192 per tonne for glass (House of Commons Library).

From the 2026 to 2027 financial year, those fees are modulated by recyclability using a red, amber and green (RAG) rating. More recyclable packaging attracts lower fees. Hard-to-recycle formats and packaging with missing data will cost producers more (House of Commons Library). In short, the better your packaging, the smaller your bill.

The EU driver: Packaging and Packaging Waste Regulation

If you sell into the EU, the Packaging and Packaging Waste Regulation (PPWR) applies to your packaging too. It came into force in February 2025 and applies from 12^th August 2026.

The main goal is that all packaging placed on the EU market should be recyclable or reusable by 2030, with phased recyclability grades and recycled content targets to follow. It applies directly across all 27 member states, including to packaging imported from the UK.

The resource driver

There is a bigger picture behind the regulation. The world is using resources faster than the planet can renew them, a point marked each year by Earth Overshoot Day. UK households alone throw away an estimated 90 billion pieces of plastic packaging a year (House of Lords Library).

Most of that material never returns to the economy. Closing that circularity gap is exactly what sustainable packaging is built to do.

How retailers can cut packaging waste and costs

The most effective packaging strategies follow the waste hierarchy: reduce first, then reuse, then recycle. Here is a practical, step-by-step approach for procurement and sustainability teams to consider:

Step 1: Build accurate and manageable packaging data

You can’t manage what you can’t measure. Map every packaging format you place on the market, by material, weight and recyclability. Good data is now a financial advantage because, under EPR, missing or incomplete data defaults to the highest fee band.

Step 2: Eliminate and lightweight

The most cost-effective packaging is the packaging you never use. Remove unnecessary layers, right-size boxes to reduce void fill, and lighten where you can. Because EPR fees are charged per tonne, reducing weight directly reduces cost.

Step 3: Design for recyclability

Switch to materials that are easy to recycle within existing UK and EU systems, and avoid hard-to-recycle composites and problem polymers.

Under fee modulation, recyclable formats pay less, so designing for recycling pays back twice: in lower fees and lower environmental impact.

A good starting point is the established design-for-recyclability guidance published by the UK and European industry bodies. For plastics, RECOUP’s Recyclability by Design is the UK reference, updated annually. For paper and board, the Confederation of Paper Industries’ Design for Recyclability Guidelines set out what the UK paper industry considers easily recyclable, supported by its Papercycle assessment tool. For fibre-based packaging more broadly, the 4evergreen alliance’s Circularity by Design guideline gives pan-European recommendations.

One important caveat. This guidance is written to help packaging get recycled in real mills and sorting systems, not to calculate fees. It does not always map one-to-one to the Recyclability Assessment Methodology (RAM), which is the methodology PackUK uses to set a packaging item’s recyclability rating and therefore its modulated fee. A format can follow good design practice and still land differently under the RAM. The practical approach is to use the design guidance to engineer out problem materials first, then test the resulting choices against the RAM (and tools such as CPI’s Papercycle for fibre) to confirm the fee impact before committing.

This is where cost-modelling earns its place. Modelling how specific material and design choices affect EPR fees under eco-modulation lets teams compare options against both recyclability and cost before they commit, rather than discovering the fee consequence after the format is locked in (Reconomy Textile EPR Strategy 2030).

Step 4: Increase recycled content

Using recycled materials reduces reliance on virgin resources and helps meet upcoming recycled-content targets under the PPWR. It also strengthens the sustainability claims you can make to increasingly conscious customers.

Step 5: Introduce reuse and refill where it fits

For some categories, reusable and refillable packaging removes single-use waste entirely. PPWR is phasing in reuse obligations for certain formats, so testing reuse models now puts you ahead of the curve.

Step 6: Set up take-back and closed-loop recycling

Take-back schemes recover packaging and feed it back into the supply. They reduce waste, support customer loyalty and can form part of a wider circular strategy that keeps valuable materials in use. Take-back systems can also be used to improve Recyclability Assessment Methodology ratings, thus reducing costs Recyclability assessment methodology: stages of recyclability and definitions – GOV.UK

Our latest research into circular take-back found consistent improvements in diversion rates, cost efficiency and compliance outcomes for businesses that made the switch (Reconomy, Closing the loop on B2B textiles).

What Reconomy’s research shows about circular packaging

Our research into circular take-back points to a clear commercial case, not just an environmental one. Across material streams, the same four benefits show up consistently for businesses that move away from a linear models to circular ones.

These are:

• Lower costs: Diverting material from general waste reduces disposal costs, and lighter, more recyclable packaging lowers EPR fees.
• Stronger ESG reporting: Circular models generate the diversion and recovery metrics that underpin credible ESG and sustainability reporting.
• Reduced risk: A clear compliance position protects against regulatory penalties and reputational exposure as the rules tighten.
• Operational clarity: Scheduled collections and dedicated infrastructure remove complexity from your procurement and operations teams.

This view is grounded in scale. Here at Reconomy, we manage environmental compliance data for more than 58 million product lines across packaging, batteries, electronics and textiles, and in 2025, managed almost 8.5 million tonnes of material, reusing or recycling more than 6.8 million tonnes of it (Reconomy Sustainability Report 2025).

The headline for retailers is simple: getting circular now means getting compliant now. The packaging decisions that lower your environmental impact are the same ones that lower your EPR fees and reduce your regulatory risk.

Turning packaging compliance into competitive advantage

Sustainable packaging works best as part of a joined-up circular strategy, not a one-off project. That means combining packaging design, accurate data, compliance reporting and end-of-life recovery into one single approach.

This is where Reconomy and its specialist Comply Loop brands support retailers. Reconomy specialist brand Valpak, in particular, is the UK’s first and largest packaging compliance scheme, helping businesses manage EPR data, navigate PPWR and turn regulatory obligations into a clear, costed plan. The aim is straightforward: help retailers think more circular, reduce waste, and protect margin as the rules evolve.

Sustainable packaging is no longer the responsible option alone. It is the commercial one. Explore how a circular economy approach can help your business cut waste, cut costs, and stay ahead of regulation.