EPR: From legal obligations to competitive advantages in a company's ESG strategy.

Extended producer responsibility (EPR) is gradually becoming an important piece in a company's ESG practice strategy. 

1. Why is EPR compliance important for businesses?  

Proactive implementation of EPR delivers value far beyond simply complying with legal regulations. Specifically, businesses will receive the following core benefits: 

• Risk Mitigation:  

Avoiding administrative penalties and financial risks due to non-compliance with regulations. Administrative penalties related to EPR compliance range from 100 million to potentially up to 2 billion.  

• Opening up to international markets:  

Compliance with Environmental Protection Regulations (EPRs) and excellent ESG practices are the "golden ticket" that helps businesses overcome technical barriers to enter major markets such as the EU, Japan, South Korea, and Australia. These markets increasingly demand transparency throughout the entire supply chain and require businesses to demonstrate responsibility for their products, even after they have become waste. Good EPR implementation demonstrates a company's willingness to meet stringent environmental standards, thereby creating a significant competitive advantage over competitors who have not yet transitioned to green. 

• ERP is a core tool for transitioning from a traditional production model to a sustainable production model. 

Instead of burdening the state and society with waste disposal costs, the Environmental Protection Plan (EPR) shifts this responsibility to manufacturers, forcing them to optimize material usage. This encourages businesses to improve product design for easier recycling and to apply digitalization to scientifically manage materials and packaging, helping to reduce emissions and efficiently utilize renewable resources. 

In the ESG roadmap, EPR plays a crucial role, directly contributing to pillar E (Environment), helping businesses address issues related to climate change, pollution, water resource protection, and biodiversity. 

2. Solutions for implementing EPR compliance 

According to Decree 08/2022/ND-CP, amended and supplemented by Decree 05/2025/ND-CP, businesses have three approaches to comply with EPR, which are: 

• Self-organized recycling 

• Hire or authorize a recycling company. 

• Making financial contributions to the Vietnam Environmental Protection Fund. 

• Self-organized recycling  

This is a business model where companies directly invest in machinery, equipment, and organize the operation of a collection and recycling system for the very products or packaging they bring to market. 

Suitable candidates: Large-scale businesses with the capacity or existing warehousing infrastructure and machinery for recycling; and with a large and stable volume of goods and packaging requiring recycling. 

Advantages: When the amount of packaging released to the market is large enough, operating its own collection and recycling system allows businesses to tightly control data, proactively manage the recycling chain, and optimize costs in the long term. At the same time, this model demonstrates a high level of commitment from the business to the circular economy and sustainable development, thereby increasing credibility and creating an advantage in ESG assessments by investors and international partners. 

Disadvantages: Businesses must invest significant initial costs in infrastructure, machinery, collection systems, and accompanying logistics. Furthermore, operating a recycling system requires complex technical processes, high-level management expertise, and compliance with numerous legal and environmental requirements. 

• Hire or authorize a third party (Option "Cooperation") 

This is a business model where the company does not directly carry out recycling activities but instead contracts with professional recycling units or authorizes intermediary organizations (PROs) to perform recycling obligations on its behalf. 

Suitable for: Businesses with large product or packaging volumes but wishing to focus resources on core business activities; or businesses with significant packaging volumes but lacking the need and capacity to invest in a recycling system. 

Advantages: Businesses can leverage the experience, technology, and existing collection and recycling networks of service providers, thereby reducing the burden of operational management, personnel, and initial infrastructure investment costs. This model allows businesses to implement recycling obligations more flexibly and quickly. 

Disadvantages: Businesses need to choose reputable and capable recycling partners and are dependent on service fees and fluctuations in the recycling market. Controlling data and maintaining transparency in the recycling process can also be more challenging compared to an in-house model. 

• Make a financial contribution to the Environmental Protection Fund (Option "Pay a fee") 

This is a form of business fulfilling its recycling obligations by contributing financially to the Vietnam Environmental Protection Fund according to the recycling cost (Fs) rates stipulated by the State, instead of directly organizing collection and recycling activities. 

Suitable for: Small and medium-sized enterprises (SMEs) or entities with a small volume of products and packaging requiring recycling; businesses lacking sufficient human resources, infrastructure, or expertise to organize their own collection and recycling system. 

Advantages: This is the simplest method in terms of procedure, allowing businesses to quickly fulfill their legal obligations without directly organizing a waste collection, transportation, and recycling system. This saves businesses management time and allows them to focus resources on their core business activities. 

Disadvantages: The cost of contributing to recycling may be higher compared to organizing recycling in-house or hiring a service provider, especially for businesses with large packaging volumes. Furthermore, this option does not create much added value for the circular economy strategy, ESG, or sustainable brand building of the business. 

In the context of increasing demands for sustainable development, Enterprise Resource Planning (EPR) is not only a compliance obligation but also an opportunity for businesses to restructure their production models towards a circular economy. Choosing the right EPR implementation method will help businesses ensure legal compliance while optimizing costs and enhancing their reputation with partners and investors. In the long term, businesses that proactively practice EPR will have a significant advantage in their green transformation journey and improve their competitiveness in the international market.