Sustainability Fundamentals 201
Understanding EPR Credits and ESG Compliance in India: A Guide for Sustainable Businesses
In a world of constant change, that is increasingly defined by sustainability, Indian businesses are evolving every day to meet the moment. At the centre of this shift are two pivotal frameworks – Extended Producer Responsibility (EPR) Credits and Environmental, Social and Governance (ESG) Compliance.
These frameworks not only play a key role in protecting the environment but also offer tangible benefits to businesses that are committed to responsible practices. In this blog, we will be exploring these concepts in detail and how businesses like yours can navigate them effectively.
What are EPR Credits?
Extended Producer Responsibility (EPR) is a policy approach that holds producers accountable for the entire lifecycle of their products, especially the post-consumer stage.
EPR credits serve as a quantifiable measure of a producer’s commitment to managing waste generated by their products. By earning these credits, businesses show their compliance with environmental regulations and their contribution to a circular economy.
These credits also have a key role to play in creating a more sustainable product lifecycle, by shifting the responsibility for managing waste from government authorities to private industries.
The EPR Credit System Explained
The EPR Credit Model, implemented by the Central Pollution Control Board (CPCB) provides the producers with flexibility in fulfilling their environmental obligations. This system acknowledges a practical challenge faced by the producer, i.e., products often travel through various regions during their lifecycle, making it impractical for the original producer to collect and dispose of every item that they manufacture.
The credit system came as a progressive wave allowing producers to exchange EPR certificates with other producers if their own EPR liabilities are already fulfilled. Let us understand this better with the help of an example – If company A has collected and recycled more plastic waste than required by their EPR obligation, then they can sell the excess credits to company B, which may be struggling to meet its targets.
Types of EPR Credits – Source
· EPR Credits for Plastic Waste
Covered Waste Materials – Plastic Packaging and Plastic Sheets
· EPR Credits for E-Waste
Covered Waste Materials – Electrical and Electronic Equipment
· EPR Credits for Battery Waste
Covered Waste Materials – Used, Disposed, and other Batteries not for consumer use, along with their spares, parts, and components
· EPR Credits for Tyre Waste
Covered Waste Materials – Tyres, Tubes, and Flaps which are no longer used for their intended purpose.
Key Features of EPR Credits - Source
The EPR credits come with specific characteristics that businesses should keep in mind –
· Validity Period – Typically, the EPR credits remain valid for two years from the end of the financial year in which they were generated.
· Denomination – Credits are usually available in the denominations of 100, 200, 500, and 1000 kilograms (kgs) or in other amounts distinctly specified by the CPCB.
· Unique Identification – Each EPR credit has a unique number containing details like the generation year, product code, recycler code, and a unique identifier for tracking purposes.
ESG Compliance – Integrating EPR into Broader Sustainability Goals
Environmental, Social, and Governance (ESG) compliance has now become a benchmark for sustainable business practices in the country. In India, the Securities and Exchange Board of India (SEBI) has incorporated green credits into the Business Responsibility and Sustainability Reporting (BRSR) framework. This interconnection ensures that all the environmental efforts undertaken by businesses, including EPR initiatives, are aligned with the global sustainability standards and transparently reported.
The Evolution of ESG Reporting in India – Source
India’s journey towards formalized ESG reporting began over a decade ago and has steadily progressed towards comprehensive requirements. Let us take a broader look at how it has evolved over the years –
In 2009, the Ministry of Corporate Affairs issued voluntary guidelines on Corporate Social Responsibility.
In 2011, National Voluntary Guidelines on Social, Environmental, and Economic Responsibilities of Business were introduced.
In 2012, SEBI mandated the top 100 listed companies to file for Business Responsibility Reports.
By 2019, this requirement expanded to the top 1000 companies by market capitalization.
In 2021, the Business Responsibility and Sustainability Reporting (BRSR) framework was introduced and thereafter it became mandatory from FY2022-2023.
Business Benefits of EPR and ESG Compliance
Strategic Advantages
Beyond regulatory compliance, businesses that embrace EPR and ESG reporting gain several competitive advantages, including but not limited to –
· Enhanced brand reputation among increasingly environmentally conscious consumers
· Potential cost savings through improved resource efficiency and waste management.
· Better risk management by anticipating environmental regulations in advance.
· Increased investor interest, as sustainability performance becomes a key investment criterion.
· Opportunities for innovation in product design and business models.
Broader Impact
In addition to the strategic advantages, EPR and ESG compliance brings several broader benefits that can significantly enhance business operations and performance, including -
· Actively reducing landfill waste and supporting recycling efforts, contributing to long-term environmental sustainability.
· Unlocking potential cost savings through efficient waste management and access to green financing, enabling more sustainable financial practices.
· Strengthening your brand’s image by meeting consumer demand for companies that show commitment to sustainability and corporate responsibility.
· Ensuring compliance with both national and international environmental regulations, minimizing legal risks, and enhancing operational transparency.
Conclusion
The modern business landscape demonstrates a clear shift in investor priorities, with sustainable growth becoming as important as wealth creation. Organizations that display strong ESG performance and effective EPR implementation often enjoy better access to capital and investment opportunities.
Moreover, for Indian businesses, EPR credits and ESG compliance represent both regulatory requirements and strategic opportunities. Companies that view these frameworks as opportunities to reinvent rather than merely compliance burdens will likely gain competitive advantages in an increasingly sustainability-focused market and strengthen their market position, while simultaneously contributing to environmental protection.
Want to know how your business can earn EPR credits or streamline ESG compliance?
Book a demo with Swish Club today and learn how to simplify sustainability for your organisation.
