Top 7 Stocks Implementing the EPR Policy at Full Throttle

The winds of change are blowing through Indian industries as the government pushes for a more sustainable future.

A key element in this strategy is the implementation of Extended Producer Responsibility (EPR) policies.

However, recent events highlight the tightrope walk companies must navigate between environmental responsibility and business interests.

The Cellular Operators Association of India (COAI) recently challenged the Ministry of Environment, Forest and Climate Change's (MoEFCC) decision to expand EPR regulations for e-waste to include telecom equipment.

This instance exemplifies the complexities of EPR, a policy designed to promote a circular economy by making producers accountable for the entire life cycle of their products.

First introduced in the EU, EPR puts the onus on companies to design products with reusability and recyclability in mind, while also ensuring responsible waste management practices.

Companies can fulfil their EPR obligations by directly collecting and processing their waste or by participating in a certificate trading system.

As India strengthens its EPR framework, let's delve into the companies already embracing this policy.

#1 Hindustan Unilever

First on the list is HUL.

Hindustan Unilever (HUL), part of the Unilever Group, is India's leading Fast Moving Consumer Goods (FMCG) company. It has a vast portfolio of over 44 brands spanning 14 diverse categories such as fabric solutions, home and hygiene, skincare, and foods.

HUL prioritises a circular economy approach as a key strategy in their pursuit of a "waste-free world." This translates to a commitment to reducing their overall waste footprint, encompassing production waste, food waste, and plastic pollution.

The company is participating in India's Extended Producer Responsibility (EPR) program for plastic waste management.

While the program officially began in February 2022, HUL has been collecting and recording data on plastic waste since 2018.

It was among the first companies in India (since 2021) to collect and responsibly process more plastic waste than what they use in their product packaging - a feat they continue to achieve year after year.

Further, HUL is working with the United Nations Development Programme (UNDP) and Xynteo India to create a circular economy for plastic waste management.

This commitment underscores HUL's proactive stance on sustainability and its dedication to pioneering waste management in the industry.

Looking ahead, HUL remains dedicated to exploring innovative methods for waste reduction, reuse, recycling, and recovery.

Their goal is to become a zero-waste business by transitioning to a circular economy.

This model departs from the traditional "take-make-dispose" approach and embraces a regenerative system that prioritises maximising the value of materials throughout their lifecycle.

For more details, see the Hindustan Unilever company fact sheet and quarterly results.

#2 Apollo Tyres

Next on the list is Apollo Tyres.

Established in 1972, the company manufactures automatic bias and radial tyres and tubes catering to OEMs and replacement demand.

The company's products are used by two-wheelers, trucks and buses, light trucks, passenger cars, and farm vehicles.

There are two brands under which the company sells its products, namely Apollo and Vredestein, a Netherlands-based brand which Apollo acquired in 2009.

At present, Apollo Tyres sells its products in over 100 countries covering Asia Pacific, USA, Europe, Middle East, and African regions.

In 2023, EPR legislation on plastic waste and e-waste was extended to include End of Life Tyres (ELT) in India.

In response, Apollo Tyres' R&D is collaborating with various recyclers to incorporate recycled materials into their products to comply with this regulation.

Apollo Tyres has partnered with Tyromer Inc., a leader in the non-chemical de-vulcanisation of end-of-life tyres.

Through their Indian associate, Tyromer India LLP, Tyromer Inc. will supply recycled rubber material produced using environmentally sustainable processes to Apollo Tyres, increasing the sustainable raw material content in their product mix.

Further, Apollo Tyres is making significant strides towards creating climate-resilient operations, in line with its commitment to become carbon neutral by 2050.

As part of their climate adaptation strategy, they focus on renewable energy usage, energy efficiency, and shifting from coal to biomass.

The company has devised a decarbonisation strategy to reduce its Scope 1 and Scope 2 emissions in the Europe and APMEA regions.

Notably, Apollo Tyres has improved its Scope 2 emissions reduction commitment to 35%, up from a previously committed target of 25%.

In FY23, the company recorded improvements of over 21% and 19% in Scope 1 and Scope 2 intensities, respectively, from the baseline year of FY20, underscoring its commitment to achieving carbon neutrality.

Furthermore, reinforcing its long-term commitment to renewable energy, Apollo Tyres aims to achieve 30% renewable power usage by FY26.

For more details, see the Apollo Tyres company fact sheet and quarterly results.

#3 Tata Consumer

Next on the list is Tata Consumer Products.

Tata Consumer Products is a focused consumer products company uniting the principal food and beverage interests of the Tata Group under one umbrella.

The company's portfolio of products includes tea, coffee, water, salt, pulses, spices, ready-to-cook offerings, breakfast cereals, snacks, and mini meals.

In India, Tata Consumer Products has a reach of over 200 million (m) households, giving it an unparalleled ability to leverage the Tata brand in consumer products.

Tata Consumer Products is committed to the Extended Producer Responsibility (EPR) plan in India, which covers the collection and reprocessing of plastic packaging waste on a brand-neutral basis across key markets.

All its beverage manufacturing facilities operate on a zero-waste-to-landfill basis. The EPR plan aims to collect and recycle the equivalent (or more) of 100% of the packaging used across its beverages, foods, and ready-to-drink (RTD) divisions.

Tata Consumer Products has been fully compliant with EPR requirements in India since 2018.

The company's research and development division is dedicated to eco-friendly packaging solutions and innovations.

This includes minimising packaging material usage, optimising existing practices, shifting to sustainable alternatives, and promoting recycling among consumers.

Looking ahead, Tata Consumer Products plans to achieve water-neutral operations across all its facilities by FY30.

For more details, see the Tata Consumer company fact sheet and quarterly results.

#4 Nestle India

Next on the list is Nestle India.

Nestle India is the 100-year-old, second-largest FMCG company in India. It dominates the noodle (Maggi) and the hot beverage (Nescafe) categories.

Nestle India has a nationwide presence with eight manufacturing facilities and four branch offices. It is a subsidiary of NESTLE S.A. of Switzerland, boasting over 2,000 brands ranging from global icons to local favourites and operating in 191 countries worldwide.

Nestle India's product range spans milk and nutrition, chocolates and confectionery, beverages, prepared dishes, and cooking aids.

The company has initiated several pilot projects in collaboration with industry partners, under the guidance of the Central Pollution Control Board, state pollution control boards, and urban local bodies, as part of its Extended Producer Responsibility (EPR) initiative.

These projects aim to collect, segregate, recycle, and recover plastic waste sustainably.

Nestle India, through its waste management agency, has begun collecting and managing pre-consumer and post-consumer plastic packaging, ensuring processing by Central Pollution Control Board-registered plastic waste processors.

The company's collection network spans 35 states and union territories of India, working with waste management partners to ensure responsible waste management.

Nestle India is committed to a future where none of its packaging ends up in landfills or as litter.

It follows a reduce-reuse-recycle model:

• REDUCE: The company continuously optimises packaging through source reduction and value engineering. For instance, it has launched Ready-to-Drink (RTD) tetrapaks with paper straws replacing plastic ones and continues with 100% paper straws. It has also implemented size reduction and value engineering for select brands under its foods and coffee business.
• RECYCLE: Nestle encourages using recycled materials wherever applicable, such as 50% recycled plastics for secondary packaging of multipack coffee sachets and rPET jars for chocolates and confectionery.
• RECOVER: Achieving plastic neutrality in 2020, Nestle India has maintained this status through 2023, responsibly managing approximately 25,600 MT of plastic packaging consumed versus the 23,000 MT EPR target assigned by the Central Pollution Control Board. This achievement is part of the company's commitment to Extended Producer Responsibility (EPR).

Going forward, the company is investing in the R&D of new and innovative technologies for material development in our packaging.

For more details, see the Nestle company fact sheet and quarterly results

#5 JK Tyre & Industries

Next on the list is JK Tyre & Industries.

The company is one of the leading tyre manufacturers in India. It manufactures types for all vehicle segments, including trucks, passenger vehicles, tractors, and multi-utility vehicles. It holds leadership in manufacturing tyres for trucks and bus radials.

It has several reputed companies as its clients, such as Maruti, Hyundai, Volvo, Ashok Leyland, Eicher, Bajaj, and Escorts.

The company has a robust distribution network of over 6,000 dealers, 500 distributors, and 140 sales offices in India.

The company is actively navigating the implications of EPR regulations.

The company has allocated Rs 1.1 bn to cover potential EPR-related liabilities for the past two financial years, a cost likely to be passed on to consumers.

The EPR guidelines, effective from July 2022, set a recycling target of 70% of the weight of new tyres manufactured or imported in FY 2022 for FY24. This target increases to 100% in FY25 and subsequent years.

Under these guidelines, based on the quantity assigned in the EPR obligation, JK Tyre will purchase EPR certificates from registered recyclers.

Additionally, the company can purchase retreading certificates from registered retreaders for deferment of its EPR obligations.

Upon submission of the EPR certification, the extended producer responsibility obligation will be deferred by one year for the corresponding quantity of waste tyres.

The company emphasised that tyre producers are responsible for mitigating environmental impact throughout the tyre's lifecycle, but they are not accountable for emissions created during tyre use.

JK Tyre's proactive approach to EPR demonstrates its commitment to environmental sustainability and compliance with regulatory standards.

Going forward, the company plans to achieve its recycling targets.

For more details, see the JK Tyre & IND company fact sheet and quarterly results.

#6 CEAT

Next on the list is CEAT.

The company manufactures tyres majorly for trucks and buses. It also manufactures tyres for two and three-wheelers, passenger cars, farm equipment, and light commercial vehicles.

It has a strong domestic presence with a network of over 300 distributors, 3,400 dealers, and 35,000 sub-dealers.

CEAT is aligned with plastic waste management guidelines and diligently practices EPR in the proper management of plastic pouches used for packaging tubes. This year, the company has successfully achieved its EPR target of 100%.

CEAT is fully compliant with the prescribed permissible limits for hazardous waste generation and management according to regulations.

The company manages its non-hazardous waste and electronic waste through authorised recyclers and waste management service providers.

Through its EPR initiatives, Ceat ensures the collection and safe disposal of its packaging waste.

The company has partnered with authorised implementation partners (producer responsibility organisations) for the collection, transportation, and end-of-life management of plastic waste.

Looking forward, CEAT plans to enhance its waste management practices and continue improving its environmental sustainability efforts.

For more details, see the Ceat company fact sheet and quarterly results.

#7 Balkrishna Industries

Last on the list is Balkrishna Industries.

The company manufactures performance-focused tyres for the agricultural, construction, earthmoving, port, gardening, and mining industries.

It sells its tyres across the globe covering over 160 countries with an extensive distribution network in India, Europe, America, and the rest of the world.

The company's client base includes reputed names such as John Deere, New Holland, JCB, CAT, and Turk Traktor.

The company is actively navigating the implications of EPR regulations.

The waste collection plan submitted to the Central Pollution Control Board aligns with the EPR requirements. Balkrishna Industries recognises the importance of recycling in environmental protection and has established processes to recycle waste generated.

Effluent Treatment Plants (ETP) and Sewage Treatment Plants (STP) are implemented at all production sites to reduce water consumption.

The wastewater is recycled and utilized in horticulture surrounding the company's locations, with water treatment monitored and maintained regularly.

Additionally, polythene used in various processes is sold to authorised resellers and reprocessed into plastic granules.

Going forward, the company plans to further enhance its waste management and recycling efforts, continuously improving its environmental sustainability practices.

For more details, see the Balkrishna Industries company fact sheet and quarterly results.

Other Companies Embracing India's EPR Policy

This list highlights a few companies actively participating in India's Extended Producer Responsibility (EPR) policy.

However, it's important to remember that this is not exhaustive. Many other companies across various sectors are implementing EPR practices.

Company	Market cap (Rs m)
Pearl Global	32,373.10
Race Eco Chain	8,035.00
Pondy Oxides & Chemicals	10,492.40
Ganesha Ecosphere	35,768.40
GRP Limited	14,033.20

Data Source: Equitymaster

Conclusion

Investing in stocks of companies committed to EPR policies can be a smart decision for several reasons.

First, these companies proactively comply with increasingly stringent environmental regulations, reducing the risk of legal issues and fines, which provides a more stable investment.

Firms dedicated to EPR are often seen as leaders in sustainability, enhancing their brand reputation and fostering higher customer loyalty, leading to potentially better financial performance.

By managing waste and recycling efficiently, these companies ensure long-term resource availability and cost savings, improving operational efficiencies and profitability over time.

Furthermore, companies engaged in EPR are well-positioned to capitalise on new market opportunities in the growing circular economy, innovating with eco-friendly products and services to meet the rising demand for sustainable solutions.

Additionally, EPR-compliant companies are better equipped to handle environmental risks, reducing the likelihood of environmental liabilities and associated costs, and thus providing a more secure investment.

Nevertheless, it is always prudent to conduct thorough research before making any investment decisions. Ensure that the investment aligns with your financial objectives and matches your risk tolerance level.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...