Meet your environmental compliance obligations under the Environment Act 2021

Does the Environment Act 2021 apply to you?

Use this decision tree to identify which provisions affect your business:

• Are you developing land or buildings? → You'll need to comply with biodiversity net gain requirements (see below)
• Do you supply 25+ tonnes of packaging to the UK market OR have turnover over £1 million? → You must register for Extended Producer Responsibility for packaging
• Are you a retailer selling drinks in single-use containers? → Prepare for the deposit return scheme (launches October 2027)
• Do you import or use cattle, cocoa, coffee, maize, palm oil, rubber, soya, or wood? → You'll need forest risk commodities due diligence systems
• None of the above? → The Act's environmental targets and improvement plans still set the policy context for all businesses, but you may not have specific compliance obligations yet

For developers: Biodiversity net gain

If you're developing land, you must deliver a measurable 10% increase in biodiversity value compared to the pre-development baseline. This applies to most planning applications submitted from February 2024 (major developments) or April 2024 (small sites of 1-9 dwellings).

This is a fundamental change to the planning system. You cannot simply pay a fee to avoid it - biodiversity net gain is mandatory, and your planning application will be invalid without a biodiversity gain plan.

How to deliver biodiversity net gain

You have three options, which you should consider in this order:

1. On-site habitat creation: Create or enhance habitats on your development site. This is usually the most cost-effective option and preferred by planning authorities.
2. Off-site habitat creation: Purchase biodiversity units from a habitat bank or create habitat on other land you control. Useful when on-site delivery is impractical.
3. Statutory biodiversity credits: Purchase credits from Natural England as a last resort. These are expensive (£48,000-£650,000 per unit in 2024) and only available when on-site and off-site delivery is demonstrably not possible.

All habitat enhancements must be maintained for a minimum of 30 years, secured through legal agreements (typically Section 106 planning obligations or conservation covenants).

Common mistakes to avoid:

• Waiting until planning submission to assess biodiversity - start early, as baseline surveys take time and are season-dependent
• Assuming you can clear a site then restore it to the same level - you need a 10% increase, not just like-for-like
• Underestimating the cost of 30-year maintenance - factor this into development viability from the start
• Forgetting to register off-site gains on the national register - unregistered gains don't count

For producers: Extended Producer Responsibility for packaging

Extended Producer Responsibility (EPR) is the single biggest change for businesses that produce, import, or sell packaged goods. It replaces the old Packaging Recovery Note (PRN) system and makes you pay the full cost of collecting, sorting, and recycling the packaging you place on the UK market.

This affects far more businesses than the previous regime. The threshold has dropped from 50 tonnes AND £2 million turnover to just 25 tonnes OR £1 million turnover. If you're an online marketplace, you're now responsible for ensuring overseas sellers comply.

Getting compliant with EPR: Action plan

If you're above the threshold, follow these steps to comply with Extended Producer Responsibility for packaging:

For retailers: Deposit return scheme

If you sell drinks in single-use containers (bottles, cans), you'll need to participate in the deposit return scheme when it launches in October 2027. Consumers will pay a deposit on every drink container (expected to be around 20p), which they get back when they return the empty container to a collection point.

This affects both producers (who must register and pay into the scheme) and retailers (who may have to accept returns). Small shops under 100 square metres may be exempt from mandatory take-back, but this is still being finalised.

What retailers need to do

The deposit return scheme is still being designed, but here's what to expect:

• Accept returns if you sell in-scope drinks: If you sell drinks in PET plastic, aluminium, steel, or glass containers (50ml-3L), you'll likely need to provide a return point. This means space for return machines (reverse vending machines) or manual take-back.
• Small shop exemption: Shops under 100 square metres may be exempt from mandatory take-back. However, customers may still expect you to participate, so consider voluntary participation.
• Handling fees: You'll receive handling fees to cover the cost of accepting returns, storing containers, and managing reverse vending machines. Fee rates will be set by the Deposit Management Organisation.
• Digital tracking: Containers will be verified through barcode scanning to prevent fraud. You'll need systems to record returns and claim handling fees.

Action now: October 2027 may seem distant, but you need to plan for space (reverse vending machines are large), budget for installation costs, and consider customer flow. If you're refitting premises before 2027, factor in DRS infrastructure.

For importers: Forest risk commodities due diligence

If you import or use products containing cattle, cocoa, coffee, maize, palm oil, rubber, soya, or wood, you'll need to establish due diligence systems to prove these commodities are not produced on illegally deforested land. This provision is expected to come into force in 2025, with detailed regulations still being finalised.

What "due diligence" means in practice

Due diligence under the Environment Act requires three steps:

1. Gather information: Collect data on the geographic origin of commodities (ideally coordinates or plot boundaries), evidence of compliance with local laws, and deforestation risk assessments for the region.
2. Assess risk: Evaluate whether the commodity is likely to have been produced on illegally deforested land. Use country risk ratings, certification schemes (e.g., FSC for wood, RSPO for palm oil), and supplier assurances.
3. Mitigate risk: If risk is identified, take action - obtain additional assurances, switch suppliers, conduct independent verification, or cease using the commodity if risk cannot be mitigated.

You must keep records of your due diligence for 5 years. The Office for Environmental Protection will enforce these requirements and can issue fines, seize goods, or impose prohibition orders for non-compliance.

Small business exemption: Businesses with turnover under £50 million may have simplified due diligence requirements, but full details are pending in the regulations.

Enforcement and penalties

The Environment Act 2021 is enforced through multiple bodies depending on the provision:

• Biodiversity net gain: Enforced by local planning authorities. Non-compliance means planning permission is invalid, and developments without valid permission face enforcement notices and potential prosecution.
• EPR for packaging: Enforced by the Environment Agency. Civil sanctions include fines up to £200,000. Criminal prosecution possible for serious or repeated violations.
• Deposit return scheme: Enforced by scheme administrator (Deposit Management Organisation) and environmental regulators. Penalties for non-registration and non-compliance to be confirmed.
• Forest risk commodities: Enforced by the Office for Environmental Protection. Penalties include fines, seizure of goods, and prohibition orders preventing you from placing commodities on the market.

Operating without compliance is not a business risk you can manage - it's a criminal or civil offence that can shut down operations, damage reputation, and result in significant fines.

What happens next?

The Environment Act 2021 is being implemented in phases. Some provisions (like biodiversity net gain and EPR data reporting) are already in force. Others (like deposit return schemes and forest commodities due diligence) are coming soon.

Key upcoming dates:

• October 2025: Full EPR fees start for packaging (registration and data reporting already started January 2024)
• March 2026: Mandatory recycling labels on packaging
• 2025 (date TBC): Forest risk commodities due diligence regulations come into force
• October 2027: Deposit return scheme launches for drinks containers

Even if your obligations aren't immediate, start planning now. EPR compliance requires data systems, packaging redesign takes time, and DRS infrastructure needs space and budget. Waiting until deadlines approach will leave you scrambling.