Many of you will have seen the recent correspondence from Ms Lorna Slater, Scottish Government Minister for Green Skills, Circular Economy and Biodiversity which sets out some very welcome updates to the guidance in relation to retailers’ ability to seek exemption from acting as return points under the Scottish Deposit Return Scheme which will be going live in August 2023. As you would expect Circularity Scotland has been working very closely with the Scottish Government and Zero Waste Scotland in the development of this updated guidance which will significantly reduce the operational burden for a large number of hard-pressed smaller retail outlets in these particularly challenging times and will also reduce the overall cost of the scheme. We also believe that the likely change in the number and profile of return points across Scotland will contribute to a significantly more environmentally efficient Deposit Return Scheme.

At the end of her correspondence Ms Slater also highlighted that she is considering what is required to address retailers concerns over the scheme’s online take-back requirements and hopes to be able to provide detail on any revised proposals in the coming weeks. Once again, we have been working closely with the Minister and her team on this matter.

Circularity Scotland is committed to deliver a Deposit Return Scheme for Scotland which delivers for the environment, society and industry. We will be working with all stakeholders to ensure that the Return Point network is accessible and inclusive, whilst also minimising vehicle miles and the cost of the scheme to industry and consumers.

This represents one strand of our work on delivering a Deposit Return Scheme which meets all of its objectives whilst also minimising the cost and cashflow impact on businesses, small and large.

The changes to the guidance enable us to reconsider the assumptions used when forecasting the producer fee for the first year of operation.

We will be advising Industry of our revised forecast producer fee as soon as we are able and will also be updating on the cashflow model of the scheme (including day one charges). As we have previously indicated one challenge we face is making reasonable predictions of the operating cost of the Deposit Return Scheme for the three classes of materials involved, however we recognise that industry needs greater clarity on this. In operation the scheme will have fees set for each material type, reflecting the actual operating costs for that material as well as the resale value of the recovered materials, we will provide further clarity on this when announcing the revised producer fee forecast.

When establishing Circularity Scotland, the founding members, representing businesses small and large and more than 90% of the scheme’s sales and return volumes, agreed on a set of operating principles which provide the framework within which Circularity Scotland operates. This framework, created through industry consensus and to which all our members are committed, set out the process used to determine the return handling fee paid to Return Point Operators and sets out the principles we will follow when setting the producer fee.

We recognise the concerns of Industry over the cashflow implications of implementing the Deposit Return Scheme, especially in the current economic climate. We are reviewing all options to create the best possible solution to this. It is vital that industry works together to ensure that we find an answer to this which is fair and equitable to all participants in the Deposit Return Scheme.

Some time will be needed to finalise the revised fees and cashflow model described above, recognising the need for producers to begin registration with Circularity Scotland from 1st December we will be issuing the Producer Agreement which will govern the relationship between producers and the Scheme Administrator. This will be issued on 7th November and the sections on fees and cashflows will be provided as soon as the updated information is made available.

Since being incorporated in 2021 Circularity Scotland has raised £100 million of funding from a combination of drinks producers, banks and business partners to enable to establishment of the Deposit Return Scheme for Scotland. The company now employs almost 50 staff in Glasgow and the wider Deposit Return Scheme will create in the region of 500 jobs within partner companies. The scale of investment demonstrates the commitment of Circularity Scotland and its partners to delivering a successful and cost-effective Deposit Return Scheme for Scotland.

David Harris, CEO