On the importance of adjusting for distorting factors in benchmarking analysis,as illustrated by a cost comparison of the different forms of implementation of the EU Packaging Directive

Abstract

Benchmarking is a proven and widely used business tool for identifying best practice. To produce robust results, the objects of comparison used in benchmarking analysis need to be structurally comparable and distorting factors need to be eliminated. We focus on a specific example – a benchmark study commissioned by the European Commission’s Directorate-General for Environment on the implementation of Extended Producer Responsibility (EPR) for packaging at the national level – to discuss potential distorting factors and take them into account in the calculation. The cost of compliance per inhabitant and year, which is used as the key cost efficiency indicator in the study, is adjusted to take account of seven factors. The results clearly show that differences in performance may play a role, but the (legal) implementation of EPR – which is highly heterogeneous across countries – is the single most important cost determinant and must be taken into account to avoid misinterpretation and false conclusions.