Following the European Parliament study on the Environmental Liability of Companies published in May of this year, the Committee on Civil Liberties, Justice and Home Affairs, and the Committee on the Environment, Public Health on Food Safety have just published draft opinions on the liability of businesses for environmental damage in the EU.

The draft opinions set out a range of proposals designed to strengthen the regime for imposing liability on companies that cause environmental damage, and increasing the scope of damages such companies would need to account for.

There are a number of proposals that could herald significant change for businesses operating in Europe:

  • Companies should be exposed to the full social costs of any environmental harm for which they are responsible.
  • Legislation should be introduced to require companies to pursue sustainable value creation and a “triple bottom line with equal attention paid to people, profit and the planet”.
  • Changes to the Environmental Liability Directive (Directive 2004/35/CE, as amended) are proposed:
    • Expand its scope to cover all damage to the environment; and
    • Scrap the ‘permit defence’ and ‘state of the art’ defence to promote the “polluter pays” principle.
  • The adoption of a framework Directive concerning crimes against the environment, so-called “ecocide”, including the potential extension of the jurisdiction of the European Public Prosecutor’s Office to cover such offences.

There are also a number of specific initiatives relevant to enforcement:

  • There are specific suggestions in relation to the Environmental Crime Directive (ECD):
    • A review of its scope should take place to ensure it covers all relevant environmental legislation; and
    • The Commission should publish guidance on the ECD issuing higher criminal sanctions.
  • The Commission should enable Member States to make wider use of administrative fines as a complementary tool alongside criminal sanctions in enforcing compliance with environmental legislation.
  • The allocation of greater resources for preventing, investigating, and prosecuting environmental crimes.

While these proposals are the opinions of parliamentary committees rather than draft legislation, they often indicate the direction of travel of the EU. The proposal to put people and the planet on parity with profits would be a fundamental change to the business model of many companies operating in Europe with the potential for far-reaching consequences.  All businesses in the products supply chain should be aware that these opinions suggest a likely increase in enforcement of stricter environmental legislation is around the corner in Europe, and significantly greater risks for companies that are seen to contribute to environmental harm.

We will be following these developments closely on Productwise.

The draft opinions are available here and here.

Posted by Jamie Humphreys

Jamie Humphreys is a litigation and regulatory lawyer. He is a strategic advisor to clients who face critical threats to their business at all stages of the product life-cycle, working with them to ensure the most favourable outcome and manage any reputational impact. He also provides policy advice to clients on proposed legislation and regulations that may introduce profound changes to their business. He has acted on high profile litigation across a range of different industries, internal investigations into allegations of fraud by global products manufacturers, major corruption investigations for Governments, and B2B product liability disputes, international recalls and consumer claims for well-known global brands. He is passionate about the impact that new technologies such as 3D printing, AI and Internet of Things will have in the products space and works with clients to ensure they prosper within a dynamic regulatory environment.

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