EU takes stand against environmental crimes with new Directive

The escalating problem of environmental degradation is triggering a re-evaluation of our legal systems' effectiveness in preventing and justly sanctioning such harms. Now the EU has taken a significant step towards safeguarding the environment with the adoption by the European parliament of a proposal for a Directive on the protection of the environment through criminal law that replaces Directive 2008/99/EC. The intention of the Directive is to establish a robust and unified system for preventing, investigating, and punishing individuals and companies that engage in actions harming the environment.

Background

Traditionally, those seeking civil compensation for environmental damage have faced significant hurdles. Establishing a clear causal link between the defendant's actions and environmental harm can be challenging. Additionally, while cumulative ecological impact is substantial, individual claims are typically limited since each individual affected may only experience relatively minor damage.

While the 2017 Collective Actions Act in Slovenia introduced the possibility of collective legal action for environmental incidents, this powerful tool has not yet been used in practice. Consequently, the prospect of facing legal challenges has not compelled many companies to mitigate their environment footprint by prioritising comprehensive data collection on environmental regulations.

The content of new Directive

The European parliament’s decision, however, to replace Directive 2008/99/EC with a proposed Directive that uses criminal law to protect the environment is seen as a potential game changer.

Specifically, the environmental crimes covered by the proposed Directive include:

• illegal water abstraction from ground or surface water;
• serious breaches of EU chemicals legislation;
• serious breaches related to dealing with fluorinated greenhouse gases;
• serious breaches of legislation on invasive alien species to the EU;
• serious circumvention of requirements to get a development consent and to do environmental impact assessment causing substantial damage.

The proposed sanctions are designed to have a strong impact and preventive effect.

Fines for violating these regulations could be as high as 5% of a company’s global turnover from the preceding year or a fixed amount of up to EUR 40 million. Further, the Directive empowers authorities to impose a range of supplementary sanctions, such as the following:

• the obligation to restore the environment to its original state within a certain period;
• temporary restricted access to public finding, including tender procedures, grants, concessions and licences;
• temporary or permanent ban on business activities;
• withdrawal of licences and authorisations for activities that have led to the commission of a crime;
• the obligation of companies to establish due-diligence schemes to increase compliance with environmental standards, etc.

Furthermore, the Directive mandates member states to implement strict penalties for individuals involved in environmental crimes, with potential sentences of up to 10 years imprisonment. Certain supplementary sanctions can also be imposed.

This stringent approach was created to deter individuals, including responsible persons of legal entities, from making a company’s potential financial gains a priority over environmental responsibility.

The Directive extends criminal culpability to include gross negligence, which eliminates the defence strategy of claiming a lack of awareness of environmental regulations or lack of awareness that harm is being done.

The Directive now needs to be confirmed by the European Council and transposed into legislations by EU member states, a process that should take two years from the Directive’s adoption.

Potential impact of the new Directive

When implemented, the new Directive is expected to trigger a significant shift within companies. Individuals holding positions of responsibility, from senior management to those directly involved in relevant operations, will need to adopt a heightened awareness of the specific environmental regulations that apply to their activities. This heightened awareness is crucial since any actions or omissions that contravene these regulations could lead to severe legal repercussions including heavy fines and even long-term imprisonment.

Conversely, the implementation of a unified approach to environmental regulations should create a level playing field in the marketplace. This ensures that all companies, regardless of their size, influence or location, are subject to the same environmental standards, which eliminate the possibility of selective compliance where certain companies can prioritise profit over environmental responsibility and gain an unfair advantage over competitors that adhere to the regulations.

For more information on this proposed Directive and how it could affect your EU-based business, contact you CMS client partner or these CMS experts.