Green compliance: EU strengthens responsibility for environmental crimes | Dentons
On December 15, 2021, the European Commission published its second series of “Fit for 55“directives – a package aimed at reducing greenhouse gas emissions in the European Union by 55% by 2030 compared to 1990 levels.
One of the important projects of the set is the draft directive on criminal liability for environmental offenses, which would replace the current directive of the European Parliament and of the Council of 19 November 2008 on the protection of the environment by criminal law. . The proposed extension of the catalog of sanctions and categories of environmental offenses is another tool ensuring not only the effective implementation of the Green Deal Strategy (i.e. the European Green Deal), but also the economic policy of the European Union.
This project is in line with the latest market trends – Green compliance and ESG, emphasizing the importance of environmental protection in corporate operations, particularly in light of the context of sanctions for environmental offenses described below. The specificity of such criminality, based on an extended supply and production chain, as well as on complex import-export patterns linked to economic activity, considerably hinders the elimination of the risk of participation in these practices. . Moreover, with the expected tightening of responsibility, companies will have to pay even more attention to the system for selecting suppliers and subcontractors, in particular with regard to waste management by unauthorized entities.
In addition, the draft directive provides for the possibility of detailed information on infringements and penalties imposed on companies, taking into account the broader context of extra-financial reporting and the Taxonomy. Transparency regarding the sanctions imposed and the procedures carried out is to ensure greater transparency in the market and, therefore, to eliminate from it those companies which do not meet the strict requirements of the EU. One of the tools to achieve this is the legal protection of whistleblowers who report irregularities to public authorities and the admission of interested parties to proceedings, in particular non-governmental organizations.
The desire to introduce a new directive on criminal liability for environmental offenses into the EU legal order is dictated by the fact that the provisions currently in force in this area are perceived as ineffective. The new directive aims to fill existing regulatory gaps and ensure broader protection of the environment by updating the scope of the provisions, clarifying or eliminating unclear terms used in definitions, or ensuring types and effective, dissuasive and proportionate levels of sanctions.
The catalog of environmental crimes proposed by the Commission extends it to include crimes such as:
- place on the market products that cause or may cause significant damage to air, water or soil quality, or to animals or plants due to the use of the product on a larger scale (in especially in the context of the so-called forever chemicals, which we talked about here),
- discharges of polluting substances from ships,
- the absorption of surface or underground water which causes or may cause significant damage to the state or ecological potential,
- the placing on the European Union market of illegally harvested timber or derived products which have been manufactured from illegally harvested timber,
- any behavior that leads to the deterioration of the natural habitat in the protected area,
- the introduction or spread of invasive alien species of interest to the European Union,
- production, placing on the market, import, export, use, emission or release of fluorinated greenhouse gases.
The draft also provides for financial penalties for legal persons, which must amount to at least 5% of the total turnover in a given Member State during the financial year preceding the decision to impose a fine. These sanctions clearly show that the Commission does not compromise on polluters and that every such case must be treated with the utmost severity in the EU.
In addition, the new directive – unlike the original – obliges member states to threaten environmental crimes with a minimum sentence of 4 years in prison, some with a sentence of at least 6 or even 10 years, depending on the degree of harm caused. The catalog of sanctions other than imprisonment proposed by the Commission may also be important from a business operating risk perspective. Although the project mainly concerns legal persons, sanctions for natural persons can be imposed on each of the persons responsible in a given entity for environmental matters. Thus, the provisions of the directive in the proposed wording will act in two ways, making it possible to impose severe financial sanctions on legal persons and to punish those responsible personally, for example by imprisonment or additional sanctions, such as:
- deprivation of the right to use public services or public aid,
- temporary or permanent exclusion from access to public funding, including tendering procedures, grants and concessions,
- revocation of permits and authorizations to carry out the activity which led to the commission of the crime,
- publication of a court decision at national or community level,
- placing under judicial supervision,
- temporary or permanent ban on carrying on a commercial activity,
- judicial liquidation.
When transposing the directive into the national legal order, one can expect a significant tightening of the penal provisions relating to environmental protection, which in Poland have so far been relatively moderate. The draft directive in its current formulation is also a clear signal to the market on the growing importance of environmental and ESG regulations in the conduct and planning of business activities.
The project will soon be dealt with by the Council and the European Parliament, and after positive review it will be handed over to the Member States for implementation, which is expected to take place in 2024 at the earliest.