CEOs and Leaders of Companies: Is the New EU Environmental Crime Directive at the Top of Your Priority List? If Not, It Probably Should Be.

There is currently a deluge of new EU law being finalized and adopted – particularly on environmental and sustainability issues. At times it may seem overwhelming – with certain new EU laws being overlooked.  However, when serious environmental problems come to light within companies – the first major concern is normally criminal liability. That includes potential criminal liability of the company itself, but also of the CEO, Board Members and other persons leading it. With that in mind – top of a company’s ‘to-do’ list should be ensuring compliance with the new EU Environmental Crime Directive.

The New Environmental Crime Directive (“New ECD”)

Following the 2021 European Commission proposal,[1] the new Environmental Crime Directive (“New ECD”)[2] was adopted on 11 April 2024 and entered into force on 20 May 2024. The New ECD essentially replaces the former 2008 Environmental Crime Directive[3] which, following evaluations in 2019 and 2020, was found to be insufficiently effective in certain aspects. EU Member States bound by the New ECD,[4]  must adopt national measures transposing the New ECD by 21 May 2026. The New ECD generally applies without prejudice to other relevant EU and national law, and Member States are generally able to add additional criminal environmental offences to the list set out in the New ECD.[5] The New ECD is not intended to affect civil liability under EU or national law for harm or damage caused as a result of any act or omission constituting a criminal offence under the New ECD.[6]

Core Requirements

The New ECD builds on the 2008 Environmental Crime Directive, adding new offences and strengthening and complementing the 2008 Directive provisions in a number of areas. It adds new categories of offences such as, for example, the extraction of surface or groundwater where such conduct causes or is likely to cause substantial damage to the ecological status of water bodies – of interest following the high-profile Donãna cases. It also strengthens and clarifies provisions on, for example, the meaning of “substantial damage”.     

The New ECD requires EU Member States to ensure certain conduct, including acts (‘active conduct’) and omissions (‘failure to comply’), constitute criminal offences.[7] For an act or omission to constitute an environmental criminal offence it must be “unlawful” meaning that the act or omission must, generally speaking, breach EU Environmental law, or breach relevant EU Member State law or acts which give effect to EU Environmental law.[8]

The New ECD sets out conduct which is capable of constituting criminal offences.  Where that conduct is committed “intentionally” – it will generally constitute a criminal offence. These include, for example:

• discharge of material or substances into air, soil or water which causes or is likely to cause death, serious injury to any person (generally excluding mental injury), or substantial damage to the quality of air, soil or water etc, and
• manufacture, placement/making available on the market, export of use of substances in breach of the REACH Restrictions and which causes or is likely to cause the death, serious injury to any person (generally excluding mental injury), or substantial damage to the quality of air, soil or water.     

For most of the conduct listed in the New ECD, where those acts or omissions are carried out with at least “serious negligence” – it will also constitute a criminal offence. The meanings of “intention” and “serious negligence” are generally to be interpreted in accordance with national law.

The New ECD includes new provisions on so-called “qualified” criminal offences.  These are acts, omissions and conduct which have a particularly devastating or serious environmental impact and which are akin, or comparable, to ‘ecocide’. Generally speaking, EU Member States must ensure that the criminal or non-criminal penalties for qualified criminal offences, are more severe than those applicable for other criminal offences in the New ECD. The New ECD sets out a number of “aggravating” and “mitigating” circumstances relating to environmental crime offences. It also addresses, and includes provisions, requiring EU Member States to ensure inciting, aiding and abetting, and attempts – concerning environmental crimes – are publishable as criminal offences.

Penalties

The New ECD requires EU Member States to ensure that: committing the criminal offences listed in the New ECD; attempting to commit those offences; and conduct inciting, aiding and abetting such offences – are punishable by effective, proportionate and dissuasive penalties.

EU Member States are required to ensure certain penalties can be imposed on legal persons, (e.g. companies) who commit environmental crimes. Those penalties include: (1) criminal or non-criminal fines including, in some cases, “5% of the total worldwide turnover” or an amount corresponding to €40 million, (2) obligations to restore the environment, the exclusion from public funding – including public tenders, exclusion of grants and concessions, withdrawal of permits and authorisations – as, according to the New ECD, these ‘accessory penalties or measures’ can be more effective than financial penalties,[9] and (3) the ability to freeze and confiscate proceeds gained as a result of environmental crimes. 

Perhaps most significantly for CEOs, corporate board members, and others leading a company – the New ECD makes clear that criminal liability of a legal person (e.g. company), does not preclude criminal proceedings being taken against individuals – such as corporate board members[10] – who commit, incite or are accessories to the criminal offences. As such, where a company is criminally liable – the CEO, corporate board members, and others leading the company – may also be criminally liable for the same or similar offence (e.g. aiding and abetting). As criminal conduct includes, omissions and failures to act, a failure of a CEO, corporate board member, or another individual leading the company – such as a failure to stop or sufficiently monitor and prevent corrupt practices resulting in environmental crimes – may incur criminal liability in their personal capacity. The New ECG requires EU Member States to ensure certain penalties can be imposed on individuals (natural persons) who commit environmental crimes, including, in some cases, imprisonment of at least 10 years.

Other Issues

The New ECG also lays down rules on, for example, issues such as: (1) limitation periods, (2) whistleblowers, (3) the protection & anonymity of individuals who report environmental crimes and assist with criminal investigations and proceedings, (4) organized crime and corruption, (5) cooperation between national enforcement authorities,[11] (6) jurisdiction of EU Member States over criminal offences.

The Situation Now: Belgium as a Case Study

Following the entry into force of the ECD on 20 May 2024, EU Member States have until 21 May 2026 to adopt national legislation to transpose the New ECD requirements. Given the lack of official information provided by the EU on the transposition of the New ECD, this process is, presumably, still at an early stage. However, that has not prevented some EU Member States to already make headway. Belgium is a particularly interesting example in this respect.

Earlier this year Belgium became one of first countries, if not the first country, in the world – to legally recognize ecocide as a national and international crime. The updated criminal code was published just days before the adoption of the ECD itself. The new criminal code, which will enter into force in 2026, defines ecocide as the deliberate commission, by act or omission, of an unlawful act which causes serious, large-scale and long-term damage to the environment, knowing that such act causes such damage, to the extent that such act constitutes a violation of federal law or international law binding on the Belgian federal government or to the extent that the act cannot be located in Belgium.

However, the application and scope of the new Belgian criminal law on ecocide reflects the unique constitutional arrangements, and the division of competencies amongst Belgium’s many regional governments – particularly on environmental matters. At present, the Belgian criminal law on ecocide may be regarded, as pointed out in the parliamentary works, as relatively narrow in scope, generally only applicable in three specific scenarios including: (1) damage resulting from ionizing radiation or radioactive waste; (2) damage in or to the North Sea; and/or (3) damage resulting from actions that have not taken place in Belgium, insofar as the conditions under Belgian criminal law for the extraterritorial application of the crime of ecocide are fulfilled, in which case the Belgian federal government will have the authority to prosecute the crime when committed abroad, irrespective of the offender’s nationality. The apparent narrow scope of the Belgian law on ecocide is due, at least in part, to the fact that, in principle, only the regions of Flanders, Wallonia and Brussels are competent to make decisions on environmental matters.  Adoption of the new Belgian federal criminal law on ecocide does not preclude the Belgian regional governments in adopting similar ecocide laws in the areas of environmental law for which they are competent. This is likely to come into focus as Belgium, and its regional governments, consider how to transpose and implement the ECD. 

In any event, Belgium, which supported the EU Commission’s initiative for the revised ECD to strengthen environmental protection through criminal law from the beginning, has laid down severe penalties for breach of the Belgian law on ecocide including: (1) as regards individuals: Imprisonment for a duration of 15 to 20 years or confinement involving the deprivation of liberty for a duration of 11 to 16 years; and (2) as regards companies: Fines ranging from 1,200,000 EUR to 1,600,000 EUR, as well as additional penalties such as confiscation, fines or pecuniary penalties in proportion to the profit expected or obtained from the offence, a ban to carry out a profession, or a closure of a facility.

One of the other interesting aspects about Belgium, is how the Belgian ecocide law, along with the New ECD, will apply in practice – in light of the significant environmental problems which have dominated local news in recent years. This includes the large scale PFAS issue that came to light in 2021, when unusually high levels of PFAS were measured in soil and water samples taken in Zwijndrecht, as well as in blood samples of inhabitants in that area. As a result of these findings, the multinational company in question was the subject of severe scrutiny and obligated by the regional Flemish government to take large-scale corrective measures to remedy the situation. One of the interesting questions arising in this content, is the extent to which the leaders of a company in a similar situation would be criminal liable, under the Belgian ecocide law and/or under the New ECD, in the future. 

What Should Companies Do Now?

1. Companies should appoint a person, or persons, as responsible for ensuring the company complies with all EU environmental laws – including, in particular, the New ECD. Indeed, the New ECD itself explicitly states that EU Member States should “encourage [companies] to have compliance officers to help ensure compliance with Union environmental laws”.[12]
2. Companies should monitor transposition of the New ECD in the EU Member States where they operate, and also where their operations may cause environmental damage. Companies should also carefully monitor other developments such as developments on ‘ecocide’ issues at the international level.[13]
3. Companies should ensure that they, and each individual forming part of their leadership teams, are protected and the risk of financial loss and reputation damage caused by allegations, investigations and actions concerning EU environmental law – is, where possible, excluded or limited. Companies should, for example, ensure that they, and each individual forming part of their leadership teams, are insured for any possible administrative investigations, civil proceedings, and/or criminal proceedings – brought by third parties, involving alleged or actual breaches of EU Environmental Law – including the New ECD. This should include insurance coverage of individuals in leadership teams, after that individual has left the company, until, for example, the limitation periods for bringing claims has expired.
4. Companies should ensure, first and foremost, that they have policies and procedures in place to monitor and verify compliance, as a minimum, with the core environmental requirements and provisions listed in the New ECD. Companies should remain cognizant that an omission may constitute a criminal offence. Therefore, any policies and procedures must be capable of identifying not merely proactive acts which may, potentially, constitute a criminal offence – but also any failure to act.
5. Companies should have policies and procedures to, amongst other things:
   • exclude and limit liability for any act or omission by an employee, officer or representative of the company, involving or relating to environmental crimes including, for example, any potentially corrupt or improper dealings which may result in environmental damage. 
   • exclude, limit and distinguish, where possible, between responsibilities and liabilities under, for example, Extended Producer Responsibility schemes, as opposed to, for example, criminal liability issues under the New ECD.