Tackling Environmental Crime: The New EU Environmental Crime Directive and its Impact on Businesses

24 June 2024

In May 2024, EU legislation aimed at combating environmental crimes within and beyond the EU entered into force, but what are the key implications for companies?

According to a report by the European Union Agency for Criminal Justice Cooperation ("Eurojust") dated January 2021¹ , environmental crime has been expanding rapidly, posing a significant threat to wildlife, ecosystems, and financial systems. It is now a major source of income for organised criminal groups. Meanwhile, such crimes currently carry a relatively low risk of detection. Recognising the gravity of the situation, the European Union ("EU") has taken a bold step forward with the adoption of the new Directive on the protection of the environment through criminal law (the "Environmental Crime Directive"). The Directive entered into force on 20 May 2024 and Member States have two years to implement the legislation which aims to strengthen ecosystem protection and harmonise sanctions across Member States.

The Environmental Crime Directive: A Game Changer?

The Environmental Crime Directive, which replaces Directive 2008/99/EC, establishes minimum rules on the definition of criminal offences and penalties to improve environmental protection. It has been hailed as a significant victory by environmental activists who have long campaigned for stricter rules against "ecocide" – a term referring to acts causing severe, widespread, or long-term damage to the environment.

While the Environmental Crime Directive does not introduce an offence titled "ecocide," it does refer to "cases comparable to ecocide" in its recitals, signalling the EU's intent to tackle such high-level environmental crimes.

Key Elements of the Directive

The Environmental Crime Directive defines environmental crime more precisely than under previous legislation, adding new offences and harmonising penalties for individuals and companies. It includes an updated list of actions that qualify as criminal offences at the EU level, such as the import and use of mercury, the import of invasive species and pollution caused by ships, where those actions are unlawful under EU law or national provisions implementing EU law.

The Environmental Crime Directive also introduces "qualified offences" being those causing widespread damage to ecosystems or habitats, or substantial damage to air, soil, or water quality. These offences are comparable to ecocide and carry severe penalties, including significant fines for companies and imprisonment for individuals.

The Environmental Crime Directive also requires enhanced investigative resources be made available to the relevant authorities in order for Member States to effectively enforce the legislation and facilitate criminal proceedings. Furthermore, the Environmental Crime Directive supports cross-border coordination of investigations and prosecutions and requires that whistleblowers be provided with the necessary support.

Penalties

Under the new legislation, companies face a range of penalties if offences are attributable to them. Alongside the risk of significant fines and an obligation to reinstate the damaged environment, or compensate for the damage caused, companies may also be subject to the withdrawal of licences, bans on access to public funding, or closure.

With respect to fines imposed on companies, Member States must set maximum levels which are:

at least 3% or 5% of annual worldwide turnover; or
fixed amounts of at least EUR 24 million or EUR 40 million depending on the underlying offence.

Even more severe penalties must be applied for qualified offences.

Individuals are also punishable under the Environmental Crime Directive and must face imprisonment with maximum sentences ranging from at least three years for certain lesser serious crimes, up to at least ten years for certain intentional offences causing death to a person.

Implications for Companies

Companies operating in the EU, especially in the industrial and energy sectors, should review their compliance management systems and prepare for increased scrutiny from the relevant authorities. This may take the form of more investigative measures, such as dawn raids or information and document requests.

Impact in the UK

Although the UK has no obligation to implement the EU's Environmental Crime Directive, peer Baroness Boycott previously proposed an Ecocide Bill to the House of Lords in November 2023 ("Ecocide Bill").² As Parliament was dissolved in May 2024, the Ecocide Bill was not passed into law.

Had it been passed, it would have introduced a new criminal offence targeting those who participate in unlawful or wanton acts or omissions that have a substantial likelihood of severe and widespread or long-term environmental damage. Significantly, it would potentially have gone beyond the reach of the Environmental Crime Directive as it would criminalise conduct causing significant harm to the environment, even if that conduct was not otherwise unlawful.

The Ecocide Bill was proposed as a "Private Members' bill" and therefore did not form part of the government's legislative policy. Private Members' bills are rarely passed into law, but they can influence future legislative proposals. It remains to be seen if such legislation will be introduced by further Private Bills, or the new Labour Government.

Conclusion

The EU's Environmental Crime Directive is a step forward in the fight against environmental crime. Importantly, it sets a precedent for other nations to strengthen their environmental protection laws. Corporates operating in the EU should be alive to the possibility of increased attention from relevant authorities and ensure that policies and procedure in place to combat environmental harm are stringent and robust. Only time will tell if the Environmental Crime Directive can be actively enforced and lives up to the expectations of environmental activists and EU legislators alike.

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