The Environment Bill received royal assent and became law on 9 November 2021. We will be publishing further analysis on the impacts of the Environment Act shortly.
The Environment Bill, first published in January 2020, provides the UK Government’s blueprint for post-Brexit environmental reform. Although progress has been stunted, largely due to the coronavirus pandemic, as of 11 October 2021, the Bill is due to undergo its third reading on 13 October in the House of Lords.
This new legislation will play a key role in the UK’s race to reach net zero carbon emissions by 2050. As such, the Bill should create an increased, tighter and ultimately stricter legal framework. According to Environment Minister Rebecca Pow, “the Environment Bill will deliver the most ambitious environmental programme of any country on earth. It will clean up the air we breathe, restore natural habitats, improve water quality and will increase biodiversity with legally binding targets that put the environment at the heart of all government policy making.”
In this article, we set out the likely impact of the new regulatory watchdog and the new risks for businesses. We also look to the future of UK environmental regulation and enforcement.
A new watchdog: what is the OEP?
The Bill creates a new environmental watchdog, known as the Office for Environmental Protection (OEP). This government body will replace the European Commission as the enforcer of environmental regulation and will hold the government and public bodies to account on its implementation of environmental law, including the Environment Agency (EA).
The OEP will monitor progress in improving the environment in accordance with improvement plans and environmental targets, which will include four priority areas; air quality, water, resource efficiency and waste reduction, and biodiversity.
Whilst the OEP’s function is not one of a traditional regulator (and its role is quite different to that of the EA), it will have enforcement powers in its own right and will be able to exercise these in circumstances where there has been a failure to comply with environmental law.
If, however, the government is serious about its stated ambition that the OEP will be a “a new, world-leading, independent environmental watchdog”, it will need to equip its watchdog with the teeth and freedom to make that possible, and recent amendments to the Bill tabled by the House of Lords have further highlighted this issue.
Environment Bill: new risks for businesses
The primary mechanism for achieving the objectives under the Bill will be the introduction of a number of specific legally binding targets (including long-term targets) for environmental improvement in the fields of air quality, water, resource efficiency and waste reduction, and biodiversity. It will therefore be essential that all businesses familiarise themselves with the new targets and focus on each of the four priority areas applicable to their undertakings, in order to ensure compliance and to protect themselves from financial, reputational and possible criminal sanctions resulting from secondary legislation.
Certain sectors, such as those with large environmental footprints (for example, the energy and constructions sectors), are likely to face the toughest challenges. Indeed, the government estimates a total annualised cost to businesses of £196.6 million due to biodiversity net gain and local nature recovery strategies as a result of the Bill.
New horizons for UK environmental regulation and enforcement
Despite challenges from the pandemic, enforcement in certain areas has continued and even increased. For example, on 9 July 2021, Southern Water was fined £90 million after pleading guilty to illegal discharges of sewage which polluted rivers and coastal waters. The case, which is the largest criminal investigation in the EA’s history, saw pollution offences from 16 waste water treatment works and one storm overflow brought together in one prosecution at Canterbury Crown Court. This case provides a stark reminder of the importance of regulatory compliance.
With ESG (environmental, social and governance) high up on the business agenda, and in light of the UK’s departure from the EU, the government has said that it wishes to maintain a strong environmental legal landscape and framework for accountability. We therefore anticipate increasing regulation to ensure transparency, positive action and to clamp down on greenwashing and corporate tick-boxing.
It remains to be seen what impact the OEP will have on the EA’s enforcement activities generally and whether it will come under pressure to revise its enforcement policy in line with the Environment Bill’s goals. With the EA thought by many to have been underfunded for years, it will be interesting to see whether that funding increases, or if some other route to compliance will be preferred.
Will we see an increase in prosecutions? Only time will tell but with increased and changing regulation, businesses will need to be on their guard.