New EU Regulations Are Set to Extend Business Liability for Environmental Damage. Peter Castle examins the implications for hard-pressed directors.

A new European environmental directive could mean big bills for
companies involved in incidents which threaten or damage the environment. Under the European Environmental Liability Directive
2004/35/EC, the "polluter pays" principle will be extended to water
sources, inhabited land and protected species and habitats.
Anyone responsible for the source of toxic leaks and spills, fire damage, explosions or similar incidents will have to take immediate steps to contain the situation and notify the relevant authorities. Taking action and notifying the relevant enforcers is not enough, the polluter will then be liable for the cost of decontaminating the affected areas. In severe cases, where the damage cannot be undone, polluters may even have to pay to enhance another site. The Directive is the latest addition to the growing number of environmental regulations facing firms.
There is no limit to the financial liabilities faced by companies in such situations. Unprepared firms could find themselves facing very
significant costs should the worst happen. This is a commercial issue which has received little attention, and the majority of directors
are quite unaware of such risks. Sensible and well-advised managers will seek additional cover to fully protect their businesses.
Several specialist environmental liability policies are available, with premiums starting at around £750.
Education is the key. Additional costs can be absorbed gradually over time, while standard due diligence and risk management can reduce the risk of unsuspected liabilities returning to haunt your business.
A site sold off years ago may be found to contain asbestos. Land contamination may be linked to past activities by your company.
Increasingly proactive councils keen to make an example of local companies and the introduction of the Environmental Liability
Directive makes such events more likely.
The days of laissez-faire indifference to industrial pollution are long gone. Reduce costs and liabilities by taking decisive action before the authorities do. Don’t leave those time bombs ticking!
By Smart and Cook.