Environment-related issues

The Environmental Liability Directive (ELD - adopted in 2004) sets out an environmental liability framework to prevent and remedy environmental damage to pre-damage condition when it is caused by economic operators. It contains the “polluter pays” principle. One of the issues that has come up over the years in the discussion at European level is the availability (at reasonable costs) of insurance and other types of financial security, and the need or not for mandatory financial security.

In the framework of its Multi-Annual Work Programme "Making the ELD more fit for purpose 2017-2020”, the European Commission requested law firm Stevens & Bolton to prepare a “Financial Security Study” (2019) and publish a report to fill the gap in knowledge on voluntary and mandatory financial security for ELD liabilities, and to suggest ways in which such financial security could be improved, both at EU level and Member State level.

In June 2020, the Commission and the law firm published the final report on improving financial security in the context of the ELD. The report states that it is premature to recommend harmonised mandatory financial security for ELD liabilities or an EU-wide fund.The report, however, adds that effective implementation of the ELD cannot occur in the absence of insurance for liabilities under it.Therefore, it recommends measures to increase availability and demand for ELD liabilities insurance, referring to an EU-wide training programme. The report refers to BIPAR and its members in this respect (as well as other European trade associations), to provide advice into such a training programme.

In November 2020, BIPAR participated in the European Commission’s 7th (virtual) Stakeholder Conference of the Environmental Liability Directive. During that week:

  • The Commission adopted a new ELD Multi-Annual Rolling Work Programme 2021-2024. In continuation of the last working programme, the 3 working areas will be:
  • BIPAR, following the Commission’s call for organising related break-out sessions, hosted a webinar on 16 November 2020 on Environmental Liability Insurance and SMEs.
  • Law firm Stevens & Bolton presented its study. There are also engaged in follow-up work, in particular with regard to better enforcement of the ELD. A specific objective is to assist the Commission and Member States in increasing the demand for insurance for ELD liabilities, and thus its availability, by increasing enforcement of the ELD by competent authorities across the EU. The work is ongoing and should be finalised by the end of August 2021. BIPAR will continue to monitor this.
  • supporting the implementation of the ELD (including training programmes)
  • promoting financial security for ELD liabilities to ensure that potentially liable operators covered by strict liability have sufficient financial capacity to meet their liabilities
  • providing better qualitative and quantitative information

In the European Parliament, MEP Toine Manders (NL EPP) of the Legal Affairs Committee (JURI) drafted an “own initiative report” (not legally binding) on the liability of companies for environmental damage. The report calls on the Commission to assess the introduction of a mandatory financial security system (covering insurance, bank guarantees, company pools, securities and bonds or funds) with a maximum threshold per case and for the ELD to be made a Regulation. The report was adopted in Plenary on 20 May 2021.

Next steps

The Commission announced that it will soon launch an evaluation of the ELD, in line with the Better Regulation approach, before considering a possible revision. BIPAR will continue to follow up this file, in particular with regard to the above-mentioned future EU training programme.

- Published in June 2021 -

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