Corporation Liability for Environmental Harmv

Abstract  

Corporation activity has become a dominant factor in global economic activity and producing  significant environmental damage through pollution and deforestation to climate change. Legal concerns arise as to how corporations should face the repercussions for such harm has  rose to great importance as the environment deteriorates further. Risk towards the  environment increased from globalisation, industrialisation and development of multinational  corporations. Corporate liability for environmental harm is an international concern, this  article focuses on the concept through a comparative lens, exploring the legal frameworks of the United Kingdom (UK), the United States (US), the European Union (EU), India and  Brazil. Also examining judicial interpretations, critical analysis of liability and developments  corporations have made, to reduce accountability. While evaluating the enforcement of  international legal principles, including polluter pays Principle, causation and highlighting  cross-border harm, before proposing future pathways and reforms, such as mandatory due  diligence to all large corporations.  

Keywords: Repercussions, corporate liability, environmental harm, legal frameworks,  judicial interpretations, accountability, polluter pays principle, cross-border harm. 

1. Introduction 

Environmental sustainability has become an overbearing topic, dominating globally, it  demands pressure on governments, corporations and individuals to minimise their ecological  footprint. Corporations are viewed as significant contributors to damaging the environment,  due to their size and influence. Liability for the damage involves assigning blame to  companies for actions that negatively impact the environment. Corporations pose direct and  indirect risks to ecosystems and communities, through industrial discharges and deforestation  to greenhouse gas emissions and toxic waste dumping. The concept of corporations bearing  responsibility for harming the environment reflects the polluter pays principle, which pursues ‘the costs of pollution should be borne by those causing it,’. As pollution cannot suddenly  stop, the principle hopes to restore or redistribute the costs of environmental damage1. 

However, appointing liability on corporations for environmental harm is complicated.  Corporate groups mainly operate across borders through contractors and subsidiaries, causing  legal and jurisdiction barriers. Although national laws try establishing obligations on  companies, enforcement is inadequate – especially in developing countries as regulation may  be limited or carelessly applied. Consequently, corporate liability has expanded into a wide ranging legal concept, as societal expectations and regulatory frameworks demand  accountability from corporations. The criteria for holding a company liable requires deep  examination of the company’s actions, control and oversight regarding environmental harm2. 

This article compares how different legal systems challenge these problems. It analyses cases,  statutory provisions and academic comments across the UK, US, EU, India and Brazil, identifying common trends, differences and unfold global standards for corporate  environmental duty. 

Research methodology  

The research approach for this article implements a comparative doctrinal method, by  reviewing legal texts, judicial precedents and policy developments to depict the evolution of  corporate liability. Primary sources include case law and legislation, such as the UK  Environmental Protection Act 1990, the US CERCLA 1980, the EU Environmental Liability  Directive 2004/35/EC, India’s Environment (Protection) Act 1986 and Brazil’s National  Environmental Policy Act (Law No. 6.938/81). Secondary sources include academic  commentary, books, journal articles and international principles like the Rio Declaration on  Environment and Development (1992).  

2. Legal Framework 

2.1 The United Kingdom 

The UK’s environmental liability system has been well-established under the Environmental  Protection Act 1990, the Environment Act 2021 and various EU-retained regulations. The  Environment Act 2021 helps policymakers to protect and enhance our environment, to  preserve England’s unique natural assets3. The UK’s legal framework for corporate liability  in environmental harm evolves to keep up with society, recent developments include the  Commercial Organisations and Public Authorities Duty (Human Rights and Environment)  Bill and the Economic Crime and Corporate Transparency Act 2023. The laws impose duties  on organisations and public authorities to prevent environmental and human rights harms,  with potential civil liability and penalties for non-compliance4. Compared to other nations,  the UK has taken legislation reform into account, society dynamics shift constantly,  especially in industries. Different forms of technology have various effects on the  environment, some greater than others, therefore the UK develops its laws to mark corporate  group accountability in environmental contexts.  

2.2 The United States 

The Comprehensive Environmental Response, Compensation and Liability Act (CERCLA),  also known as Superfund, was approved by Congress on December 11, 1980. The law created  tax on chemical and petroleum industries, it provided broad Federal authority to respond  promptly to releases or threats of hazardous substances that could endanger public health or  the environment. After 5 years, $1.6 billion had been collected and the tax went to a trust  fund that cleaned abandoned or uncontrolled hazardous waste sites. It established liability for  individuals to be held responsible for transmitting hazardous waste5. Unlike other  jurisdictions the United States considers corporate criminal liability, reinforcing its act  through fundamental fines and consequences on brand image and reputation. 

2.3 The European Union 

Directive 2004/35/CE of the European Parliament and of the Council of 21 April 2004 on  environmental liability regarding the prevention and remedying of environmental damage6.  The intention of the Directive has been to prevent environmental damage and ensure any  damage that occurs is rectified effectively. It applies to every business, despite the size and  holds operators financially responsible for environmental damage caused by their activities. 

The Environmental Liability Directive (ELD), was enforced in 2007, establishing a  comprehensive EU-wide liability regime for environmental damage based on the ‘polluter pays’ principle. The ELD provides strong incentives to avoid damage occurring in the first  place, supports other EU environmental laws that protect the environment and those whose  activities threaten the environment liable for taking preventive action7. The EU has taken  reasonable precautions to try reducing their eco footprint in regard to corporations, by  providing incentives and holding business owners liable for the damage they cause.  

2.4 India 

The Environment (Protection) Act 1986 is a landmark legislation in India that aimed to  protect and improve the environment, by giving the government authority to take necessary  measures against environmental pollution8. Under the Act, the government has the power of  entry for examination, testing of equipment and ability to analyse the sample of air, water or  other substances. There is a specific prohibition on controlling hazardous substances except  for those that are following regulatory standards and procedures9. The Act empowers  Connecting laws include the Water Act 1974 and Air Act 1981, which established the  regulatory bodies such as the Central and State Pollution Control Boards. Through Public  Interest Litigation, under Article 21 of the Constitution, treating environmental protection  became a part of the right to life10. India treats environmental harm and the right to life as  equals, reinforcing the importance of society’s role in environmental degradation. It addresses  the significant environmental challenges while trying to achieve conservational development.  

2.5 Brazil 

Brazil’s National Environmental Policy Act (Law No. 6.938/81) established to protect the  environment and ensure sustainable development. Article 2 states the Act has ‘the aim of  preserving, improving and recovering the environmental quality conducive of a healthy life’  focuses, while protecting human health and ‘ensuring socio-economic development’. In this  Act, corporate entities are bound by strict, objective liability for environmental damage. It  established the National Environment Council and the Federal Technical Register of  Activities and Instruments of Environmental Protection, which made environmental impact  assessments and permits for possible polluting activities mandatory. The Act ensured all  organisations, including government or private, will act in accordance with environmental  standards and regulations. Brazil’s legal framework aims to perfect integrated environmental  accountability, linking criminal sanctions and statutory duties within a coordinated system11. 

3. Judicial Interpretations  

Among the jurisdictions there has major contributions in improving the doctrine of corporate  environmental responsibility. Part of the Uk’s The Vedanta and Okpabi case, the judgment of is a major interest to multinational organisations with UK incorporated parent companies12. It expanded parent company liability by implementing a duty of care when control or policy setting is demonstrated. The US Bestfoods Principle has a major impact on corporate liability,  the Bestfoods decision held that parent corporation liability may be formed on either  traditional veil piercing doctrine or direct parental control of the operations at the polluting facility13. It found “operator liability” and closed ambiguity that legitimated parent companies  evade accountability. For the EU, Milieudefensie v Shell [2021] was a landmark case that  held Shell responsible for contributions to climate change and violating its duty of care under  Dutch law and human rights obligations14. India’s Mehta v Union of India AIR [1987] SC  965 established the principle of absolute liability for hazardous industries in India. The Supreme Court held companies using harmful chemicals are absolutely liable for damage  caused, regardless of any safety measures they took and a complete ban on these industries  will impact growth and development of the country15. Brazil’s Environmental Criminal  Liability framework became a significant aspect in the legal system, and it established  recognises both civil and criminal liability has made enforcement very effective. The  Brazilian Constitution, Article 225, s3, established conduct and activities that danger the  environment is considered as criminal offences and administrative sanctions, no matter what  the obligation to repair damages caused16. 

4. Critical Analysis 

Although there is progress, corporate liability faces constant challenges. Across the  United Kingdom, the United States, the European Union, India and Brazil, corporate  environmental liability shows the connection between principle and divergence in  enforcement philosophy. The UK law evolved through judicial innovation instead of  comprehensive statutory reform. Actions in nuisance and negligence restrict liability by  demanding foreseeability of harm and proof of causation, making remedies difficult, as  demonstrated in Cambridge Water Co v Eastern Counties Leather pls [1994] 2 AC 264.  Recent judicial advancement in Vedanta Resources plc v Lungowe [2019] UKSC 20 and  Okpabi v Royal Dutch Shell plc [2021] UKSC 3 show emerging enthusiasm to hold  parent companies accountable when they manage control over subsidiaries. Whereas the  US adopts a statutory model, imposing strict and joint liability under the Comprehensive  Environment Response, Compensation and Liability Act 1980 (CERCLA), emphasised by United States v Bestfoods 524 US 51 {1998}, ensuring a duty on parent corporations  acting as “operators”. The EU’s Environmental Liability Directive 2004/35/EC pursues to  correlate liability through correcting duties but enforcing consistency between Member  States to implement a well-communicated approach to a sustainable environment. In  Mehta v Union of India AIR [1987] SC 965, judicial activism established the doctrine of  absolute liability, exceeding traditional fault concepts and embedded environmental  protection within Article 21’s right to life. Brazil’s constitutional recognition of  environmental rights under Article 225 and objective liability regime under Law No.  6.938/81 shows an integrated approach. Together, the jurisdictions demonstrate global  trajectory toward broadening corporate liability, but gaps in enforcement, causation proof  and transnational regulation limits the maximum capacity of environmental justice. 

5. Developments 

Environmental reports under ESG frameworks helped form corporate accountability  exposure, as the court affirmed that Shell has an active duty of care to the people and environment of the Netherlands17. The EU’s Corporate Sustainability Due Diligence  Directive (Directive 2024/1760) entered into force in July 2024, too foster sustainable and  responsible corporate attitudes in businesses operations and in their global value chains18. It  signals a global movement towards mandatory environmental due diligence expansion.  Milieudefensie v Shell unfolded suits against fossil fuel producers that helped redefine  climate change litigation and proved corporate environmental liability as a climate  requirement. Brazil and India experiment with environmental repair funds and community  compensation schemes, also encasing restoration into responsibility.  

6. Ways Forward 

Suggestions to strengthen corporate liability for environmental harm include global  consistency and powerful enforcement. Governments should mandate companies to follow  environmental due diligence, identify and address risks at each stage of production. Just as  the EU has done, to prevent corporations ecologically damaging through supply chains.  Recognition of foreign judgment and increased international cooperation would enhance  accountability toward transnational harm. At a national level, environmental responsibility  must be set into directors’ duties and spreading access for public interest litigation may  improve practise. Improving access to justice and simplifying systems would enable  communities impacted to revive their own environments. Ultimately, responsibility should  come from a system that has punishments in place to on that promotes prevention and  sustainable business practise.  

7. Conclusion 

Corporate liability for environmental harm has progressed incredibly across the jurisdictions,  shifting from the environment deteriorating at speed to proactive prevention. The  comparative study of the UK, US EU, India and Brazil shows across the globe changes and  laws are being made to hold corporations accountable for the damage they have caused and  continue to cause to the environment. The UK relies on a judicial approach as well as the EU  but also preventative governance, at the same time, the US and Brazil embody strict statutory  enforcement and India’s judiciary distinctively constitutionalises environmental preservation.  Regardless of the development, enforcement continues to be unbalanced due to the lack of  uniformity across the globe and there are many jurisdiction barriers to tackle. Legal systems  must carry on expanding corporate responsibility, as the dynamics of environmental crisis  fluctuates constantly. For further success and progression depends on changing liability from  punishment to prevention and promoting global uniformity standards, to help industrial  growth to continue without harming the ecological balance.  

Bibliography  

Case Law 

• Cambridge Water Co v Eastern Counties Leather pls [1994] 2 AC 264 • Vedanta Resources plc v Lungowe [2019] UKSC 20 
• Okpabi v Royal Dutch Shell plc [2021] UKSC 3)  
• United States v Bestfoods 524 US 51 [1998] 
• Milieudefensie v Shell [2021]  
• Mehta v Union of India AIR [1987] SC 965  
• ESG frameworks v Shell  

Legislation  

• Environmental Protection Act 1990 
• The US CERCLA 1980 
• The EU Environmental Liability Directive 2004/35/EC 
• India’s Environment (Protection) Act 1986  
• Brazil’s National Environmental Policy Act (Law No. 6.938/81) 
• The Environmental Protection Act 1990 
• The Environment Act 2021 
• Commercial Organisations and Public Authorities Duty (Human Rights and  Environment) Bill and the Economic Crime and Corporate Transparency Act 2023 • The Comprehensive Environment Response, Compensation and Liability Act 1980  (CERCLA 
• The Environmental Liability Directive (ELD) 
• The Environment (Protection) Act 1986 
• The Water Act 1974  
• The Air Act 1981 
• National Environmental Policy Act (Law No. 6.938/81) 
• National Environment Council and the Federal Technical Register of Activities and  Instruments of Environmental Protection 

Journal Articles  

• Anisha Bisht, ‘Public Interest Litigation: It’s impact on judiciary and governance’,  7(5) ), Indian Journal of Law and Legal Research 
• Omar N. White, ‘United states v Bestfoods’, Vol. 26, No. 4, pp. 757-776, Ecology  Law Quarterly, (1999) 

Legal Documents  

• The Rio Declaration on Environment and Development (1992) 

Websites  

1. Corporate Liability for Environmental Damage: Legal Perspectives and Preventive Strategies – Michael Edwards | Commercial Corporate Solicitor 
2. Environmental principles policy statement – GOV.UK
3. Understanding Corporate Liability for Environmental Harm in Legal Contexts – Statulink 
4. Environmental principles policy statement – GOV.UK
5. Corporate Liability for Environmental Damage: Legal Perspectives and Preventive Strategies – Michael Edwards | Commercial Corporate Solicitor
6. Superfund: CERCLA Overview | US EPA 
7. Directive – 2004/35 – EN – EUR-Lex
8. Environmental Liability – Environment – European Commission 9. 19
9. Environment Protection Act, 1986 (EPA, 1986) 
10. PUBLIC INTEREST LITIGATION- ITS IMPACT ON JUDICIARY AND GOVERNANCE.pdf
11. FEDERAL REPUBLIC OF BRAZIL 
12. Parent Company Liability back in the Supreme Court 
13. United States v. Bestfoods on JSTOR 
14. Milieudefensie et al. v. Royal Dutch Shell plc. – The Climate Litigation Database 16. 53IJAERS-10202262-TheCriminal.pdf 
15. Shell vs Friends of the Earth : A Turning Point in Corporate Environmental Accountability | Netherlands 
16. Corporate sustainability due diligence – European Commission