While departure from the EU grants the freedom for the UK to set its own environmental agenda, the decision to ‘copy and paste’ the bulk of existing EU law onto the UK statute book means that the brave new (post-Brexit) world is mostly familiar territory for businesses operating in the UK. The advantage of this approach is of course to provide business with certainty by maintaining the status quo, with government opting for evolution, not revolution. But the Secretary of State for the environment has made it clear that 'there is no point leaving the EU to keep everything the same'. So where do we go from here, and what are the potential drivers for change?
COVID-19
There can be no doubt that the arrival and impact of COVID-19 has diverted the attention of environmental policy-makers and regulators away from matters of environmental improvement during 2020 and 2021. However, the seemingly successful rollout of the vaccination programme, and the resulting decline in infection rates, suggests that there may now be the necessary bandwidth to return to the delivery of the Government’s ambitious environmental agenda. Further, awareness of the importance of green spaces for recreation and mental health, and our understanding of human impact on the natural environment, has only grown during this period, and so the public demand for change has led to political talk of a ‘green recovery’.
Environment Bill
The long-awaited Environmental Bill suffered a number of false-starts, even before the arrival of COVID-19. The Bill was first introduced in 2019, and then re-introduced following the January 2020 general election. Following further delays, the Bill was 'carried over' into the current Parliamentary session (which began on 11 May 2021). Royal Assent is currently anticipated during Autumn 2021.
The objectives behind the Bill do not lack aspiration. Indeed, DEFRA has claimed that the Bill will do no less than: clean up the country’s air; restore natural habitats; increase biodiversity; reduce waste; “crack down” on water companies; introduce “world-leading” species targets; and “deliver the most ambitious environmental programme of any country on earth”.
The primary mechanism for achieving these objectives under the Bill will be the introduction of a number of specific targets for environmental improvement in the fields of water, air quality, biodiversity and resource efficiency. By establishing a system of well-documented targets, this will (in theory) improve accountability – a fascinating prospect at a time when ministers will no longer be able to pass the buck to Brussels when things don’t go to plan. In the face of seemingly unwaivering public support for substantive and sustained environmental improvement, government will need to navigate the potential tensions between an enhanced environmental regulatory framework (on one hand) and a lower-regulation ‘business-friendly’ UK to international investors and trading partners (on the other). Can the UK achieve the same or better improvements in a more efficient manner? That is very much down to how ministers use the wide-ranging powers given to them in the Environment Bill.
In order to strengthen environmental accountability (following the removal of EU-level oversight), the Bill will also establish a new public body – the Office for Environmental Protection – as an independent, domestic watchdog. Through its scrutiny and advice functions, the new body will monitor progress in improving the natural environment in accordance with the environmental improvement plans and targets. Due to parliamentary delays, an Interim Office for Environmental Protection was launched in non-statutory form in March 2021 and will provide independent oversight of the government’s environmental progress from July 2021.
Enforcement trends
Environmental regulators have not escaped the challenges presented by COVID-19 pandemic, and the resulting logistical difficulties have inevitably resulted in a reduction in activity. We have however been pleased to see a good deal of pragmatism and flexibilty from regulators during the period, particularly in relation to those businesses who are working hard to do the right thing while navigating the additional administrative and compliance challenges thrown up by COVID-19.
As with all large organisations, the regulators themselves have been faced with protecting their own workforces and adapting in the face of reduced staff numbers. This has inevitably led to a reduced number of site visits and inspections. These are not trends that we would expect to outlast the return to work, and should not be seen as an indication of a long-term change to direction of travel.
It is also worth noting that SEPA’s regulatory capacity was dealt a further blow in December 2020, following a sophisticated cyber-attack that significantly compromised its internal systems and processes. SEPA has confirmed that full recovery would take “many months”.
Regulating waste, water and air quality
Despite the challenges, enforcement in certain priority areas has been intense and energetic. Even during the peak of the pandemic, the Environment Agency intensified investigations and prosecutions against criminal waste operations. The Joint Unit for Waste Crime (JUWC), launched in 2020 via a partnership between the Agency, the police and HMRC, appears to have had a successful first year in operation. By way of an example, JUWC officers undertook a week of action in October 2020 tackling waste and metal crime by visiting over 550 sites and stopping over 1,100 vehicles. Over 150 offences were detected and 29 arrests made.
Another sector where we have seen continued, and arguably increased, regulatory scrutiny during 2020/2021 is the water industry. A particular focus for the Environment Agency has been reducing issues relating to combined sewer overflows (CSOs). In many parts of the country, the same sewerage networks are used to convey clean rainwater and domestic sewage. CSOs were developed (many in Victorian times) as overflow valves to reduce the risk of sewage backing up during heavy rainfall. Following a number of high profile media reports, the Environment Agency identified over 700 CSOs to investigate and 40 overflows to be improved within the period 2020-2025. Furthermore, in the Queen’s Speech on 11 May 2021, it was announced that Government would be bringing forward amendments to the Environment Bill to reduce the harm from CSOs to rivers, waterways and coastlines. New duties will require the Government to publish a plan to reduce sewage discharges by September 2022 and report to Parliament on the progress towards implementing the plan. Further, it is also expected that water companies will fall within the remit of the OEP under the Bill, which may result in increased scrutiny.
From an air quality perspective, it is significant that the UK is no longer part of the EU’s ‘best available techniques’ (BAT) process. In October 2020, the Government issued guidance on how industrial emissions standards and BAT will apply from 1 January 2021. ‘BAT Conclusions’ are the minimum legal requirements contained within a BAT reference document (BREF), for example, providing acceptable carbon monoxide emissions or energy efficiency for industrial processes. Existing EU guidance on best available techniques (BAT) has been transferred directly into UK law. However, it is probable that standards in the two regimes will diverge over time, and we anticipate that this will lead to heightened NGO scrutiny in the UK to ensure standards are not being reduced. The Clean Air Strategy (January 2019) stated that the UK would 'ensure there is a clear process for determining future BAT Conclusions for UK industrial emissions that broadly maintains a consistent approach with the Industrial Emissions Directive (IED).' The Strategy alludes to the possibility that the Government could simply skip producing full BREFs altogether, although DEFRA have not clarified this position.
Investor-led change
In addition to the traditional drivers of environmental change, the growing buzz around the importance of ESG (environmental, social and governance) issues to business’ bottom lines, talent retention and public image is also expected to drive the environmental agenda for a post-Brexit UK. As ESG-focused investment decisions (based on sophisticated ESG metrics) become more common, they serve to highlight those environmental concerns and market trends that matter to consumers (as well as larger corporates with sway over the behaviours of their supply chains). It follows that this will impact on corporate behaviour. We also anticipate increasing regulation to ensure transparency and avoid ‘greenwashing’.
Improvements to environmental behaviours will always require a sensible balance of carrot and stick – the surge in attention on ESG appears to represent a welcome, market-driven ‘carrot’ during a challenging time for the regulators.