With corporations often at the heart of serious ecological damage, environmental degradation has become a global issue that requires urgent attention. To ensure business corporations comply with the law and strive for sustainable means of operating a business, the theory of business liability for environmental wrongdoing calls for business responsibilities that should ensure them being taken to book in case they cause wrongdoing. The legal framework that guides corporate liability against environmental infractions is scrutinized in this article, its practice examined in relation to those from other jurisdictions, the recent developments are commented upon, and reforms are suggested to make the accountability regime more stringent.
National law, international treaties, and industry standards are considered the three main elements that decide whether a corporation is liable or not for environmental offences. Criminal and civil liabilities apart, other mechanisms include the two: in addition to administrative penalties. Various laws-the Clean Air Act and the Clean Water Act of the United States, the Environmental Protection Act of the United Kingdom, and the Environmental Protection Law of India-all of these provide general standards of action that can be taken by the corporations related to environmental matters.
The above reasons, among others, further dilute the strength of such measures.This happens when the bodies that are supposed to oversee the affairs of the organizations are under-resourced, hence are incapable of providing the much-needed oversight of the organizational affairs.Legal standards are so unclear and vague that exploiters take advantage of loopholes created by the statutory provisions.The doctrine of corporate separateness protects individual directors and shareholders from liability. This means the deterrence level reduces.In most cases, major corporations have revenues much more than the fines and penalties imposed on them. Therefore, the amount of fines and penalties is usually not substantial.Within the United States of America, the Environmental Protection Agency (EPA) handles environmental violations within a strict jurisdiction. The parties liable for hazardous waste contamination have to be taken into account as per the provisions of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). However, sometimes lobbying by firms and political pressures can weaken regulation.
To ensure the “polluter pays” principle, the European Union has strong regulations in place, such as the Environmental Liability Directive (ELD). It is a policy that focuses on the importance of precautionary measures and corrective actions of corporations. The two examples are Germany and Sweden, whose stringent enforcement measures become a benchmark for compliance. Environmental law Examples include the Air (Prevention and Control of Pollution) Act 1981, which sought to redress corporate misdoings on the environmental side, and the Water (Prevention and Control of Pollution) Act 1974. Though this legislation looks strong on paper, poor implementation coupled with the destruction caused by corruption defeats their aims. Judicial interventions similar to that in the Bhopal Gas Tragedy case might help explain how the judiciary fills in gaps of regulation.
In many jurisdictions, the law has been changed to make corporations accountable.The United Kingdom’s Environment Act 2021 has provided very severe punishments for water pollution and forest-cutting cases.Most of the environmental monitoring activities and clean energy programs are supposed to be funded by the Inflation Reduction Act 2022, being passed in the United States.National Green Tribunal, India, has taken extra measures to fortify the prosecution of businesses that are involved in illegal pollution and ecological degradation activities.
The company had to undergo intense penalty for installing defeat devices in vehicles to cheat the emissions test during the scandal of Volkswagen’s emissions scandal. It has marked one of the biggest turns in the history of holding major corporations accountable. The incident had brought damages and fines amounting to an astonishing $33 billion, making it one of the biggest scandals in the history of the automobile industry.
The case of the Vedanta Sterlite Plant in India exposed that much still needs to be done on the part of the judicial system to deal with environmental crimes. In this regard, it was shut down because the effects generated in the environment have been adverse to the ecosystems. In the same way, Shell was held responsible for accountability in terms of the oil spills that were observed in the Niger Delta region of Nigeria, which brought every question round the globe over the accountability that the corporations have towards the environment and whether there should be more stringent regulations3.
There are many technological advances that have influenced monitoring positively. These include tracing waste through blockchain technology and AI-driven compliance checks, which helped increase transparency and accountability. Some reforms that could be implemented are increasing monetary penalties to reflect losses more accurately incurred and punitive damages against corporations held liable for causing environmental harm. Other measures of increased transparency in companies may include reporting their environment impacts in annual reports, and also ensuring that violation databases are maintained and available for public access. In addition reforms of the corporate governance system should ensure companies take factors about their risk to the environment into consideration while making business decisions. This would put the directors on the lime light to answer their intentions.
Important steps toward greater accountability include giving legal standing to local communities to pursue environmental lawsuits and making it easier for the public to participate in industrial proposals. International cooperation is also very important; strengthening frameworks such as the Paris Agreement can address environmental damage that occurs across international borders while, at the same time, harmonising regulations across states.
One role judicial institutions can play in ensuring corporate accountability is the establishment of environmental courts, with a fast-track structure. The precautionary principles developed to require proactive action from corporations is also an important role that judicial institutions play. ESG reporting has emerged as a highly important tool for assessing corporate social responsibility. It has, in turn, provided the impetus of business companies becoming environmentally responsible. This is because the demand is rising, this time from the investors to finance ventures that address ESG principles.
Public enlightenment programs can be advanced to enlighten on community rights toward environmentalism. Thereby, making people accountable more. The involvement of youth toward environmental law studies is a factor that prepares an activist for later, while advertisement campaigns in mass media can potentially uncover corporate offenses. This was the case with the historical oil spill on the vessel Exxon Valdez, which underplayed and disregarded the concern of corporates. It also calls for more efficient legal procedures to compensate the community appropriately in the event of such a spill.
Improvement to the corporate accountability scenario can be brought about by NGOs and civil society supporting regulatory agencies through public interest litigations toward ensuring accountability along with independent review of corporate practices. Improvement to be brought about in corporate accountability can be realized by installing cutting-edge technologies including real-time monitoring using Internet of Things sensors as well as platforms for crowdsourcing reporting of violations. International treaties, like the Basel Convention, have the intention of controlling the global conduct of corporations. Such treaties give greater importance to the enforcement in terms of preventing the environmental degradation of cross border activities.
Conclusion
Corporate liability toward environmental violation remains a good tool for the sustainability and preservation of the ecosystem. Despite the already set frameworks, which are quite great, a better improvement in these frameworks’ application and scope needs to be considered. It’s possible to fortify the regime by taking the best practices that are being employed globally, technological advancement, and encouraging community involvement. The practice of holding corporations accountable not only protects the environment but also guarantees that businesses make a good contribution to the general well-being of citizens of society. In so doing, citizens, corporations, NGOs, and governments must cooperate to engage with the complex issues concerning environmental accountability.
References and Footnotes
- Clean Air Act, 42 U.S.C. § 7401 et seq.
- Environmental Liability Directive 2004/35/EC.
- “Bhopal Gas Tragedy Case: Judicial Intervention,” National Law Review, 2020.
- “Volkswagen Emissions Scandal: Lessons in Corporate Accountability,” Harvard Environmental Law Review, 2021.
- National Green Tribunal, India: Key Judgments and Impact, Environmental Law Journal, 2023.
- Exxon Valdez Oil Spill: Legal and Environmental Aftermath, Marine Policy Journal, 1995.
Author: Anannya Mohanty is currently pursuing a BA LLB at Symbiosis Law School.
