In this issue


  • Is the EU to become a circular economy?
  • Consultation on ratification of the Minamata Mercury Convention
  • The EU takes the lead on nuclear safety 


  • The adoption of railway reform 


  • Introduction of statutory gender quotas on the cards


  • Law Commission recommends the introduction of conservation covenants
  • Energy Savings Opportunity Scheme
  • Update on the availability of PCOs in private nuisance cases


EU to become a circular economy? 

The European Commission has recently issued its proposals to turn Europe into a circular economy – essentially a society without waste. The proposals focus on increasing current waste recycling targets and banning some waste from landfill. A possible resource productivity target is also proposed and ways to make buildings more resource efficient and improve markets for construction and demolition waste are also being considered. 

As part of its circular economy and green employment initiative, the European Commission recently adopted a Communication Towards a circular economy: A zero waste programme for Europe. It also published a draft Directive amending various waste-related Directives with a view to increasing existing waste targets and preparing for re-use targets. The measures proposed include :

  • increasing municipal waste recycling targets to 70 per cent by 2030. This is likely to be challenging given that only about 42 per cent of the EU’s municipal waste is currently recycled and the present target is 50 per cent by 2020;
  • increasing packaging waste recycling targets to 80 per cent by 2030;
  • banning landfilling of recyclable waste by 2025 (including plastics, paper, metals, glass and biodegradable waste); and
  • setting an “aspirational” goal of cutting food waste by 30 per cent by 2025. 

The Communication explains that a circular economy aims to preserve the value added in products for as long as possible and virtually eliminate waste. This means that resources are retained within the economy when a product has reached the end of its life, so that they remain in productive use and create further value. Achieving this may involve any one of the following:

  • improvements to the durability of products;
  • substituting hazardous materials or those that are difficult to recycle for more sustainable alternatives;
  • creating markets for recycled materials;
  • designing products that are easier to repair, upgrade, remanufacture of recycle;
  • incentivising waste reduction and separation by consumers; 
  • incentivising separation and collection systems that minimise the costs of recycling and reuse; 
  • facilitating industrial clusters that exchange by-products to prevent them from becoming wastes; and
  • encouraging wider consumer choice through renting or leasing instead of owning products.

The package of measures proposed as part of the move to a circular economy also includes measures to improve the environmental performance of buildings and an economy-wide resource productivity target of 30 per cent by 2030, based on the metric (GDP divided by raw material use). 

The draft Directive will now be considered by the European Council and Parliament. 

It will be interesting to see how the policy framework for promoting a circular economy will develop over the coming years – concerns have already been expressed by some about the potential cost to businesses of the measures and the additional regulatory burden that they may impose.

EU consults on ratification of the Minamata Mercury Convention 

The European Commission has launched a consultation on issues related to the ratification by the EU of the Minamata Convention on mercury emissions. The Convention will ban a number of products that contain mercury (including medical devices and low-energy light bulbs), from 2020, and introduces controls on the use of mercury in certain large industrial processes, including power generation. 

Back in December, we reported that the UN Minamata Convention on the reduction of mercury emissions had been adopted. The main aim of the Minamata Convention is to protect human health and the environment from anthropogenic emissions and releases of mercury and mercury compounds (Article 1). 

The EU has now signed the Convention. However, although it largely contains measures similar to, or identical to, existing EU legislation, certain additional measures will be needed to ensure full implementation of the Convention after it is ratified. Gaps have been identified in EU legislation in the following areas:

  • import restrictions for metallic mercury;
  • export bans for certain products containing mercury;
  • mercury use in products and processes not yet placed on the market (i.e. either an outright ban or the requirement for an EU approval / assessment process); 
  • restrictions on certain processes where mercury is used e.g. dental amalgam; and 
  • mercury use in artisanal and small-scale gold mining.

The consultation, which concludes on 14 November 2014, provides stakeholders with an opportunity to comment on the ratification and subsequent EU implementation of the Convention.

EU takes the lead on nuclear safety 

The amended Nuclear Safety Directive has now been published in the Official Journal. It introduces a number of changes to the legal framework on of the safety of nuclear installations. 

Following the Fukushima Daiichi accident in 2011, the European Council called for a review of the safety of all EU nuclear power plants on the basis of a comprehensive and transparent risk and safety assessment (stress tests). In addition, they mandated the Commission to review the existing legal and regulatory framework (including the 2009 Nuclear Safety Directive) on the safety of nuclear installations, and to propose any improvements that may be necessary. 

The amended Nuclear Safety Directive reinforces the provisions of the 2009 directive by, amongst other things:

  • strengthening the powers and independence of national regulatory authorities that supervise the activities of nuclear operators;
  • introducing a high-level EU-wide safety objective to prevent accidents and avoid radioactive releases outside a nuclear installation;
  • setting up a European system of peer reviews on specific safety issues to be carried out every six years by the member states through their competent regulatory authorities using the European Nuclear Safety Regulators Group . The first topical peer review will take place in 2017;
  • increasing transparency on nuclear safety matters by ensuring that information is made available to the public both in normal operating conditions of nuclear installations and in case of incidents or accidents; and
  • providing for an initial safety assessment before a nuclear installation is built as well as for periodic national safety assessments, at least every ten years, to re-evaluate the safety of the installations and identify further safety improvements. 

Member states have to transpose the provisions of the directive into their national law by 15 August 2017. Meanwhile, the Commission is following up the implementation of the technical improvements required by the stress tests report. It is also involved in promoting research activities aimed at improving the safety of nuclear installations.

Nuclear site licence holders can prepare for the introduction of the 2014 Directive by, amongst other things:

  • Ensuring contractual arrangements with contractors or sub-contractors include provisions that require compliance with nuclear safety requirements, including the site licence and applicable law, to the same level as that required by the licence holder. This is because a licence holder will be unable to delegate it’s responsibility to ensure nuclear safety to others; 
  • Reconsidering on-site emergency procedures and arrangements, including severe accident management guidelines or equivalent arrangements, and work with regulators to ensure that the licence holder’s arrangements satisfy any amendments; and 
  • Reviewing human resource qualifications and competencies, of own staff and contractors and sub contractors, to ensure it can fulfill its obligations with respect to nuclear safety at installations. Reviewing, and if necessary, revising or developing communications policies to ensure that obligations with respect to transparency and dissemination of appropriate information to local authorities, populations and stakeholders in the vicinity of a nuclear installation are properly incorporated into that policy. 

For entities working in the nuclear industry the 2014 Directive contains concepts and standards that warrant attention, particularly for contractors and sub-contractors doing business with licence holders. It may also be prudent for companies that have policies for doing business in the nuclear sector (whether individually or through common initiatives such as the Nuclear Power Plant Exporters Principles of Conduct) to consider whether any amendments should be made to these policies to take into account the requirements of the Directive.


Adoption of railway reform in France

The railway reform, which was announced by the French government at the end of 2012 (see here), has finally been adopted by the French Parliament. Most provisions of the new law (Law no. 2014-872 of 4 August 2014) will enter into force on 1 January 2015.

A structural overhaul of the railway industry will be implemented, with the creation of a new railway public group comprising three public entities: 

  • SNCF, as 'parent' entity, in charge of monitoring the group, ensuring social unity and strategic management; 
  • SNCF Réseau, as the unified infrastructure owner and manager; and 
  • SNCF Mobilités), the operating railway undertaking. 

The State will be heavily involved in the management of the new group. It will have representatives on the supervisory board of SNCF and on the boards of directors of SNCF Réseaux and SNCF Mobilités, and will also appoint two members of the management board of SNCF. It will enter into performance contracts with each of the three entities – a matter required by EU law in the case of the infrastructure manager.

These contracts will determine the financial trajectory to be followed by SNCF Réseau and SNCF Mobilités, which should help to stabilize the debt load of their predecessors (amounting to more than €40bn, and increasing by €1-1.5bn per year). The law also provides for principles to be applied to the financing of SNCF Réseau’s investments to bring its debt under control. In particular, above certain limits to be determined by the Parliament, investment projects for the development of the railway infrastructure will have to be financed by the State, local governments or any other entity. 

Regions will have an increased role and resources: they will be able to define the pricing policy for services of regional interest and to institute a transport tax to be paid by employers to fund the organisation of regional transport outside urban areas. They will be competent to create or operate railway infrastructure of regional interest. 

To implement EU requirements, the railway regulator (Autorité de régulation des activités ferroviaires), whose role is to ensure that access to the railway infrastructure is granted in an equitable and non-discriminatory manner, will have enhanced powers (for instance on the setting of fees for access to stations and on the appointment or revocation of the chairman of the board of SNCF Réseau) and a new advising role concerning the financial health of the railway system. 

Lastly, although the new law maintains specific regulations for employees of SNCF, SNCF Réseau and SNCF Mobilités, it also provides for the adoption (in a future decree) of common rules relating to working time for the whole railway sector; a national labour agreement will also apply to all railway sector participants.


Introduction of statutory gender quotas on the cards

The responsible Federal Ministries in Germany have recently issued a draft bill aimed at ensuring equal participation of men and women in high level corporate positions in the private and public sectors. The Federal Cabinet will decide whether to take the bill forward, after hearing from stakeholders and internal consultation.

According to the draft bill, in Germany’s 200 largest companies, women make up only 15 per cent of supervisory boards and four per cent of management boards. This is at odds with the mandatory principle of equality, stated in Article 3 of the German Constitution. Neither the German Corporate Governance Codex for publicly owned companies, nor voluntary commitments made by German industry have done much to improve the situation, making statutory regulation inevitable. 

Further, only around 27 per cent of the leading positions in the supreme Federal authorities and in companies partially owned by the Federal Government are filled by women. And, even though there is legislation requiring the promotion of women to these positions, there has been little progress towards addressing the lack of females in leadership roles in the public sector, probably due to the lack of sanctions in case of violation.

The draft bill concludes that all these figures do not reflect the fact that women make up over 50 per cent of the German population and that their qualifications, as well as their participation in the labour market, is constantly rising. Accordingly, the draft bill proposes three main strategies:

The “empty chair” policy

Beginning in 2016, a gender quota for supervisory boards will be introduced in all publicly owned companies. This would see both genders having a minimum of 30 percent representation on the board. If one gender gains less than 30 percent of the supervisory board positions at an election, the chairs provided for the underrepresented gender remain empty. About 120 companies would be affected by this regulation.

A flexible quota for 3,500 companies

From 2015, about 3,500 companies with employee board-level representation will be obligated to set target quotas in order to increase the ratio of women on supervisory boards, management boards and in high level positions. As there will be no minimum quota by law, companies will be able to choose a quota .

Female leaders in the public sector

The existing public sector legislation will be revised in order to implement mandatory target quotas for an equal gender participation in all public administration, courts and companies with federal participation.

Some political and economic stakeholders claim that a government-imposed quota is vital for a change, others though argue that a statutory regulation constitutes a substantial intrusion into corporate freedom and fails to reflect the unique aspects of certain industries, where qualified female candidates for leadership positions were just not available.


Law Commission recommends the introduction of conservation covenants

The Law Commission recently published a report recommending the use of a new statutory scheme of conservation covenants in England and Wales. If the recommendation is implemented by the government, the covenants would be made voluntarily between landowners and a “responsible body,” and contain an agreement to do, or refrain from doing, something on land for a conservation purpose. “Responsible bodies” will include local authorities and any public bodies or charities whose purpose relates to conservation. The covenants would attach to the land, binding the landowner who enters the original covenant and subsequent owners of that land, but would be capable of modification or discharge in certain circumstances. 

The proposed scheme has been well received by conservation groups. Natural England stated that the covenants “have a powerful advantage over [existing measures] in terms of their ability to commit land for conservation purposes for future generations.” The Law Commission has previously argued that, despite creating a voluntary burden, the covenants will also be beneficial to landowners seeking to secure biodiversity offsets; where developers compensate for damage to nature by providing benefits elsewhere. See our May 2014 Edition for further information.

The Law Commission proposes that the covenants could be enforced by means of court injunction and has recommended that “exemplary damages” should be available to encourage landowners to comply. 

The proposed scheme would though allow the modification or variation of the covenant by way of an application to the Lands Chamber of the Upper Tribunal. 

The Law Commission has submitted its report to the Secretary of State for Environment, Food and Rural Affairs and to the Lord Chancellor. The government now needs to decide whether to implement its recommendations.

Energy Savings Opportunity Scheme 

Legislation delivering the Energy Savings Opportunity Scheme (ESOS) recently came into force, to bring England and Wales in line with the requirements of the EU Energy Efficiency Directive 2012. ESOS requires larger companies and non-public sector organisations to carry out regular audits of the energy used by their buildings, industrial processes and transport to identify cost-effective energy saving measures. Participants must report compliance to the Environment Agency (as the scheme administrator). There is though no actual requirement to undertake the measures identified at this stage. 

Affected companies will need to decide whether they qualify for ESOS on 31 December 2014 (the qualification date). Subsequent qualification dates are every four years after that. The first compliance date by which ESOS assessments must be completed, and compliance notified to the Environment Agency is 5 December 2015. Subsequent compliance dates are every four years after that.

Does ESOS apply? 

ESOS applies to large UK undertakings and their corporate groups. It mainly affects businesses but can also apply to not-for-profit bodies and any other non-public sector undertakings that are large enough to meet the qualification criteria. For ESOS purposes, a large undertaking either has over 250 employees in the UK or has turnover exceeding €50m or an annual balance sheet exceeding €43m.

How to comply 

The ESOS energy assessment which participants are required to carry out includes: 

  • measuring total energy consumption over a 12-month reference period;
  • carrying out energy audits of at least 90 per cent of energy consumption;
  • identifying cost-effective recommendations to improve energy efficiency;
  • keeping ESOS evidence packs, consisting of a written record in relation to each ESOS assessment; and 
  • employing a lead assessor (listed on an approved register) to oversee the energy audits. 

The scheme will be administered by the Environment Agency who will be able to issue enforcement notices to participants in breach of ESOS Regulations. There are a range of civil penalties available including publishing penalty notices and financial penalties of up to £50,000. 

The Department of Energy and Climate Change has already published a guide to ESOS, outlining the requirements of the scheme and setting out practical steps to achieve compliance and improve energy management. The Environment Agency will be publishing its own compliance guidance, which will replace the DECC guide. This is expected in autumn 2014.

Availability of PCOs in private nuisance cases 

The Court of Appeal have recently considered whether it is appropriate for a protective cost order (PCO) to be granted in a private nuisance matter. The main issue for the Court was whether a private nuisance claim was within the scope of the Aarhus Convention. The Court decided that such claims could be the subject of the Aarhus Convention, provided the public benefit was obvious and not limited.

The Aarhus Convention, to which the UK is a signatory both in its own right and through its membership of the EU, consists of three pillars granting rights to the public in respect of access to environmental information, participation in environmental decision making and access to justice. In the latter case, signatories are required to ensure members of the public who have an interest in the proceeding or whose rights are being impaired have access to a review procedure to challenge environmental decision making, and that the cost of participating in these is not prohibitively expensive.

PCOs are a means to ensure claimants are shielded from the cost of environmental litigation where the Aarhus Convention is engaged. They cap the liability of the person granted the order to pay the costs of the other party in the event the former is unsuccessful. 

In the case, Austin v Miller Argent (South Wales) Limited, the claimant brought a claim in private nuisance relating to dust and noise. It involved allegations that the conditions attached to a planning permission relating to the suppression of these factors was being breached, and that the resulting dust and noise unreasonably interfered with the enjoyment of Mrs Austin’s home. Mrs Austin also applied for a PCO.

This was refused at first instance, so Mrs Austin appealed. 

The Court of Appeal decided that private nuisance actions can fall within the scope of the Aarhus Convention. However whilst the claim demonstrated a close link with the environmental matters regulated by the Convention, if the claim was successful, it was not clear it would achieve significant public environmental benefits. A claim which was mainly to protect private property interests, and the public benefit was only limited or accidental, was not be within the scope of the Convention. 

The Court went on to say that even if the claim had been found to be within scope, the application would still fail as protection of a private property interest was a significant part of the claim, it was not satisfied Mrs Austin has explored the possibility of statutory nuisance proceedings and the defendants had already incurred substantial costs defending an unsuccessful group litigation claim brought by Mrs Austin.