Penalties for environmental offences have been increasing since the introduction of the Sentencing Council's 'Environmental Offences: Definitive Guideline' ('the Guideline').
The Guideline applies to all sentencing on or after 1 July 2014 in England and Wales for specified environmental offences, regardless of the date of the offence.
Before the introduction of the Guideline, fines exceeding £1 million for environmental offences were extremely rare, but they are now more common. In January 2016, Thames Water Utilities Ltd (TWUL) was fined £1 million for causing pollution to a canal. In December 2016, Southern Water Services Ltd was fined £2 million for causing pollution to the Kent coastline. On 22 March 2017, these sentences, considered exceptional at the time, were dramatically overtaken by another fine for TWUL imposed by Aylesbury Crown Court - an eye-watering £19.75 million for causing pollution to the River Thames, with an additional £600,000 in costs payable to the Environment Agency.
Thames Water Utilities Prosecution
The prosecution followed a series of six separate sewage pollution incidents on the River Thames, occurring at different sites between 2012 and 2014. Discharges of sewage into the river and its tributaries resulted in major environmental damage, including visible sewage and the death of birds, fish and invertebrates. According to the Environment Agency's press release, 'Investigations.revealed a catalogue of failures by TWUL management'.
TWUL has issued its own press release, in which Chief Executive Steve Robertson says: 'We deeply regret each of these incidents at six of our sites during the period 2012-14. Since then we've reviewed how we do things at all levels and made a number of key changes. These have included increasing the numbers of staff in key operational roles and investing heavily to improve reliability. As a result, our performance has significantly improved. We understand our huge responsibilities to the environment, have learned from these serious events, and continue to invest at the rate of around £20 million a week on continually improving our service to our customers and the environment.'
Board level and shareholder commitment
Fines of this magnitude are not only designed to make company directors and senior management sit up and take notice of their environmental responsibilities, but are also intended to send a clear message to shareholders about their own responsibilities. Most environmental offences are 'strict liability', meaning that fault is not required, but awareness and forward planning can result in a reduced risk of an incident occurring in the first place. Where there has been a breach which has resulted in prosecution, the Court of Appeal has made it clear that Board-level commitment to compliance with environmental regulations will be a significant mitigating factor.
Proactivity key to compliance
On that basis, companies are likely to benefit from taking a pro-active approach to environmental compliance:
- environmental compliance should appear regularly on the Board agenda;
- the Board should put in place systems for monitoring and reporting on environmental compliance. It should receive both specific (eg incident-led) and routine reports;
- the Board should act on specific and routine reports which flag environmental compliance weaknesses; and
- environmental compliance discussions should be minuted in case of future investigations.
Large fines are not only limited to water companies. In April 2016 waste management company Powerday was fined £1.2 million for various waste management offences. It is also worth noting that even if they are lower in absolute terms, as a proportion of turnover fines for smaller companies may be larger (and therefore more damaging to the business) than the highest fines imposed on water companies.