in recent years, a number of Australian environmental protection agencies have pledged greater enforcement activity against businesses that fail to comply with their environmental obligations.
Environmental interest groups are adopting increasingly sophisticated strategies to target sectors and businesses that fail to adhere to their environmental obligations. Strategies include using third-party litigation rights, lobbying shareholders and raising awareness with financiers. But what does environmental compliance look like? How should a business approach the complex, wide ranging and often highly technical legislation underpinning Australian environmental law?
In this article, we identify the two key regulation styles used to achieve environmental protection, explain differences in how they are enforced and provide you with a starting point on building your approach to achieving environmental compliance.
Identifying the type of environmental obligation
Environmental obligations are generally expressed in one of two broad styles:
- those requiring you to do (or not do) something specific (the “rules”); and
- those requiring you to achieve a standard of conduct or an outcome, but without specifying the means of achieving compliance (the “standards”).
The environmental rules
The environmental rules (also known as “prescriptions”) tell you specifically what steps must be taken by your business to achieve compliance. Examples of prescriptive duties include:
- certification and licensing to transport hazardous waste on public roads;
- the provision of spill containment equipment; and
- the dimensions of warning signs on a premises.
Prescriptive duties are often included in licence conditions issued by State and Territory environmental agencies in relation to the specific pollutant that is the focus of the licence. Other prescriptive regulations include pollution reporting regimes that require a business to monitor, measure and report to State or Federal environmental agencies on the release into the environment of particular substances (eg greenhouse gases) or the use of resources (eg water and energy).
The environmental standards
In contrast, the other key approach is the use of “performance-based” obligations that identify a standard of conduct or a desired outcome that must be achieved, but where the means of attaining the standard is largely open to your business to determine.
Compliance with this style of obligation normally requires you to adopt a riskmanagement approach to demonstrate compliance. Risk management requires you to:
- identify hazards associated with your businesses’ activities that may affect the performance standard;
- assess the risk in terms of the likelihood of an incident or factor affecting the standard and the severity of the consequence if that risk arises; and
- identify and implement control measures that will eliminate or reduce the risk posed by the hazard to a level that complies with the performance standard.
This approach is often described as “self-regulation” because the substantive decisions on appropriate conduct or actions are the responsibility of your business. Performancebased obligations are often included in environmental licences as general conditions beyond the specific values imposed on licensed discharges.
Important differences in enforcement
Compliance with the prescriptive obligations is relatively straight forward, as the law tells you what you must do to achieve compliance. A common approach is for the legislation to specifically incorporate an Australian standard to provide the detail of the specific legislative obligations. The specific nature of prescriptive obligations means that non-compliance tends to be easier to detect and easier to prosecute.
In contrast, compliance with performance-based obligations is only achieved where a business takes positive steps and exercises judgement to identify the aspects of its operations that may give rise to environmental hazards, assessing the associated risks and putting in place control measures to achieve the required standard.
Enforcement agencies often produce codes of compliance or guidelines that provide practical examples for achieving compliance. These codes may be used by courts as a practical standard by which your businesses’ conduct will be judged, although it remains open to your business to identify and undertake alternative and potentially more appropriate methods to comply with the equivalent standard.
Compliance with performance-based obligations is often harder to detect and may be more difficult to prosecute in terms of proving that the standard has not been reached or that not all practicable steps were taken in the circumstances.
Bottom line for employers
Identifying the two obligation types that apply to your businesses’ activities is the first step to determining the form and content of your compliance action plan.
The nature of prescriptive obligations generally enables a business to generate a finite list of these obligations, which can be distilled into a “checklist” and “ticked off” at regular intervals by an appropriately trained worker.
Compliance with performance-based obligations, however, needs a more systematic approach where key decision makers consider potential environmental hazards that may affect their organisation’s compliance. Ideally, this process should culminate in the development of a company policy supported by procedures, training, consultation and audits.
Together, your approach to addressing prescriptive and performance-based obligations can form the basis of a robust and effective environmental compliance system.