Environmental crimes involve violations of relevant legal obligations, such as deforestation, wildlife crimes, habitat deterioration, illegal waste shipment or dumping, pollution offenses and illegal trading of hazardous substances. Such crimes have far-reaching impacts, not only on ecosystems and environment but also on society. According to the European Council, environmental crime is the third largest criminal activity in the world, grows at a rate of 5-7% and causes annual losses of EUR 110-281 billion. Due to their often cross-border nature, environmental crimes are highly lucrative but challenging to detect, prosecute and punish.
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#1. Recognising the connection between different types of crime can improve the detection of ESG-related crimes
Environmental crimes are often part of a wider web of criminal conduct that overlaps with an array of financial crimes and human rights violations. Serious environmental crimes such as deforestation are frequently accompanied by financial crimes like fraud, corruption, forgery, and human rights violations. Although corruption is by its nature difficult to quantify, even conservative estimates suggest that it costs the EU economy at least EUR 120 billion per year.
Understanding the impact of corruption and fraud on Environmental, Social, and Governance (ESG) issues - and vice versa - is important for professionals working in compliance, risk management, and anti-financial crime sectors. By recognising the link between different types of crime, signals of ESG-related crimes can be better identified.
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#2. An effective compliance program is essential for any business
The Corporate Sustainability Due Diligence Directive (CSDDD), effective from 25 July 2024, requires companies to conduct comprehensive due diligence on human rights and environmental impacts throughout their value chain. This will provide companies with greater insight into their suppliers and assist investigating authorities and regulators in proving the required knowledge in the context of criminal liability for wrongdoing in the supply chain.
The New Environmental Crime Directive 2024/1203, adopted on 11 April 2024 and effective from 20 May 2024, must be implemented into national law by 21 May 2026. It aims to combat environmental offenses more effectively by introducing (i) new criminal offenses, (ii) detailed sanctioning levels for natural and legal persons and (iii) measures that member states must take to prevent or effectively prosecute offenses. Several countries have already criminalised ecocide and the Netherlands is considering a bill on the Criminalisation of Ecocide (Wetsvoorstel strafbaarstelling ecocide). The proposal for an EU Directive on combatting corruption is another step in further expanding the legal framework to counter corruption.
Considering the extension of criminal offences and the corresponding sanctions, companies should evaluate the risk potential of their business activities and adjust their internal environmental compliance management system. A proactive approach will help mitigate potential criminal law risks for both individual employees and organisations.
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#3. Compliance involves establishing and maintaining a complaints procedure
The bill International Corporate Social Responsibility (Wetsvoorstel verantwoord en duurzaam internationaal ondernemen) translates European rules into Dutch law. Noteworthy is that it provides for a complaints procedure for (legal) persons who are affected or have reasonable grounds to believe that they may be affected by an adverse consequence and representatives acting on their behalf, such as civil society organisations and human rights defenders. Civil society organisations may also file a complaint concerning adverse environmental effects. Among other things, the complaint procedure should be fair and publicly available. This further emphasises society as an important stakeholder for companies to take into account.
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At NautaDutilh, we closely monitor these developments to remain well-informed. Should you have any questions regarding Integrity in Sustainability and its implications for your current and future business operations, please do not hesitate to contact us.