UK: When Civil Society Overreaches Regulation

Last Updated: 29 April 2019
Article by Stephen Shergold, Sam Boileau, Laura Mackett, Pamela Coulthard and Annabel Hodge

On 27 March, the Dentons Environment team delivered the first in a series of seminars on UK Environmental Law – 2019 as it happens (and beyond). The team explored where civil society demands more from business than the current regulatory regime and how this is impacting a wide range of sectors and investment decisions around sustainability and environmental standards.

In heavily regulated business environments we can see what's coming down the pipeline. The challenge we face today is that, in many countries around the world, civil society, whether through litigation, social media, shareholder activism or other avenues of pressure, is impacting how companies are making decisions and taking action. The team considered how we can foresee civil society driven change as well as how well-intentioned investments made today in response to civil society could deliver a net positive financial impact in the short term, but could become stranded investments or clash with policy aims and law once government reacts and the regulatory landscape shifts.

The role of civil society in the environmental space was analysed from three perspectives:

  1. how civil society drives the policy agenda;
  2. how civil society is effectively becoming the regulator; and
  3. how civil society is influencing client behaviours.

The resounding conclusion was that civil society is a growing in influence in today's business world, reaching a position of equivalent importance to regulatory compliance in some businesses, and that this trend seems set to continue.

Pamela Coulthard discussed how, in the wake of Blue Planet 2 and increasing awareness around the environmental damage caused by discarded plastic, civil society has forced UK government to drive faster on its waste policy and legislative agendas. Whilst laws have been passed relating to single-use plastic carrier bag charges and microbeads, both of which have been successfully implemented, the current raft of consultations on issues such as plastic packaging taxes, deposit return schemes and a bans on other single use plastic items shows that Government still has a lot to do to keep up with the demands of public opinion. This also represents a challenge for businesses, who must balance public pressures with legal compliance.

The team then looked at the way in which in civil society has gone one step further than just driving the legislative agenda and has started to perform a regulator-type role. Sam Boileau discussed how environmental law NGOs, cities and impacted parties had recently taken legal action against polluters and governments. Client Earth, Plan B, WildEarth Guardians and others have been holding governments to account in the courts for non-compliances in to the areas of climate change and air quality, as well as successfully driving policy change.

Laura Mackett discussed how the law on modern slavery and human trafficking statements provides us with a regime specifically designed with weak enforcement powers but a clear intention for consumers, investors and NGOs to instead be the ones monitoring and policing non-compliance. NGO threats, negative publicity and reputational damage fears have been forcing businesses into compliance more quickly than Home Office action in some cases. Laura also considered how in a time of economic austerity, where we are seeing staffing cuts within regulators and Brexit placing further strain on Government resources, we could see a trend emerging in light touch statutory enforcement powers and Government pushing society to do the work for them.

Laura then looked at how NGO Client Earth are holding businesses to account for arguably breaching Companies Act requirements by failing to adequately address in reports to shareholders the risks or trends that climate change or the low carbon transition present to their businesses. Client Earth recently reported a number of businesses to the Financial Reporting Council Conduct Committee for this.

The team lastly focused on civil society's direct influence on client behaviours. Here, the spotlight was placed on companies that had reformed their operations, sometimes at great expense, not because of a change in law but because it was the "right" thing to do.

Annabel Hodge looked at supply chain sustainability, including WWF's Palm Oil Buyer's Scorecard and Iceland's decision to remove palm oil from its own-brand products. Annabel examined Pret-a-Manger's commitment to go beyond statutory compliance in food labelling and allergic reaction warnings on packaging following two fatalities after customers had consumed their products, as well as possible contractual protection options in supply chains. Businesses are clearly responding to the concerns of civil society before legislation has even been contemplated by Government.

The severe environmental impact of food waste was then brought into focus by Laura Mackett, discussing civil society's growing recognition of this and how major supermarkets are adapting and directing capital expenditure in response to consumer and NGO pressure rather than the law. Laura also discussed how we are currently seeing an explosion of initiatives and digital platforms promoting food waste reduction by the "rescuing", sharing, purchase and consumption of food that would have otherwise become waste – designed and driven by society, not law. Government is now starting to take action too, consulting on proposals relating household and business food waste segregation and collection.

In their next breakfast seminar in June, the Dentons Environment Team will be looking at the weight of proposed policy, law and guidance coming out of Government. This will be followed by a full-day session in October mapping out the wider landscape of environmental law in 2019 and beyond.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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