Food and drink manufacturers risk incurring even greater financial penalties if they pollute the natural environment following the introduction of new laws, warned an insurance broker.
The Environmental Damage Regulations, which came into force last March, could present a serious threat to businesses that don’t take precautions, according to Jardine Lloyd Thompson (JLT).
Ian Edwards of JLT’s food drink practice advised firms to take out Environmental Impairment Liability insurance to meet some of the extra costs of the new regulations not covered by traditional standard UK Public Liability policies.
But, Edwards added: “This insurance will not, however, provide cover for additional fines and penalties imposed by the regulatory authorities. Clearly, there is no substitute for a business implementing and regularly reviewing its environmental protection policies.”
Since the regulations were enacted, businesses have been required to notify the authorities if environmental damage has occurred or is threatened to non-owned water, land, protected species, natural habitats and sites of special scientific interest.
Other interested parties, such as environmental groups, can also report actual or suspected environmental damage.
Businesses will then be required to take steps to prevent the threat of environmental damage. If damage has already occurred, they will be liable for any costs incurred to remedy or prevent further damage.
They must return the affected resource to the condition it was in before the environmental damage occurred. If that is not possible, they may be required to pay the costs of ‘complementary remediation’ to restore or create a similar habitat, possibly at another site.
Businesses might also be ordered to pay ‘compensatory remediation’ costs to provide an interim environmental resource while the original resource recovers, claimed the broker.
Failure to co-operate will result in financial penalties over and above these remediation costs.
Edwards said: “Businesses in the food and drink sector should ensure they fully understand the additional environmental risks they now face. They may feel that their ingredients, products or processes pose a very low potential risk to the environment, but seemingly innocuous substances in the wrong place can represent a serious pollution risk.”