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Avoid Contributing To Ecocide – Know Your Supply Chain – Clean Air / Pollution

Sustainability has risen to the top of the agenda for businesses
around the world. Governments, investors and the public demand that
organisations play a part in the global push to eliminate, or at
least limit, the environmental impact of their business operations.
This evolving landscape means the risk of inadvertently breaching
regulations via supply chain and business partners is a real
threat: one that could lead to severe reputational damage.

By applying advanced analytics to enterprise and public data,
it’s possible to proactively minimise the risk.

Political and public focus on environment and sustainability
issues is growing apace. President Biden is showing that he means
business on climate change with initiatives such as his reversal of
former President Trump’s withdrawal from the Paris Agreement,
and Biden’s Executive Order on Climate-Related Financial
Risk1 along with his targeted climate change
programs.2 The virtual summit he hosted to mark Earth
Day in 2021 is another sign of his intentions, as are the more
ambitious emissions targets announced by the United States.

Biden’s stance seems to be accelerating similar shifts in
the international community, including the heightened environmental
claims and targets discussed by participants at the virtual summit
and the announcement that the United States and China will
collaborate on environmental issues.3 The UK government,
too, has emphasised its desire to “build back greener”
following the pandemic.4 However, the environment does
not feature in Liz Truss’s three priority areas, but these are
early days.5

Another instance of the trend to formalise environmental
concerns is the EU’s reinforcement of its Sustainable Finance
Action Plan with the Renewed Sustainable Finance
Strategy,6 focusing on governance, ESG data and digital
finance among other requirements. Also expected is a “brown
taxonomy” classifying certain activities as unsustainable,
thereby incentivising divestments from such activities and making
access to capital more cumbersome and costly for affected
businesses.

Faced with mounting consumer pressure and the need to
demonstrate to investors that they are behaving responsibly,
businesses themselves are taking action to make their supply chains
more sustainable, without waiting for government or regulatory
intervention. Effective action on the environment cannot come too
soon, whether it’s from government or business. Despite current
efforts to combat deforestation in Brazil, for example, it has
recently hit its highest level in 10 years.7

Will ecocide be criminalised?

There are already many incentives for businesses to become as
sustainable as possible, but now a more specific risk is emerging -
that of being penalised for participation in ecocide. Ecocide has
not yet been criminalised to any significant extent, and until now
conflicting interests have made it difficult to do so (for
instance, China could resist sanctioning Brazil for rainforest
destruction because of its dependence on Brazilian soy).

That picture may soon change. Biden’s stance may lead to the
emergence of an international legal framework for acting against
companies involved in environmental damage. Within the EU, too,
there is talk of criminalising ecocide.8

Given the emergence of a raft of new legislation, the concepts
of undertaking readiness assessments and horizon scanning for
future regulation are very much part of current corporate
governance thinking. And, in view of the often-extraterritorial
reach of such regulations, businesses need to think strategically
about not only which countries they operate in, but also where
their supply chain operates.

Towards a legal framework for ecocide

Ecocide was first promoted as a potential international crime as
long ago as the 1970s. Yet it is only more recently, as the effects
of climate change have begun to make themselves felt, that the
concept has really attracted public interest.

There are three key possibilities here:

First, the International Criminal Court (ICC) could amend the
Rome Statute to create a new crime of ecocide, which would
underscore the seriousness of the crime by placing it alongside
genocide and crimes against humanity. Potential problems include
the fact that major states (for instance China, India and
Indonesia) are not signatories to the Statute; in addition, the
amendment would be time consuming and would probably face
opposition.

A second, potentially easier, option is for ecocide to form the
basis of an international convention, to be implemented
domestically by states that choose to ratify it – though it could
then be difficult to compel states to comply with the convention.
Significantly, the ICC cannot prosecute corporations, whereas any
countries that chose to incorporate ecocide into their domestic law
could do so. Third, instead of making ecocide a standalone legal
concept, certain environmental crimes could be prosecuted by the
ICC under the current Rome Statute, albeit only in the context of
armed conflicts. The Rome Statute includes some types of
environmental damage under the definition of “war crime”,
and the ICC has expressed interest in prosecuting war crimes with
an environmental focus.9,10

For the crime of ecocide to become law, a definition is needed.
A good starting point is the one drafted by the Stop Ecocide
Foundation (“SEF”):

“Ecocide” means unlawful or wanton acts committed with
knowledge that there is a substantial likelihood of severe and
either widespread or long-term damage to the environment being
caused by those acts.

This definition would have to be refined to address questions
such as the scope of environmental damage targeted: after all, a
wide range of useful human activity causes damage that could be
viewed as “widespread” or “long term”. Although
these terms encompass the types of harm that most people would
associate with “ecocide”, they risk an overbroad
approach, as a wide range of useful human activity causes damage
that would meet that threshold. For instance, a lithium mine may
cause severe long-term environmental damage, but be essential for
developing long-term renewable energy storage. As we have discussed
before, unlike other international crimes, ecocide will need to
balance the social or economic good of an act against the
environmental harm that it causes.11 Uncertainty around
the mens rea (the mental element of the crime) would also need to
be resolved.

One of the most interesting features of this definition is that
it includes “unlawful acts”. Much of the deforestation of
the Amazon rainforest, for instance, is already illegal, so this
definition may have the effect of advancing that kind of offence to
the level of an international crime.

The challenge to companies

The shift in the political climate means that companies need to
take urgent action to make sure that they comply fully with their
own policies and stakeholder expectations in relation to ESG. With
new due diligence requirements that came into force in July 2021,
the EU is imposing requirements on companies to understand their
supply chains better,12 as highlighted in a previous
paper by FTI Consulting.13

If ecocide is criminalised, depending on the framework, senior
decision makers and even companies may run the risk of being
prosecuted for causing significant environmental damage
(potentially including conduct that is already unlawful at a
national level).

Just as companies need to avoid shipping goods into countries
where embargoes and restrictions apply because of geopolitical
tension, they may soon need to avoid doing business with, for
example, companies using the wood from illegal forestry in South
America, or products of subsequent agriculture. We have seen this
type of effect in other sectors too: for example, in relation to
cotton and other supplies out of Xinjiang in China and even in the
UK, where allegations around labour conditions were cited by the US
government as a reason why a company could no longer import into
the United States.14

While most companies would say that they are already doing their
best to avoid contributing to such disasters, it’s hard to be
100% confident. It is not always easy to know who you are dealing
with in the more remote parts of the supply chain. The
manufacturing industry has historically had long and complex supply
chains, requiring companies to understand many tiers with a broad
range of products, particularly where the inputs include wood,
paper and plastics. Even with extensive due diligence and risk
management, it can be difficult to confirm that nobody along the
supply chain is inflicting significant environmental damage and/or
violating environmental legislation and regulations.

What can be done?

There is no “one-stop shop” for compliance and
transparency when it comes to mitigating the risk of environmental
harm within your supply chain. Good practice focuses on a
“toolkit” approach to managing risk: governance, a robust
(and tailored) risk assessment, due diligence and ongoing
monitoring, as well as a programme of audits that is proportionate
to the risks.

Transparency and traceability in supply chains has emerged as an
area of focus for companies, given investor and consumer demands to
understand the integrity of products. As a result, the tools to
ensure compliance with ESG commitments already exist.

By applying these advanced analytical tools to enterprise and
public data, it becomes possible to trace extra layers of
involvement that a company may not be aware of. The analytical
techniques can raise red flags where there is a possible risk, or
where there have been issues in the past, so that human experts can
investigate further. In this way, companies can ensure that they
are adhering to their own ESG policies, and thus can remain on the
right side of the law and avoid reputational damage.

This approach requires expertise in analysing large-scale data
plus knowledge of investigative and compliance techniques. It is
worth taking the time to develop effective compliance, detection
and risk management programmes – which can often be based on
existing initiatives – to protect against other inherent risks.

Companies should look to build a comprehensive approach to
monitoring risk using innovative methods that leverage automated
tools, rule libraries, statistical analyses packages, and machine
learning algorithms.

Footnotes

1. https://www.cnbc.com/2022/07/20/biden-announces-new-climate-change-programs-no-emergency-declaration.html.

2. https://www.cnbc.com/2022/07/20/biden-announces-new-climate-change-programs-no-emergency-declaration.html.

3. https://www.npr.org/2021/04/21/989165775/on-climate-u-s-and-china-pledge-cooperation-but-competition-will-also-be-prominent.

4. https://www.gov.uk/government/news/uk-enshrines-new-target-in-law-to-slash-emissions-by-78-by-2035.

5 .https://www.gov.uk/government/speeches/prime-minister-liz-trusss-statement-6-september-2022.

6. https://finance.ec.europa.eu/sustainable-finance/overview-sustainable-finance_en.

7. https://imazon.org.br/en/imprensa/deforestation-in-the-brazilian-amazon-reached-2-095-km%C2%B2-in-july-and-the-last-12-months-cumulative-is-the-highest-in-10-years.

8. https://www.politico.eu/article/ecocide-environmental-crime/.

9. Statement of ICC Prosecutor, Karim A.A. Khan QC, on
the Situation in Ukraine: Receipt of Referrals from 39 States
Parties and the Opening of an Investigation, Office of the
Prosecutor, 2 March 2022. Policy Paper on Preliminary Evaluations,
The Office of the Prosecutor of the International Criminal Court,
November 2013.

10. Policy paper on case selection and prioritisation,
The Office of the Prosecutor of the International Criminal Court,
September 2016.

11. https://www.wilmerhale.com/en/insights/blogs/WilmerHale-W-I-R-E-UK/2010810-the-definition-of-ecocide.

12. https://www.europarl.europa.eu/RegData/etudes/STUD/2020/654191/EPRS_STU(2020)654191_EN.pdf.

13. https://getready4.eu/wp-content/uploads/2020/07/Human-Rights-Due-Diligence-and-Sustainable-Supply-Chains-An-overview-from-FTI-Consulting-Europe-US-and-Asia-1.pdf.

14. https://www.bloomberg.com/news/articles/2021-03-02/boohoo-faces-request-for-u-s-import-ban-over-labor-concerns.

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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