Environmental regulations: The Must-Know List

Sponsor: Irwin Mitchell LLP

Firms must quickly become well-versed in a swathe of environmental law, some of it recently enacted. Much of the new regulations affect property and companies’ ability to relocate to a new site, and the effect of their manufacturing operations on air, water, noise, adjacent land and the site’s biodiversity. Be well prepared, is the advice of Claire Petricca-Riding, partner and National Head of Planning and Environmental Law at Irwin Mitchell LLP.

Above: Claire Petricca-Riding, partner and National Head of Planning and Environmental Law at Irwin Mitchell LLP. Credit: Irwin Mitchell LLP

Companies cannot delay in diligently preparing for a wave of legislation designed to protect the environment and slow climate change. Many firms are underprepared for the changes that may affect their operations and premises – several laws have been enacted in the last 12-18 months while firms have been in survival mode following a series of big challenges and crises, including supply shortages, delivery delays and high inflation.

Since the pandemic came under control, climate change is back as the biggest existential threat to society and where mass public attention leads, legislation follows. Claire Petricca-Riding, an expert in planning, real estate and environmental law, says manufacturers need to devote some time to studying the changes.

What is often overlooked by firms are the green regulations on real estate that affect occupying new premises, related to the environment. Claire explains the considerations:

To capture your legal (environmental) risks and liabilities when relocating to a new factory or warehouse, especially if you engage in new types of activity there, you must consider what your whole operational and environmental impact will be. Our horizon scanning exercise assesses what sustainability means for your company, to effectively produce a sustainability practise blueprint. For example, how could you reduce carbon emissions in your real estate portfolio? Simple actions like fitting LED lightbulbs and EV charging points, yes, but this report will assess your air, noise, odour and wastewater emissions. Do your activities require new environmental regulations? Might local residents have reason to complain? Does your site need a wastewater treatment plant, to discharge your grey water into surface water courses safely?

Air quality is increasingly important. Last year, a young girl tragically died due to exposure to poor air quality in a home. A greater regulatory burden is coming from both The Environment Agency and local authorities on the effect of air quality from building developments.

There are many other facets to consider – and budget for. Much is driven by the government’s Net Zero Strategy, a series of policies to commit the UK to reaching net zero carbon emissions by 2050. One is more robust detail in companies’ ESG policies or commitments. An Irwin Mitchell client, a luxury carmaker, installed a large solar panel on its roof. The entire project – covering planning, its carbon emissions, its ability to generate electricity and feed surplus power into the grid – was assessed as part of its ESG plan, which has a stated criteria of powering the factory with 10% renewable energy. Every vehicle built will have its own carbon budget.”

Claire writes about some of the detail of companies’ environmental regulatory liabilities on the UKMO website – see the Irwin Mitchell section.

Here she summarises the most important regulations that manufacturers must know in 2022:

1. Environment Act 2021 (2021 c 30)

Provides the UK’s new framework of environmental protection. The main objective of this act is to fill the gaps in UK’s environmental law created by Brexit when the UK left the largely EU-led regulatory framework.

The Environment Act 2021 regulates on several matters including Environmental governance (environmental targets and creation of the Office of Environmental Protection – OEP), Waste, Air, Water, Nature and biodiversity (including deforestation and Biodiversity Net Gain – BNG), and Conservation covenants.

One provision to heavily affect manufacturers is Part 3 Waste and Resource Efficiency. These provisions give power to the Secretary of State to make new regulations for Producer Responsibility waste packaging, Resource Efficiency requirements deposit schemes and electronic waste tracking and hazardous waste and powers to make
charging schemes.

2. Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022, (SI 2022/31)

These regulations make it mandatory for certain companies to make climate-related financial disclosures in their strategic reports. The companies subject to this requirement need to comply with two conditions. First, they should have more than 500 employees. Second, they should either have a turnover of more than £500m or have securities admitted to trading on the Alternative Investment Market. The obligation to report the climate-related financial disclosures started on 6 April 2022.

3. Carbon Budget Order 2021 (SI 2021/750)

This Order fixes into law the sixth carbon budget’s target of reducing emissions by 78% by 2035 compared to 1990 levels. It provides that the carbon budget for the sixth budgetary period (2033-2037) is 965 million tonnes of CO2 equivalent. Among other relevant matters of the Sixth Carbon Budget, it incorporates for the first time the UK’s share of international aviation and shipping emissions.

The government claims this to be the “world’s most ambitious climate change target”. In that regard, it is expected that the government would start introducing incentives for all businesses to reduce their GHG emissions.

4. The UK Energy Security Strategy. Launched April 2022

This strategy was not only awaited by the stakeholders of the energy sector, but also by all energy users and industries due to the rising cost of energy and ever present energy security issue which has been brought into sharp focus with the war in Ukraine.

The strategy aims to deliver:

• 24GW of nuclear by 2050

• 50GW of offshore wind by 2030

• Up to 5GW of floating wind

• An increase (up to five times) in solar energy by 2035

• Up to 5GW of green hydrogen by 2030 – up to 10GW overall

• Increase funding for heat pump manufacturing

The strategy was supposed to identify how the UK would become energy independent, but we believe it falls short on that aspect. More on the scope of the Energy Security Strategy in my commentary on the UKMO website.

“What is often overlooked by firms are the green regulations on real estate that affect occupying new premises”