It is now six months since the Environment Act 2021 came into force, and placement of the UK Government’s 25-year environment plan ‘A Green Future’ onto a statutory footing. In addition to the provisions relating to environmental protection, promoting biodiversity and pursuit of clean air and water targets, the Act also contains a number of provisions which are likely to have a material impact on both manufacturers and producers, across a wide range of sectors.
Whilst the Act itself serves to provide a foundation – with many of the specific details being left for future regulations – there has already been much commentary as to the seismic shift in attitude and procedures that will likely be required as a result.
For example, Schedule 4 to the Act provides a framework which will prevent any product or material becoming waste, and/ or reducing the amount of any given product that becomes waste. Given the Government’s continuing war on plastic, that appears to be an early contender to be caught when more detailed regulations are ultimately introduced. However, the Act itself is not drafted in such limited terms and it is more than likely that, following future consultations, additional materials will be caught by this general provision.
It is unclear when specific regulations will be introduced to flesh out the framework provided within the Environment Act, and in their absence there is a degree of speculation as to how individual provisions will take effect, or how they will impact organisations on a day-to-day basis. That being said, the intended direction of travel towards increased sustainability and reuse/ recycling is clear.
What are the likely practical implications for businesses?
At this early stage, organisations may want to review the environmental impact of their own operations and consider whether there are areas within their business where more could potentially be done. It would be advantageous for businesses to undertake this task now, and before they are compelled to do so, in order to best position themselves going forwards. In due course, it is anticipated that businesses will be required to actively demonstrate and provide detailed information as to their sustainability credentials.
There is likely to be an increase in the use and promotion of ESG scores, which are already being used within the banking sector, to help companies report in a comparable and consistent manner. However, it is likely that similar methods of audit will increasingly be used across sectors in order to score an organisation’s compliance, for example during tender processes. Whilst it may be some time away, it is possible that environmental scores may attach to businesses in much the same way that efficiency ratings currently attach to white goods.
In order to demonstrate their environmental credentials, businesses will need to have a real understanding of their own sustainability measures, and how these correlate with and help promote the key aims of the Act and Government’s 25-year plan.
This trend of increasing demonstrable environmental compliance is unlikely to be restricted to business-to-business operations, and it is expected that there will also be a rise in the provision of environmental information to end consumers.
For example, the Food Labelling (Environmental Sustainability) Bill proposed a kitemark for food to indicate that they had environmentally sustainable origins, such as protecting endangered species, preventing biodiversity loss, avoiding deforestation and avoiding increased carbon emissions.
Although the Bill was introduced it failed to complete its passage through Parliament before the end of the 2019-21 session and has not progressed further. That notwithstanding, the introduction of this draft legislation is indicative of a general parliamentary intention and drive.
How will the regulators respond?
An ability to assess the scope and extent of environmental compliance is potentially outside the current knowledge and experience of the various workplace and environmental regulators.
Whilst the Environment Act 2021 establishes the Office for Environmental Protection, this organisation is intended to hold the government to account. It remains unclear who is going to enforce against private organisations, as well as where their experience will come from.
It may be the case that self and peer regulation comes increasingly to the fore, especially if ESG scores become omnipresent, with poor scores resulting in a loss of trade. If so it would therefore be within every organisation’s interest to actively compete with others in the market to achieve the best score.
What can businesses do now?
Businesses need to take steps to review the environmental impact of their operations in preparation for future regulations being introduced, in accordance with the provisions of the Environment Act 2021. The current priority is focussed on plastics, and we suggest that organisations may want to ask themselves whether its use can be reduced within their operations.
This is especially so given the recent introduction of the Plastic Packaging Tax, which aims to increase the amount of recycled plastics used by imposing increased costs on packaging which does not contain a required percentage of recycled material.
What does the future hold?
Future regulations will require a cultural change within businesses, and whilst environmental credentials are currently given some attention, their importance looks only set to increase significantly and in a meaningful way. These cultural changes will need to flow from the top of organisations and cannot be seen or treated as a simple a tick-box exercise. The emphasis on sustainability will require a new mindset and shift in focus where the aims of a circular economy are prioritised and actively promoted.
All of the above is a long-term process and change will not occur overnight, but we are starting to see a shift in emphasis. For example: some confectionary is now being sold in paper instead of plastic wrapping; an exponential increase in the hire of clothes, which in turn reduces waste; and a move away from private ownership towards reusability between individuals.
Sustainability may be considered to be something of a ‘hot topic’ at the moment, but its impact goes deeper than this and rather than being a passing phase, is likely to become a central feature of both life and commercial practices.