Environmental Law 2022

Global Overview

Contemporary environmental problems are predominantly global in their cumulative consequences. Traditional transboundary issues of water management and air pollution, increased demand and decreased supply, and a continued decline in biodiversity have an enormous impact on our highly interdependent world economy and remain the principal drivers of global environmental policy and regulation. This introduction considers some of the main trends and themes in international environmental law and how these might influence its future development.

Climate Change

The future of international environmental law will continue to be framed by the complexity of the interlinked environmental, social and economic challenges now confronting decision-makers. Record high temperatures, polar ice loss, wildfires and droughts continue to worsen, affecting communities, nations and economies around the world. Deemed the most critical, climate change continues to be the predominant driver of current global environmental policy.

Climate change continues to be a critical driver for business and the economy. Efforts to reduce carbon emissions continue to drive development of renewable technologies. Globally, carbon mitigation techniques include waste-to-energy, improved management of manure and herds, and fluorinated gas substitution. Market shifts continue to favour lower-carbon products and services. However, the main driver of fossil fuel consumption and reduction is energy security and independence. The war in Ukraine has sharpened the focus on energy independence for much of Europe.

Corporations are focused on implementing environmental, social and governance (ESG), carbon reporting and management of their global carbon footprint and extended supply chains. Corporations are acknowledging the business imperative of climate change and continue to seek a viable path to a low carbon future. A significant driver of this activity is rising costs of insurance due to climate change concerns.

Industries that will continue to bear the brunt of regulations include oil and gas, real estate, automotive and transport, power generation, and agriculture. Decarbonisation efforts – the most visible response to climate change concerns as the world shifts to low-carbon and renewable energy and energy efficiency across all sectors – will deeply impact heavy transportation, heavy industry and construction. Climate-risk management extends into the financial sector as well, particularly as corporations respond to stakeholder demands for ESG strategies.

Globally, a number of governments are implementing legislation to reduce the impact of climate change. In a largely symbolic gesture, Italy amended its constitution to safeguard the environment, biodiversity and local ecosystems. The USA passed the Inflation Reduction Act that will, among other things, reduce greenhouse gas emissions by about 30-40% below 2005 levels by 2030. That legislation provides significant investment in the manufacturing of clean technologies.

In May, the European Union entered into the 8th Environment Action Programme, focusing efforts on achieving the 2030 environment targets and carbon neutrality in 2050. Similarly, Australia’s Climate Change Bill 2022, passed in September, sets out greenhouse gas emission reduction targets for 2030 and sets a goal of net-zero emissions by 2050. Chile and South Korea introduced a Framework Law on Climate Change and a Carbon Neutral Green Growth Framework Act, respectively.

Litigation related to climate change is on the rise as private companies face liability risks from failure to mitigate, adapt to, disclose or comply with changing legal and regulatory expectations. In the USA, the Securities and Exchange Commission has proposed rules to mandate publicly traded companies disclose climate-related risk. This effort follows action by the UK, New Zealand, Japan, and other countries who have taken substantial policy and regulatory steps to further transparency and disclosures of how large companies are managing environmental and social activity, in addition to climate risks. The less prescriptive nature of the proposed rules in the USA will continue to pose complex regulatory and reporting challenges for companies operating in multiple jurisdictions.

Global Water Crisis

The single largest issue beyond climate change is water stress – the availability, access and quality of water. At the highest level, water supply, sanitation and hygiene are the most critical issues faced by developed and developing nations alike. Over-exploitation of water resources, insufficient access to safe drinking water and water scarcity, water pollution and ageing water infrastructure systems across developed nations reflect ever-growing global pressures on this vital resource. Water availability contributes to food insecurity.

In October 2022, the parties to the London Convention and Protocol passed an amendment banning the dumping of sewer sludge into the seas.

Water availability remains a major economic driver as corporations consider potential constraints on new locations due to water scarcity, possible operational and supply chain disruptions, and increasing costs of water. New markets will also develop for water-efficient technologies, from water recycling and reuse technologies to desalination products and waste water treatment technologies, from heat-pumps to anaerobic digestion and incineration. There is a continued focus on the development of technologies for watershed, utility, consumer and industrial water use.

Pollution Reduction

Ongoing reduction of pollution in air, water and waste management is a constant theme of environmental law internationally. Rapid urbanisation and industrialisation bring new challenges for developing countries. This perspective could have significant implications for the future direction of environmental law, because it directly addresses environmental impacts on the life, health, private life and property of individual humans, rather than on other states or the environment in general.

Plastic waste can be found across the globe, with over 11 million metric tons flowing into the world’s oceans. Plastic pollution is harming ecosystems and posing risks to human health. In March 2022, the United Nations member states agreed to a mandate to negotiate a legally binding global instrument to end plastic pollution. Negotiations will take place over the next two years and focus on the full life cycle of plastics.

In 2022, Brazil approved the long-awaited National Solid Waste Plan, intended to guide the management of solid waste nationally.

Biodiversity

The loss of biodiversity and the degradation of the ecosystem is seen as an increasingly significant issue internationally. In the past, discussions on biodiversity have focused on specifics, such as coral reef degradation, deforestation or declining fish stocks. More recently, the wider importance of biodiversity and ecosystems, including to businesses, and the potentially profound consequences of their loss have been recognised. Natural resource depletion and adverse impacts of environmental degradation, including desertification, drought, land degradation, freshwater scarcity and loss of biodiversity, add to and exacerbate the list of challenges which humanity faces. We should look to see a push to strengthen rule-making on illegal trade in wildlife and exploitation of natural resources.

The loss of biodiversity and impairment of the ecosystem exacerbates and amplifies other environmental risks. For example, the removal of key coastal ecosystems often increases the severity of coastal flooding, ecosystem degradation has been a key driver of desertification, and food security is highly dependent on biologically diverse soils and other key ecosystem services such as water regulation, pollination and climatic stability.

The UN 2030 Agenda for Sustainable Development provides for the cessation of biodiversity loss as a measurable goal. Specifically, it seeks to take urgent and significant action to reduce the degradation of natural habitats, halt the loss of biodiversity and, by 2030, protect and prevent the extinction of threatened species. This also includes provisions to protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation.

Increased market, reputational and regulatory pressure to reduce biodiversity presents both business risks and opportunities. There are physical risks to business arising from scarcity and increased costs of resources and potentially reduced productivity. The continued destruction of biodiversity will impact the corporate bottom line, focusing attention on the issue. Companies may also face increased litigation risks as a result of their exploitation of biological resources or their adverse impacts on ecosystems.

COVID-19

The world continues to grapple with the COVID-19 crisis, including the impact on the environment. Human-wildlife interactions, single-use plastics, increased health risks of air pollution, and continued impact on economic resources can potentially be subject to further rule-making and policy decisions.

Testing kits, protective equipment – including the packaging and delivery of these supplies – have increased the production of single-use plastics, making medical, household and hazardous waste management and sanitation infrastructure an increasing focus.

COVID-19 has also created unexpected operational and supply chain disruptions. We can expect to see further developments as industry and corporations react to these challenges, while also facing an increase in ESG reporting requirements.