Environmental Law

As the world anticipates the return of Donald Trump to the White House, the European Union (“EU”) braces for significant impacts in various sectors. The first Trump administration’s approach to transatlantic relations was characterized by unpredictability, tariffs on imported goods, a strained NATO relationship, and withdrawal from the Iran nuclear deal and the Paris climate agreement. If past is prologue, the EU must prepare for a renewed era of uncertainty and potential adversarial policies.

Trade Relations

Trump’s self-proclaimed identity as a “tariff man” suggests that trade policies would once again be at the forefront of his administration’s priorities. His campaign promises, which include imposing global tariffs on all goods from all countries in the range of 10 % to 20%, signal a departure from traditional U.S. trade policies. Such measures could have severe repercussions for the EU, both directly through increased tariffs on its exports and indirectly via an influx of dumped products from other affected nations, particularly China. Broad-based tariffs of this nature would likely provoke retaliatory measures from the EU.

The EU’s response toolkit would likely mirror many of the actions it employed between 2018 and 2020 in reaction to U.S. tariffs imposed during the first Trump administration. These measures would include retaliation on U.S. products to maximize political pressure by targeting Trump-supporting constituencies, pursuing chosen legal challenges against the U.S. at the World Trade Organization, and implementing safeguards to shield the EU market from an influx of Chinese and other diverted goods following U.S. tariff hikes. Very practically, the EU has suspended tariffs on US exports of steel and aluminum to its market worth €2.8 billion. The suspension expires on 1 March 2025, requiring an active decision on whether to reintroduce them or not.

In executing these measures, the EU is expected to collaborate with allies such as the UK, Canada, Japan, Australia, and South Korea to amplify its response. The EU may also explore smaller trade agreements or informal “packages” with the U.S. as part of a negotiated tariff truce. Broader protective measures could also be pursued, focusing on subsidies and industrial policies aimed at strengthening Europe’s strategic sectors, beyond actions specific to the U.S. Some cooperation with the U.S. on China may also be possible in areas like export control, investment control, and dual-use technologies.Continue Reading Policy Implications for Europe Under a Second Trump Administration

The European Union has just published a new (recast) Urban Wastewater Treatment Directive (“UWWTD”) in the EU’s official journal.  The UWWTD imposes important new Extended Producer Responsibility (“EPR”) obligations that will have a significant financial and administrative impact on companies marketing human medicines and cosmetic products in the EU.  Member States must implement the new UWWTD by July 31, 2027 and must apply the new EPR obligations to in‑scope companies by December 31, 2028. 

In a previous blog, we discussed the new EPR obligations in detail.  In this blog, we outline the key financial provisions of the EPR obligations and raise different questions concerning Member States’ discretion when transposing the EPR obligations into their national laws.

Extended Producer Responsibility under the UWWTD

The UWWTD requires Member States to ensure the treatment of urban wastewaters to remove micropollutants (so‑called fourth stage, or “quaternary” treatment).  Article 9 of the Directive also requires Member States to ensure that producers that market products listed in Annex III (i.e., human medicinal products and cosmetic products) have EPR obligations and pay, via producer responsibility organizations (“PROs”), for the costs of the quaternary treatment of urban wastewater, for data collection, and for other costs required to exercise their EPR. 

Specifically, Article 9 requires that producers subject to EPR obligations must cover:

  • At least 80% of the costs associated with quaternary treatment of wastewater to remove micropollutants.  This includes both capital investments for building or expanding urban wastewater treatment facilities and operational expenses for the treatment facilities.
  • 100% of the costs for gathering data on the products they place on the market.
  • 100% of other costs (e.g., administrative) required to exercise their EPR.

As noted above, Annex III currently lists human medicines and cosmetics as the product groups covered by the EPR obligations.  However, the UWWTD requires the Commission to assess the possible expansion of that list and to make the related legislative proposals by December 31, 2033.

National Implementation: Some Questions

The EPR obligations of the UWWTD will only apply to producers once Member States implement them into their national laws.  The Directive requires Member States to adopt their national implementing laws by July 31, 2027 and to apply the EPR obligations not later than December 31, 2028.  Member States may choose to apply the EPR obligations earlier.

The UWWTD leaves Member States with some discretion as to how they implement the EPR obligations, and also allows Member States to impose stricter and broader requirements.  Recital 3 of the Directive makes this clear, as it states that “[i]n line with Article 193 of the [TFEU] Member States can go beyond the minimum requirements set out in this Directive.  Member States could consider for instance […] imposing additional requirements for, or broadening the spectrum of the application of, their national extended producer responsibility systems.” Continue Reading The EPR Obligations of the New Urban Wastewater Treatment Directive Key Questions and Next Steps for Member States

June 27, 2024, Covington Alert

Per- and poly-fluoroalkyl substances (PFAS)—sometimes referred to as “forever chemicals”—have garnered significant attention in recent years, becoming a focus of government regulation and a deluge of civil litigation targeting a wide array of industries. As with any developing area of risk, it is critical that companies assess what insurance coverage they have for PFAS-related risks; allegations of PFAS exposure can trigger decades of potentially available insurance coverage. Policyholders across industries are taking steps to assess their exposure to PFAS liability and to evaluate the insurance coverage that may respond to any PFAS-related claims.

Recent Developments

The science concerning the human health and environmental effects of PFAS has progressed significantly over the last two decades. For example, in 2024, environmental and other regulators took significant action on PFAS:

  • In February, the Food and Drug Administration announced a voluntary ban on PFAS-containing food packaging, such as takeout containers, microwave popcorn bags, and fast-food wrappers, in the U.S.
  • In April, the Environmental Protection Agency set its first regulatory limits on six types of PFAS in drinking water. The EPA also designated two types of PFAS as CERCLA hazardous substances, paving the way for future contribution actions under environmental cost-recovery statutes.

Continue Reading Navigating PFAS Liability: Emerging Regulations, Litigation Risks, and Insurance Coverage Strategies

The Supreme Court will soon decide whether to hear two cases that could dictate the future of climate change tort suits.  Such suits have proliferated in recent years: several dozen active cases assert state tort law claims—like nuisance, trespass, and strict liability—against oil and gas companies for fueling and misleading…

Continue Reading Supreme Court Receives Filings with Key Implications for Climate Change Tort Suits

What You Need to Know. 

  • “We very much believe and respect the science,” said COP28 President Al Jaber on Monday after it had been reported that he had earlier commented that there was “no science” behind requiring the phase-out of fossil fuels to limit global warming to 1.5C. President Al Jaber went on to say that “the phase down and the phase out of fossil fuel is inevitable.”  This statement comes after heavy criticism from climate activists and scientists of President Al Jaber’s earlier comments, further emphasizing the centrality of the “phase down” vs. “phase out” debate as a wedge issue at this COP.
  • According to the UAE COP Presidency, the first four days of COP28 have seen a collective commitment of USD $57 billion in climate finance from governments, businesses, investors, and philanthropies.  Although still falling short of the global investment needs, these collective pledges show the continuing growth in climate-focused capital around the globe.
  • The U.S. Commodity Futures Trading Commission (“CFTC”) has issued proposed guidance regarding the listing of voluntary carbon credit derivative contracts, the first guidance specifically targeting the voluntary carbon market (“VCM”) by a federal U.S. regulator.  The proposed guidance outlines certain factors a CFTC-regulated exchange, or designated contract market, should consider when addressing requirements of the Commodity Exchange Act (“CEA”) and CFTC regulations that are relevant to the contract design and listing process.  The proposed guidance will be open to public comments until February 16, 2024.

Continue Reading COP28 Day 5 Recap: Climate Finance Continues to Grow and Carbon Offsets Face More Regulation

What You Need to Know.

  • The fourth Day of COP28 saw the first-ever Health Day at the United Nations Framework Convention on Climate Change conference.  In collaboration with the World Health Organization, Health Day included programing that showcased the links between the impacts of climate change on human health and methods for identifying and scaling adaptation measures to address these impacts.
  • Tensions and debate remained high around whether the world should commit to “phase out” or merely “phase down” fossil fuels.  On the same day that the Guardian reported statements from COP28 President Al Jaber that “[t]here is no science out there, or no scenario out there, that says that the phase-out of fossil fuel is what’s going to achieve 1.5C,” UN Secretary-General António Guterres noted that the Day 3 pledges by several major oil and gas companies to reduce methane leaks from their pipelines by 2030 “clearly fall short of what is required” and “say[] nothing about eliminating emissions from fossil fuel consumption . . . .”
  • The UN’s High Level Expert Group on Net-Zero Emissions Commitments of Non-State Entities launched a Taskforce on Net-Zero Policy to ensure the credibility and accountability of net-zero commitments.  Taskforce constituents include, among others, the Principles for Responsible Investment (PRI), the United Nations Environment Program – Finance Initiative, the United Nations Conference on Trade and Development, the Vulnerable 20 Group, and the International Financial Reporting Standards.  The taskforce’s objective is to share knowledge, practices, and insights that advance net-zero aligned policy.
  • During the World Climate Action Summit (WCAS), various governments and organizations unveiled $1.7 billion in new initiatives to further both climate and biodiversity goals, including $1 billion from a coalition of international institutions led by the Asian Development Bank.
  • On Day Two of the Business & Philanthropy Climate Forum—COP28’s multistakeholder engagement platform for the private sector—business and philanthropy leaders made additional pledges and announcements on renewable energy and green economy programs, commitments to preserving nature, a methane abatement accelerator, and  initiatives to decarbonize health supply chains.
  • The U.S. Department of State, the Bezos Earth Fund, and The Rockefeller Foundation presented the core framework of the Energy Transition Accelerator (ETA), a carbon finance platform aimed at catalyzing private capital to support energy transition strategies in developing and emerging economies.  The ETA aims to connect willing sellers and buyers employing high-integrity carbon crediting to support faster energy transition.

Continue Reading COP28 Day 4 Recap: The First COP Health Day

On May 24, 2023, EPA released a guidance memorandum addressing the hazardous waste status of lithium ion batteries under the Resource Conservation and Recovery Act (“RCRA”).  EPA released the guidance to “both remove uncertainties for the states and industry about the regulatory status of these materials,” and to ensure that…

Continue Reading EPA Clarifies Hazardous Waste Requirements Applicable to Lithium Ion Batteries

Various national competition authorities (“NCAs”) are continuing to consider sustainability arguments in competition cases. However, NCAs are increasingly diverging in their approach as to whether, and to what extent, they are willing to allow sustainability considerations in the competition law framework. This blogpost highlights a few recent developments in jurisdictions on both sides of the Atlantic.

Belgian approval of an initiative in the banana sector

On 30 March 2023, the Belgian Competition Authority (“BCA”) approved a sustainability initiative concerning living wages in the banana industry. This marks the first initiative based on sustainability grounds  approved by the Belgian NCA.

The IDH Sustainable Trade Initiative, a social enterprise working with various entities towards facilitating sustainable trade in global supply chains, and five Belgian supermarkets proposed a collaboration scheme aimed at closing the gap between actual wages and living wages in the banana sector. The collaboration will consist of meetings and discussions where the companies’ internal conduct will be assessed and further developed with the aim to better support living wages for workers in the participants’ banana supply chains.

The collaboration will involve the exchange of certain data and information which the BCA did not consider anticompetitive. The participants have committed to not set mandatory or recommended minimum prices and to not communicate any changes in costs relating to their supply chains. IDH will supervise the collaboration and any data shared will be verified by an independent third party.

Similar initiatives concerning the banana sector  have been proposed in Germany, the Netherlands and the UK. The German NCA has already approved the proposed initiative. Neither the Belgian nor the German NCA considered the initiatives in question to infringe competition law. There is, however, a fine line between such agreements falling in or outside the scope of competition law, and potentially amounting to an infringement. For example, clauses which lead to non-negligible price increases for end-consumers could raise questions and potentially be considered to have anticompetitive effect. It can therefore be expected that that NCAs will periodically monitor the implementation of such initiatives.Continue Reading Sustainability Agreements: Potential Divergence between Authorities

2022 and 2023 may be remembered as pivotal years for efforts against so-called “greenwashing.”  In this article, we look at some recent developments in the regulation of “green claims” in the UK, the US, and the EU that corporates should be aware of.  We provide a broad summary and comparison snapshot of the UK, US and EU regimes to help companies navigate these rules.  Now is a critical time for companies to get up to speed: authorities in all three jurisdictions are focusing more and more intently on this issue; company reputations will increasingly rise and fall with the strength of their green claims, and national regulators are set to get new powers (including the power to levy significant fines) to tackle companies found in breach.

I.  Summary of recent developments: What’s new in greenwashing?

In January 2022, the UK’s Competition & Markets Authority (“CMA”) launched a sector‑by‑sector review of misleading environmental claims.  The CMA started with the fashion sector, and called out a number of high‑profile, fast‑fashion companies for their practices.  Twelve months later, the CMA announced that it was expanding the investigation to greenwashing around “household essentials”, including food, drink, toiletries and cleaning products.  The CMA’s review is the first concerted application of the CMA’s new Green Claims Code, published in September 2021, which gives guidance for any business (wherever based) making environmental claims in the UK.

Meanwhile, in December 2022, the US Federal Trade Commission’s (“FTC”) launched a review of the “Guides for the Use of Environmental Claims” (“Green Guides”), which was last updated in 2012.  The initial comment period closed on April 24, 2023.  The FTC plans to update the Green Guides to reflect developments in consumers’ perception of environmental marketing claims.  As a part of its ongoing review, the FTC also announced a workshop to examine recyclable claims.  The workshop is scheduled for May 23, 2023 and the public can submit comments on the subject of recyclable claims through June 13, 2023.  For more detail on the review, please see our dedicated blog post, here.

Finally, the EU has proposed two Directives to modernize and harmonize the rules on green claims across the bloc (together, the “EU Green Claims Proposals”).  Currently, EU law does not specifically regulate environmental claims.  Instead, environmental claims are subject only to general consumer protection and advertising rules (set out in Directive 2005/29 on Unfair Business-to-Consumer Practices and Directive 2006/114 on Comparative Advertising).  Admittedly, the EU has published guidance on interpreting and applying the general rules in the context of green claims (see the guidance here, and see our previous blog post discussing the guidance here).  However, in practice, EU Member States approach interpretation and enforcement in a variety of different ways.  On March 3, 2022, the European Commission published a Proposal for a Directive Empowering Consumers for the Green Transition, also known as the “Greenwashing Directive.”  The Greenwashing Directive amends the EU’s existing consumer protection rules, and bans a number of general green claims, such as “climate neutral” or “eco-friendly.”  It also imposes some rules on the use of non-environmental sustainability claims or “social impact” claims, such as “locally produced” or “fair labour.”  One year later, on March 22, 2023, the European Commission presented a Proposal for a Directive on Green Claims (“Green Claims Directive”), which we discussed here.  The Green Claims Directive proposes a new and strict framework, applicable to all companies operating in the EU/EEA, to harmonize the rules on the substantiation of voluntary green claims. 

Below, we outline the key aspects of the different legislative frameworks.Continue Reading The Green Claims Global Drive: Developments in the UK, US and EU

Those in the business of fast‑moving consumer goods (“FMCGs”) are likely aware of the plethora of environmental and product stewardship regulations applicable to the FMCG sector.  These laws are set to increase and expand in application.  What FMCG companies also need to get to grips with are a range of broader (and also fast‑moving!) environmental, social and governance (“ESG”) developments and consequent risks and opportunities.  Companies need to understand how the new world of ESG impacts their supply chains, key ingredients and components, consumer choice and confidence, competitive advantage, market accessibility, and marketing. 

Designed as a ‘primer’ for FMCG companies, in this piece, we cover a range of key trends in the emerging UK and EU ESG legal landscape as relevant for the FMCG sector, from farmers to Food Business Operators (“FBOs”) and from manufacturers to retailers.  We also discuss some key legal and reputational risks; as well as pointers to help companies decipher and prepare for the ESG storm.

We focus on the UK and the EU (first movers on many ESG issues), but the landscape in other jurisdictions (including, for example, the US) is also evolving and becoming more complex.

Key ESG Issues for FMCGs

We think there are four categories of key ESG developments for FMCGs to watch: (I) corporate reporting and disclosure regimes; (II) green/sustainability claims and labelling; (III) supply chain obligations; and (IV) product packaging and presentation.

Many emerging ESG frameworks cut across sectors.  This may be efficient for regulators, but can make identifying sector-specific risks and opportunities more challenging.  We have sought to do that below.Continue Reading Green Groceries: Key ESG Issues for the FMCG Industry (including FBOs)