Environmental regulations pose threat

New regulations requiring food manufacturers to clean up and prevent environmental damage could present a serious threat to business.

Under the Environmental Damage Regulations, which came into effect in March, businesses are required to take steps to prevent the threat of environmental damage or, if the damage has already occurred, they are liable for any costs incurred to remedy or prevent further damage.

Failure to co-operate will result in financial penalties over and above these remediation costs. The new regulations, therefore, clearly represent an increased financial risk to all businesses.

Ian Edwards of Jardine Lloyd Thompson’s Food Drink Practice said: “Food and drink manufacturers and processors should recognise that it’s not just so-called “dirty industries”, such as waste disposal or chemical processors, that are at risk of causing environmental damage.

“Importantly, the limited extent of the pollution insurance cover provided under standard Public Liability policies should also be fully understood. Environmental Impairment Liability insurance is available and affordable, and your broker will already be in a position to provide options for your business.”

Standard UK Public Liability policies will normally indemnify a business for its obligation to pay compensation to third parties for injury or damage caused by any sudden and accidental pollution it has caused. However, costs incurred under the new regulations will be imposed by the environmental authorities and would not therefore constitute a third-party damages claim.

“Clearly, there is no substitute for a business implementing and regularly reviewing its environmental protection policies.” added Edwards.

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