Contributors
The recent ITV News investigation into Amazon's waste removal and destruction policies claims that Amazon destroys millions of unsold products every year.
Despite Amazon's response that they are working towards a goal of zero product disposal and that:
"No items are sent to landfill in the UK. As a last resort, we will send items to energy recovery, but we’re working hard to drive the number of times this happens down to zero."
The power of images of unopened goods including laptops and books being destroyed should not be underestimated. Amazon is now facing increased public and political scrutiny of its environmental and waste practices.
Stephen Panton, regulatory partner says:
"While the ITV investigation focusses on the alleged practices at Amazon, the issues raised by the investigation and the response from government will be of interest to manufacturers, retailers, online marketplaces and all businesses handling or disposing of waste."
Response of government and MPs
Amazon immediately faced demands from three Labour MPs including the chairs of the all-party parliamentary groups (APPGs) on digital skills and data poverty for Amazon to stop the "wanton waste" generated by their practices.
Responding to the claims ITV News Boris Johnson said "An indictment of a consumerist society, if it's as you say, we will look into it." He also said he wanted to see more reuse and recycling, to stop people using things that will ultimately go to polluting our seas and our world and the need to cut down on the use of plastics.
Businesses' legal duty
The Department for the Environment, Food and Rural Affairs (DEFRA) has issued a statement in response to the investigation reminding businesses of their legal duties:
"When handling or disposing of waste, businesses have a legal duty to adhere to the waste hierarchy. This means businesses should firstly seek to prevent waste (via donations for example), and if that is not feasible, then they should try to prepare the waste for re-use, or failing that, for recycling. Only if none of these options are viable should waste be sent to energy-recovery or landfill.
"Failure to meet the legal obligation to take all reasonable steps to apply the waste hierarchy on the transfer of waste can lead to enforcement action.
"Current regulations require sellers of electrical equipment to offer a free take-back service for waste electricals or join the Distributor Takeback Scheme to help fund local authority recycling services, and we are reviewing the regulations to see how we make sure all retailers – including online marketplaces - take greater responsibility for electricals."
Francesca Hodgson, regulatory director says:
"In addition to the waste hierarchy referred to by DEFRA, it's important for all businesses to be aware that, when it comes to waste, out of sight is not out of mind, at least insofar as potential enforcement action. Anyone handling controlled waste is subject to the waste duty of care. This includes a requirement to take all reasonable steps to prevent unlawful disposal and, when transferring waste to another person, to ensure an accurate description is provided and that the person has the correct authorisation."
Global spotlight on businesses environmental practices and Environmental Social Governance (ESG)
Davina Watson, practice development lawyer says:
"Businesses' environmental practices and ESG performance are coming under increasing scrutiny not just from the press and NGO's but equally from government, regulators, investors and consumers. Just looking at the environmental issues hitting the headlines recently shows the momentum behind holding companies to account for their environmental performance."
Recent issues include:
- Governments being willing to legislate and impose tougher anti-waste laws. For example, in January this year, the French government passed a wide-ranging anti-waste law, covering any consumer goods that can be donated without a risk to health or safety. It bans the destruction of unsold or returned items. This legislation was promised by the French junior environment minister after French TV showed images similar to those broadcast by ITV of containers of Amazon goods being sent to be destroyed.
- Climate change litigation is on the rise as NGO's and citizens seek to hold companies to account for their environmental impact. As seen in the recent landmark ruling by the Netherlands court that Royal Dutch Shell has a duty of care to reduce not only its own CO2 emissions but also a 'best-efforts obligation' to reduce the emissions of its suppliers and customers by net 45% (compared to 2019 levels), by the end of 2030. Read our article on the decision and implications for corporations in carbon heavy industries here.
- Increased scrutiny by Regulators. Southern Water were recently fined a record £90million for pollution offences and multiple breaches of environmental law following the Environment Agencies largest ever criminal investigation. And prior to this an Ofwat investigation resulted in Southern Water paying a £3 million fine and £123 million in rebate payments to customers for serious regulatory failings and deliberately misreporting its performance. Read our article on the prosecution and implications for regulated businesses here.
- Investment decisions influenced by and influencing companies ESG policies and performance. There is a growing trend of companies being challenged by their own shareholders. Recently two ExxonMobil board seats were won by a small climate activist hedge fund. Pensions funds, fund managers and private investors are increasingly influenced by ESG metrics.
- Increased public pressure and media scrutiny. Companies facing campaigns/legal action by environment groups and shareholders, even on a relatively small scale, are coming under an increasing amount of public scrutiny and media coverage. The impact of the ITV Amazon investigation shows the amount of pressure that can be placed on companies by public and media scrutiny.
So what does this mean for businesses in the UK?
- Retailers, manufacturers and online marketplaces should prepare for tougher UK and EU environmental regulation particularly in the area of disposal of unwanted or unsellable products and also waste electronic and electrical equipment
- Those in regulated industries should anticipate increased scrutiny by Regulators
- Businesses are advised to regularly review their own environmental practices and policies to ensure they are meeting all relevant legislation. They should also scrutinise their corporate statements and commitments on climate change as following the Royal Dutch Shell judgment shareholders and activists may be encouraged to consider them binding corporate commitments rather than 'corporate targets/aspirations'
- Does your business have an up to date environmental specific critical incident plan to ensure effective management of environmental incidents should something go wrong?
- Does ESG form an integral part of your business culture and decision making process at all levels of the organisation? Knowing what ESG means for your business and the behaviour expected of all staff, suppliers and key stakeholders will be critical for business facing increased scrutiny of their environmental impact and the risk of environmental/climate change litigation.
If you would like to know more about these issues or WBD's regulatory, energy and energy litigation practice please get in touch.
