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As a core part of its post-Covid European Green Deal, the EU has adopted a Biodiversity Strategy for 2030 aimed at building resilience to climate change, forest fires, food insecurity and disease outbreaks. Under the Strategy, the EU Commission will legally protect a minimum of 30% of EU land and 30% of sea, integrate ecological corridors as part of a Trans-European Nature Network 170 and create strict protections around remaining primary and old- growth forests. 171 It is expected that in the early months of 2022 the Commission will set out its legally binding nature restoration targets 172 to restore ecosystems and manage them sustainably, 173 particularly those with the most potential to capture and store carbon.
At the same time, developed economies have relatively stringent environmental standards and active, well-funded civil society organisations which can monitor and enforce such standards. Even then, biodiversity loss is rampant. In some less developed countries, lax environmental regulations, corruption, or lack of funding for enforcement mean that there is little to no accountability for biodiversity loss and related harms. The fiction of legal personhood and local incorporation of subsidiary entities has historically permitted environmental harms to be perpetrated through value chains in jurisdictions where there is little prospect of effective remedy, due to a lack of assets or lack of enforcement. The concept of the “corporate veil” means that courts are generally not able to look behind a company (which may be a single-asset special purpose vehicle) to its parent companies, shareholders or directors (where power, decision- making, control and, importantly, assets may be held). This presumption is shifting in a number of jurisdictions, a legal development we explore at pages 48 - 49 below.
LAW IS NOT ENOUGH?
It is important to recognise that the law is only one lever in action on biodiversity, and is only as robust as the institutions and professionals that enact and enforce it. The law is situated in a wider social and cultural context and sits alongside other mechanisms, such as governance, education, technical capacity, data, finance and indigenous knowledge. Nor are the effects of biodiversity law always biodiversity positive. For example, in some cases, forest protection policies have prompted “panic clearing”, leading to greater deforestation. 174 This is why monitoring and review of the effectiveness of biodiversity laws remains essential.
THE CORPORATE VEIL DOCTRINE
The corporate veil doctrine is one of the foundations of commercial law in many jurisdictions. It provides that a company is at law a separate legal person from its shareholders (including parent companies) and has separate rights and liabilities. ‘Piercing’ the corporate veil refers to an exception to the doctrine, pursuant to which the company’s limited liability is put aside and shareholders may be found liable for the actions of the company. There is generally a strong judicial presumption against piercing the corporate veil. Until relatively recently, too, it was not possible for consumers or regulators to readily identify embedded Environmental, Social and Governance (ESG) harms within consumer products, which were a ‘black box’ as regards the inputs. Although it might have been suspected that, for example, a chocolate bar contained palm oil from illegally logged primary growth rainforest or a piece of clothing was made with child labour, it was impossible to trace the inputs through the corporate value chain to determine provenance.
The jurisdictional challenge of accountability for biodiversity loss
It is well recognised that international trade together with commodity use and consumption drives local biodiversity loss around the world. 175 Biodiversity impacts are localised but are driven by global systems. 176 Each stage of a value chain impacts biodiversity, but most of this impact happens at the production level where, for example, land is cleared for farming or mines pollute rivers. There can be a large disparity between where biodiversity impact happens and where the profit extracted from nature is captured. To illustrate, out of a GBP 2.50 cup of coffee, only ten pence is spent on the coffee beans, of which growers only receive one penny. 177
The advent of supply chain due diligence regulations
The first initiatives around resource due diligence originated in the late 1990s, as oil, diamonds, and timber came under increased scrutiny for their role in funding contemporary wars. 178 This led to eventual scrutiny of a wide range of “conflict resources”. The discussion broadened out from conflict to other human rights and labour issues, and the last 10 years has seen a dramatic change in the means by which corporations may be held to account for such abuses in their supply chains.
170 Building a coherent Trans-European Nature Network, European Environment Agency, 2 July 2020. 171 Questions and Answers: EU Biodiversity Strategy for 2030 – Bringing nature back into our lives, European Commission, 20 May 2020. 172 EU nature restoration targets, European Commission. 173 Currently expected in March 2022. 174 B. Alexander Simmons et al., Effectiveness of regulatory policy in curbing deforestation in a biodiversity hotspot, Environmental Research Letters, 23 November 2018. 175 Biodiversity: Finance and the Economic and Business Case for Action, Chapter 2, OECD, 6 December 2019. 176 Where is most biodiversity loss happening and why?, The Royal Society. 177 Chelsea Bruce-Lockhart and Emiko Terazono, From bean to cup, what goes into the cost of your coffee?, Financial Times, 4 June 2019.
178 Phillipe Le Billon, DiamondWars? Conflict Diamonds and Geographies of Re- source Wars, Annals of the American Association of Geographers, June 2008.
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