Environmental Law - things to look out for in 2022

• United Kingdom

• Environment
• Other
• Consumer
• Food and drink
• Retail

20-01-2022

Whilst still dominated by the Covid-19 pandemic, 2021 was the year when environmental and ESG matters really gained momentum in the UK. Key events included the UK hosting COP 26 in Glasgow, the publication of the government’s Net Zero Strategy and the Environment Bill finally becoming law. What environmental ambitions does 2022 have in store and what should businesses keep on their radar?

 1.   Environment Act 2021

Nearly two years after being first laid before Parliament, the Environment Bill received Royal Assent in November 2021, paving the way for a new UK environmental protection framework following Brexit. The Environment Act, which implements some of the objectives of the government’s 25-Year Environment Plan, aims to protect and improve the environment for future generations, enshrine environmental principles and set legally-binding targets into law including for air quality, water, biodiversity and waste. Many of the Environment Act’s provisions will be implemented by secondary legislation that is expected to be introduced in 2022. Key actions we can expect the government to take this year include:

• setting long-term binding targets on air quality, biodiversity, water, resource efficiency and waste reduction by October 2022;
• producing a statutory plan to reduce discharges from storm overflows and a report setting out the actions that would be needed to eliminate discharges from storm overflows by September 2022;
• finalising its policy statement on environmental principles to which ministers must have due regard when making policy.

2.   Plastic packaging tax

A new environmental tax on plastic packaging will come into effect from 1 April 2022. The tax will apply to in-scope plastic packaging manufactured in or imported into the UK that contains less than 30% recycled plastic. The rationale behind the tax is to incentivise businesses to incorporate recycled plastic into their packaging and increase levels of plastic waste collection and recycling. The rate of tax will be £200 per metric tonne of relevant plastic packaging. Manufacturers and importers of plastic packaging will need to get their businesses ready for the new tax and consider its impacts on their supply chain.

3.   Mandatory climate-related disclosures

For the first time premium listed UK PLCs will be obligated to state in their Annual Reports whether they have included climate-related financial disclosures consistent with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and if not to explain why. Many companies will currently be grappling with these requirements as they prepare their 2021 Annual Reports.

New regulations have recently been adopted to extend this obligation to certain public companies, large private companies and LLPs. The Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 and the Limited Liability Partnerships (Climate-related Financial Disclosure) Regulations 2022 come into force on 6 April 2022 and will apply to accounting periods starting on or after that date.

The FCA has separately started discussions on introducing UK Sustainability Disclosure Requirements (SDR) and a UK sustainable product labelling system. Businesses should consider what strategy they intend to adopt in light of these new disclosure requirements and consider going beyond minimum reporting requirements.

4.   UK Green Taxonomy

By the end of 2022, the government aims to establish a UK “Green Taxonomy” that will set out the criteria which specific economic activities must meet to be considered environmentally sustainable. The green taxonomy is intended to help tackle greenwashing by providing better data on the environmental impact of firms, accelerate green finance and support the government’s net zero objectives.

5.   UK ETS

The UK Emissions Trading Scheme (UK ETS) came into force in 2021 to replace the UK’s participation in EU ETS following Brexit. The scheme aims to incentivise cost-effective greenhouse gas emissions reductions for certain sectors by putting a cost on carbon pollution. Further consultations around UK ETS can be expected in 2022 including in relation to an emissions cap, the role of free allocation of allowances and a potential expansion of the scheme to cover additional sectors. Businesses affected by UK ETS are advised to follow developments in this area.

6.   ESOS

The Energy Savings Opportunity Scheme (ESOS) requires large companies and non-public sector organisations that qualify for the scheme to carry out energy audits to assess their business’s total energy consumption with a view to identifying energy savings. The government is considering improving and strengthening ESOS by potentially extending the scheme to medium sized companies and introducing a net zero element to the existing ESOS audit, which would require relevant companies to identify which energy-using processes and activities need to be addressed for the business to become carbon neutral or net zero by 2050. Businesses should look out for the outcome of the consultation which will bring more clarity around the government’s proposals. Businesses should also start thinking about Phase 3 of ESOS – the qualification date is 31 December 2022.

7.   SECR

The Streamlined Energy and Carbon Reporting (SECR) framework requires large UK companies and large LLPs to make disclosures on energy use and emissions in their annual reports. The government is considering making changes to the framework to better align it with the TCFD requirements by 2023. Companies should prepare themselves for more ambitious requirements in the years to come and notably for Scope 3 value chain emissions reporting to become mandatory.

8.   UK REACH

In a letter to the Chemical Industries Association dated 6 December 2021, the government has announced that it is looking to take the following steps in relation to UK REACH:

• engage with stakeholders to explore a new UK REACH “transitional registration model” to reduce the need to replicate EU REACH data packages; and
• consult on extending the current deadlines for providing full registration data under UK REACH to provide time for the government to explore its transitional registration model.

Further information about the government’s intentions can be found here.

9.   Chemicals strategy

The government is expected to publish its UK chemicals strategy at some point this year. Whilst we know very little about its proposed content, businesses should expect the strategy to address (amongst other things) hazardous chemicals such as endocrine disruptors (EDCs), persistent, bioaccumulative and toxic substances (PBTs) and persistent, mobile and toxic chemicals (PMTs); consider a phase-out of PFAS substances as a group; and consider whether to introduce a UK equivalent of the EU’s SCIP database.  

10.   Review of the Furniture and Furnishings (Fire Safety) Regulations 1988

The Furniture and Furnishings (Fire Safety) Regulations 1988 regulate the fire resistance of furniture products. Several attempts have been made to review the regulations over the last few years on the basis that they allow toxic flame retardants to be used in everyday items such as sofas, mattresses and baby products. The government is expected to consult on a proposed legislative reform and issue draft new legislation in 2022.

11.   Other key consultations

Businesses are advised to keep an eye on the following consultations: