The polluter pays

Industrial operators need to grasp the insurance implications of Europe’s Environmental Liability Directive

There is a burst in a dam holding back six billion litres of waste water from a mine. Toxic sludge floods into a nearby river. Almost all aquatic life is wiped out, protected bird populations are decimated and thousands of hectares of land polluted. The damage to the environment runs into hundreds of millions of euros. The massive clean-up operation is paid from the public purse. This is not a future scenario. It actually happened several years ago in Spain. The point is that should a similarly disastrous environmental event re-occur  – as no doubt it will – then next time round it won’t be the tax payer that foots the bill but the waste originator. This is the intention of the most recent piece of environmental liability legislation to be enacted by the European Union (Environmental Liability Directive – ELD).

Operators of industrial installations consequently need to be keenly aware of their social, environmental and financial responsibilities in this regard and of the fact that such responsibilities cannot be completely avoided through risk transfer.This will entail their cultivating a risk culture that embraces environmental liabilities and is able to initiate crisis communication in the event of serious bio-diversity incidents.
In general terms, it is our job as a leading reinsurer to raise awareness that nature conservation is becoming increasingly important for governments and other governmental institutions, including the European Union. We also draw attention to the differences in global jurisdictions that affect corporate environmental liability. More specifically, Swiss Re is able to present stakeholders with new approaches to environmental exposure assessment and outline risk transfer solutions that address both existing and possible future scenarios.

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