“The crime of Ecocide is more about holding a corporate or individual accountable so that it encourages them not to engage in the activity in the first place.”

Nilam Sharma is a dual UK/US qualified lawyer with over 30 years’ experience in providing insurance/reinsurance and litigation strategic advices to insurers/reinsurers and their clients on how liability policies issued to professionals, directors & officers, corporate boards, and financial institutions will respond to multi-national litigation and regulatory investigations.

For every year since 2015, Nilam has figured in the Who’s Who Leading Insurance and Reinsurance Lawyers. During 2013 – 2020 she was recognised as Leading lawyer for D&O and commercial litigation by Legal 500. She was shortlisted for the American Bar Association Outstanding Achievement Excellence Award nomination 2016 and the European D&O lawyer nomination 2014. Nilam is European author and co-publisher “Global Directors & Officers Deskbook”.  She is the Vice Chair of ABA Professional Liability Insurance Committee 2015 to present.

PG: The codification of Ecocide is rapidly underway. How would you define this new risk?

NS: I have three responses to this and one overall comment.

First, the official definitions vary. The Oxford English Dictionary defines Ecocide as “Destruction of the natural environment by deliberate or negligent human activities.” The Cambridge English Dictionary does not refer to deliberate or negligence.  The Stop Ecocide website defines this as “mass damage, destruction of the ecosystem, harm to nature, which is widespread, severe or systematic” While the phrases “deliberate” or “negligence” is not used in this definition, the definition itself I think does imply this behaviour.  

Secondly, the objective of a law on Ecocide is to create a criminal offence which is arrestable.  That itself will require a party being accused of Ecocide to have knowingly committed an illegal act which breaches the law. 

Thirdly, the above definitions are not legal. That is due to be published early this year. For this to work, the offence must have “sufficient clarity” as to what exactly is being breached to ensure that there is no room for ambiguity.

My overall comment relates to the premise of your question “The codification of Ecocide is rapidly underway”- the concept was developed in the 1970s and while there has been more attention on the harm to the climate over the past two years, and I believe accelerated by the pandemic, I do not think that it will be rapid.  The legal definition itself is going to be the subject of lengthy debate to ensure that the offences which are potentially covered, can be the subject of criminality.  I remember discussing the need for insurers and corporates to consider climate change as a risk about 20 years ago and it is only recently that society is identifying this as a necessity.

The concept was developed in the 1970s and while there has been more attention on the harm to the climate over the past two years, and I believe accelerated by the pandemic, I do not think that it will be rapid.

PG: How would the current form of insurance coverages respond to this emerging risk? How adequate or inadequate are these vis-à-vis to the definition as it is evolving? Would there be a need to design new/ tailor made covers?

NS: There are three subsets to the question and I will deal with them in turn;

A. Current form of insurance coverages

The Stop Ecocide Website has a number of examples which it considers could be a form of Ecocide (oil mining; deforestation; fracking; industrial fishing; oil spills). The damage and loss from each of these activities are covered under current insurance policies:

i. Pollution under a GL policy

ii. Legal costs under a management liability policy for investigations into a corporate or individual’s participation in allowing the above activities to occur which result in loss/damage to land/homes/livelihoods.

iii. Legal costs under a management liability or professional indemnity policy for defending a criminal offence albeit the loss/damage from the offence itself would not be a covered event in the UK/US as it would be against public policy to provide insurance for a criminal wrongdoing.

B. How adequate or inadequate are these insurances in light of the emerging risk?

In light of the intention of Ecocide being a criminal offence, the following issues arise:

How would you police any of the activities that the offence is intended to cover? Who would be held liable – the corporate or the individual?

How would you prove causation?  For example, is Company C going to be held solely responsible for deforestation of land which was already mined/fracked etc. by Companies A and B? 

How would you differentiate these activities from “natural” disasters?  Would Ecocide in fact, turn the table that in effect, none of the climate events we are currently experiencing are “natural’ disasters because to some/whole extent, they have all been caused by human activities in the past? 

Would Ecocide in fact, turn the table that in effect, none of the climate events we are currently experiencing are “natural” disasters because to some/whole extent, they have all been caused by human activities in the past? 

All the above are questions which insurers are very likely to raise before considering payment of defence costs and/or payment of any loss/damage when presented with a claim of Ecocide. 

C. Would there be a need to design new tailor-made covers?

I am not sure this is what would be required. My own view is that the crime of Ecocide is more about holding a corporate or individual accountable so that it encourages them not to engage in the activity in the first place.

If that is correct, the activities under consideration for a crime of Ecocide I believe already have some form of cover. 

PG: Could this trigger a new wave of Captives?

NS: The impact on climate is a societal, governmental and economic issue. That alone is sufficient to warrant captives being formed or a pool of money being made available (Terrorism being such an example).  So, yes, I do believe that it will trigger a new wave of Captives.

PG: If there are multiple contributors, how do you prove that only Company A caused the loss/damage when there are likely to be a number of contributing factors to the damage?

NS: Causation as a legal concept will require an examination of the facts and the chain of events.  It is not going to be easy to prove at all. That is why getting the legal definition spot on is very important.

PG: Do you think the usual suspects – fossil fuel, extractive industries, chemicals, infrastructure, building material, chemicals, shipping, aviation, auto, food and packaging are most likely to be implicated?

NS: Yes. But I go back to my point on causation above.

PG: Would this make the SMCR globally applicable and thereby more onerous?

NS: The Senior Managers and Certification Regime is about holding senior individuals to account and was brought in to plug the gap between senior and junior conduct where the juniors were held to account, but seniors were not, even though the seniors had very likely sanctioned the juniors’ behaviour. My own view is that if Ecocide does become law, then it would be a corporate offence and therefore collectively, senior management would need to ensure that their policies and compliance meet the relevant standards. 

If Ecocide does become law, then it would be a corporate offence and therefore collectively, senior management would need to ensure that their policies and compliance meet the relevant standards. 

With regard to whether it will be “globally” applicable – we only just need to look at the implementation of bribery offences worldwide – some countries have not imposed as restrictive measures as others, since business requires “workingwithothers financially” to get the contract or work done and is not seen to be an illegal act. For that reason, I do not believe the SMCR will become globally applicable and more onerous. 

PG: Would the global financial services need to incorporate these laws, once codified, in respective regulations? Would these be enforceable anyway? Where would the court of final appeal sit?

NS: Taking each question in turn:

A. Would the global financial services need to incorporate an Ecocide Law into respective regulations?

No. If drafted with sufficient clarity, the law would stand by itself which should not require further incorporation. That would just cause more confusion and potentially dilute the effect of the law.

B. Would these be enforceable anyway?

The respective regulations should stand by themselves so yes, they would be enforceable on their own. 

C. Where would the court of final appeal sit?

Do you mean jurisdiction? If my understanding is correct, the law of Ecocide is due to be a triable offence at the International Criminal Court in the Hague, Netherlands.

PG: The Economics of Biodiversity – The report better known as The Dasgupta Review was commissioned by the UK Treasury – it is expected to have a highly significant influence on government finance departments across the globe? Would this hasten Ecocide implementation? (Abridged report: https://lnkd.in/dMRYkpe).

NS: This was published on February 2nd and reactions are currently being collated to it. The basis of the review is how to account for nature in economics and decision making and the review “calls for changes in how we think, act and measure economic success to protect and enhance our prosperity and the natural world”  At a time when the pandemic has resulted in job losses, deepening poverty in both the developed and developing countries, a recession that is expected to last for the foreseeable future, I think the timing of the review is unfortunate and is likely to be buried by the UK Government until such time as the economy has stabilised. There will be some focus on it no doubt but not one that is going to be taken seriously for the time being. 

PG: Many thanks Nilam for these brilliant insights. I do look forward to revisiting the theme as it evolves.