New regulations have made food and drink manufacturers and processors responsible for the cost of cleaning up and preventing environmental damage.

The Environmental Damage Regulations could present a serious threat to businesses that don’t take precautions, warns major insurance broker Jardine Lloyd Thompson (JLT).

Since the regulations were enacted in March, businesses are now compelled to notify the authorities if environmental damage has occurred or is threatened to non-owned water, land, protected species, natural habitats and sites of special scientific interest.

Other interested parties, such as environmental groups, can also report actual or suspected environmental damage.

Businesses will then be required to take steps to prevent the threat of environmental damage. If damage has already occurred, they will be liable for any costs incurred to remedy or prevent further damage.

They must return the affected resource to the condition it was in before the environmental damage occurred. If the damage is such that the original condition cannot be restored, businesses may be required to pay the costs of "complementary remediation" to restore or create a similar habitat, possibly at another site.

Businesses might also be ordered to pay "compensatory remediation" costs to provide an interim environmental resource while the original resource recovers.

Failure to co-operate will result in financial penalties over and above these remediation costs, representing an increased financial risk to all businesses.

Ian Edwards of JLT's Food & Drink Practice said: "Food and drink manufacturers and processors should recognise that it’s not just so-called ‘dirty industries’, such as waste disposal or chemical processors, that are at risk of causing environmental damage.

“Importantly, the limited extent of the pollution insurance cover provided under standard Public Liability policies should also be fully understood.

"Businesses in the food and drink sector should ensure they fully understand the additional environmental risks they now face. They may feel that their ingredients, products or processes pose a very low potential risk to the environment, but seemingly innocuous substances in the wrong place can represent a serious pollution risk.”

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