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Diversified Industrials: Horizons

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Legal compliance is critical for conglomerates as environmental risks evolve

By Jennifer Adams and Santiago Garrido

Even in an era of perceived deregulation in the United States, environmental stewardship and compliance remain important as legal risks evolve.

Globally, especially in Europe, environmental regulatory requirements continue to increase in both quantity and stringency. Government entities actively enforce compliance with the environmental regulations. Recently, the European Commission published a fact sheet, noting that enforcement actions are necessary and desirable, finding that legal action considerably benefits the citizens and the environment.

In the United States, where the past two years have seen deregulation at the federal level, conglomerates should remain vigilant because of continued legal scrutiny on environmental compliance from government enforcement and citizen-brought lawsuits, as well as frequently changing state-law requirements.

The risks and changes vary country-by-country and state-by-state, making it difficult, and important, for conglomerates to understand and comply with the legal requirements and to protect against potential litigation. States such as California continue to heavily regulate the environmental area, creating a web of varying and sometimes conflicting state-level laws. And while some federal environmental regulations are changing or have been curtailed, many remain on the books, and the United States Environmental Protection Agency continues to actively enforce them.

The issue of climate change provides one example where environmental concerns have created pervasive legal risks across the world. Companies should expect increased attention to environmental permitting and other regulatory requirements on matters relating to climate change concerns. Companies also must be aware of the litigation risks and take steps to prepare for such challenges.

In addition to environmental legal demands, consumers bring additional demands and risks for companies. With the power of the purse and social media, consumers continue to push companies to increase their environmental stewardship efforts by boycotting and publicly denouncing companies they deem environmentally irresponsible, sometimes with limited or no basis.

Worldwide, conglomerates must continue to focus on environmental compliance, from both legal and business perspectives, and continue to adopt practices and programs to protect against the evolving legal risks. We have seen many cases where companies need legal help to address environmental regulatory requirements and litigation concerns. With the fast-changing environmental, legal landscape, it’s crucial that companies get the right legal advice on implementing environmental compliance programs and proactively preparing for increased litigation risks.

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