UKELA Scottish Conference – The Future of Environmental Law in Scotland

The recent UK Environmental Law Association Annual Scottish Conference considered the future of environmental law in Scotland in three key areas: the post-Brexit landscape; marine protection; and the interaction of ESG requirements and investor-backed litigation.

Post-Brexit landscape

Two key themes permeating this section of the conference were the blurring of legislative competence and devolution tensions.

Much of the former stems from the power granted by the Retained EU Law (Revocation and Reform) Act 2023 to UK Ministers to act in devolved areas, including in relation to key fisheries, agriculture, and trade regulations. This runs alongside the UK Withdrawal from the European Union (Continuity) (Scotland) Act 2021, section 1(1) of which, as discussed further here, confers a power on Scottish Ministers to keep Scots law aligned with developing EU law in devolved areas.

This has led to what was described in the conference as a fragmented approach to environmental law in the UK with blurred legislative responsibilities. An example of this discussed at the conference was the Levelling Up and Regeneration Bill, in relation to which it was argued that that it was not clear whether it was for UK or Scottish Ministers to apply the proposed Environmental Outcome Reports across Scotland and the UK, which will replace the EU-derived Strategic Environmental Assessment and Environmental Impact Assessment processes.

Professor Reid of the University of Dundee observed that the UK Internal Market Act 2020 has created tension between Scotland and the rest of the UK. Much of this is epitomised in the delay of Scotland's Deposit Return Scheme until 2025 to align with schemes in the rest of the UK. Further points of regulatory divergence may include the Scottish Government's ban on disposable vapes, introduction of a Circular Economy (Scotland) Bill, and proposed retention of the initial dates for the gas boiler and petrol and diesel vehicles bans.

Looking to the future, key upcoming Scottish environmental legislation includes a Human Rights Bill that looks to enshrine a right to a healthy environment – the impact of which will be interesting in the context of recent US climate litigation discussed in our blog here – and proposals for new legislation in agriculture, heat in buildings, and the natural environment. 

Marine protection

Speakers noted that the recent withdrawal of proposals for Highly Protected Marine Areas in Scotland indicate the difficulties behind managing a marine environment and ensuring agreement between the Government, industry, and public interest organisations.

Under section 3 of the Marine (Scotland) Act 2010, the Scottish Government has a duty to protect and enhance the health of the Scottish marine area. However, it was argued at the conference through the creative metaphor of a fish finger butty that some of the key principles behind protecting the seas – preventing overfishing, introducing spatial management plans, and incentivising compliance – were not being applied.

There was general agreement among the panellists at the conference that protecting and enhancing the seas was an incredibly complex task, but that more needs to be done. Proposed solutions included adding equipment on fishing boats for monitoring seafood stocks and the living environment; improving traceability through the supply chain; and providing commitments to keep pace with EU strategy and enshrine nature recovery targets into law. 

ESG requirements and investor-backed litigation

The interaction between increased ESG regulation in the UK and litigation funding was discussed as a growing risk to companies.

Companies should be wary of the financial penalties and concomitant reputational impact that come with breaching ESG regulations and disclosure requirements.

Firms may also be at risk of legal action from competitors and public interest organisations where they have made strong public ESG announcements but do not make reasonable attempts to meet them, for example by compiling and analysing initial data, implementing policies and actions, and tracking progress against metrics. This is especially important in an increasingly litigious society, where more diverse strategic litigation routes are being pursued as a means of promoting action and recovering money in the form of damages.

While the significant expense of going to court is a strong deterrent, recent years have seen a sharp increase in investor-backed litigation in areas such as ESG and human rights. As we have discussed previously, this involves lenders providing funding for the costs of litigation in return for a share of the proceeds if a claim is successful.

This may lead to more investor-backed claims against companies who have secured competitive advantage from making grand ESG announcements but have not made any real commitment to achieving them.

Conclusion

The conference emphasised that significant challenges remain in meeting Scotland's net-zero obligations. It was suggested that Brexit has contributed to a distorted environmental legal landscape by altering legislative and regulatory responsibilities and encouraging differing policy commitments from UK and Scottish governments, and this may make responding to urgent and complex challenges such as marine protection even more difficult.