The New Era of Environmental Liability: Why Compliance Isn't Enough
Key Takeaways
Courts now hold executives personally criminally liable for environmental damage even when their actions were legal at the time.
Current regulatory compliance provides no protection against future liability claims based on what companies "should have known."
Proactive environmental risk assessment has become essential as financial stakes include both government penalties and shareholder lawsuits.
In June 2025, former executives of Italy's Miteni chemical plant learned a costly lesson: following the rules today won't shield you from tomorrow's consequences. These managers were held personally criminally liable for PFAS water and soil pollution—despite operating during an era when:
detecting these highly toxic "forever chemicals" was technologically impossible
no Italian laws regulated PFAS
the health risks linked to PFAS in soil and water were uncertain
This landmark conviction signals a fundamental shift in how courts view corporate environmental responsibility. The message is clear: if you should have known you were causing harm, the law will no longer accept ignorance as a defense- and may hold executives personally responsible.
Similar cases signal a shift
While the Miteni case is novel in holding executives personally liable, it is part of an accelerating trend that's reshaping liability across industries.
Consider Bayer's recent settlements. The German chemicals giant faced a total of $858 million in penalties for PCB pollution in Oregon and Seattle—for chemicals it manufactured between 1935 and 1977. Notably, Bayer voluntarily stopped PCB production in 1977, two years before the U.S. government banned these substances. Even this proactive compliance couldn't protect the company from liability decades later.
This pattern extends beyond the chemical industry. In New Zealand, property developer Winton was prosecuted for clearing what authorities later deemed an ecologically crucial wetland. The area wasn't officially protected, local councils hadn't designated it as significant, and no laws explicitly prohibited the clearing. Yet the developer still faced prosecution and subsequent remediation obligations.
The Financial Stakes Keep Rising
The costs go beyond regulatory fines. As shareholders intensify their demands for sustainability accounting, companies face liability from multiple fronts. Even when governments don't pursue cases, shareholders can step in directly. Pacific Gas & Electric's directors faced a $90 million shareholder lawsuit over pipeline safety failures—separate from the $2.2 billion in government penalties. While this case wasn't directly about nature risk, it demonstrates how shareholders can hold companies accountable for poor risk management. As sustainability demands from shareholders continue to grow, companies must get ahead of nature risks before they become liability issues.
The Bottom Line: Compliance Is No Longer Protection
These cases establish a new reality for corporate leaders: following today's environmental regulations provides no legal immunity from tomorrow's liability claims. Courts are increasingly willing to hold companies accountable for environmental damage based on what they should have known, not just what regulations required them to know. While this shift may seem daunting, it's actually manageable—and arguably beneficial—for companies willing to proactively assess their environmental impacts.
The TNFD in collaboration with other partners published a database of nature-related financial risks that shows this trend spans multiple industries and geographies, exhibiting the growing financial effects of nature risk.
The Path Forward
Protection lies not in regulatory compliance, but in proactive environmental stewardship. Companies must identify their environmental impacts before regulators do, understand their risks before courts define them, and take corrective action before liability becomes inevitable.
The good news? Getting started is entirely manageable. Assessing impacts, mapping nature risk, and engaging stakeholders can transform risks into opportunities.
Today's corporate leaders can choose a proactive path—one that reduces legal risk and increases business value. The question isn't whether you can afford to be proactive about nature risks. It's whether you can afford not to be.
