Corporate Environmental Obligations and Directors' and Officers' Liability

• Author: Jamie Benidickson
• Profession: Faculty of Law University of Ottawa
• Pages: 163-181

163

CHAPTER 9

CORPORATE

ENVIRONMENTAL

OBLIGATIONS AND

DIRECTORS’ AND

OFFICERS’ LIABILITY

A. THE LIABILITY OF CORPORATIONS

Among the principal forms of business — sole proprietorships, part-

nerships, and corporations — the last, corporations, has attracted par-

ticular attention from an environmental perspective. Despite many

variations in corporate form, from small, not-for-profit entities to

major multinational firms, in the environmental context corporations

have often been regarded as serious sources of potential harm whose

operations require careful supervision and control. Environmental

risks inherent in the use of dangerous pollutants may be accentuated

by competitive pressures on corporate profitability.

While the nature and magnitude of the risks create an obvious

public interest in channelling corporate behaviour in ways that reduce

the likelihood of environmental damage, the practical problems of

influencing corporate behaviour through the legal regime must be

faced. Those who rely on legal mechanisms, criminal sanctions in par-

ticular, have had to consider how a regime of prohibitions and penal-

ties will affect corporate operations. In the context of corporate

accused, some aspects of criminal law pose especially intriguing prob-

lems. The need, in relation to the prosecution of certain offences, to

establish a guilty mind or some form of intent on the part of accused

corporations is one obvious example.

Although it may be argued that corporate action ultimately

depends on human agency, or that the corporation can never act alone,

164 ENVIRONMENTAL LAW

1 M.A. Bowden & T. Quigley, “Pinstripes or Prison Stripes? The Liability of

Corporations and Directors for Environmental Offences” (1995) 5 J.E.L.P. 209

at 222.

2R. v. Wholesale Travel Group Inc., [1991] 3 S.C.R. 154 at 182.

the tendency is to subordinate philosophical dilemmas in the context

of holding corporations responsible for wrongdoing. One recent analy-

sis sets out the normative and practical arguments. First, justice

requires that everyone in breach of penal law be equally subject to

prosecution. “It is hardly fair,” the analysis continues, “that individu-

als committing rather petty crimes, almost always entailing only one or

a few victims, are subject to prosecution and imprisonment while a

corporation might cause harm on a far grander scale, yet escape pun-

ishment.” Second, although individual actions within a corporate envi-

ronment may not constitute a crime when considered separately, the

cumulative impact can be criminal and blameworthy; to exempt the

corporation from liability would be to permit such crime to go

unchecked. Moreover, corporations, because of the collectivity of indi-

viduals involved, can and do behave as the persons that they, in strict

point of law, are. Corporations are therefore susceptible to stigmatiza-

tion and deterrence in the same way as individuals. Finally, access to

resources, information, and expertise makes corporations better able to

take measures to avoid the commission of criminal offences than indi-

viduals ordinarily are.1

Another approach to the conceptual challenges of holding corpo-

rations accountable for criminal offences attributed to them is to min-

imize the criminal dimensions of the situation. Such an approach is

hinted at by Chief Justice Lamer, who expresses the opinion that

“when the criminal law is applied to a corporation, it loses much of its

‘criminal’ nature and becomes, in essence, a ‘vigorous’ form of admin-

istrative law.” Since the stigma attached to conviction is effectively

reduced to a financial penalty, the corporation — which cannot be

imprisoned — is in a completely different situation than is an individ-

ual.2

Corporate liability for environmental violations thus rests on a

variety of grounds. One means of linking the responsibility of the cor-

poration directly with the conduct of individuals in its employ takes

the form of vicarious liability. Such an approach appears in some reg-

ulatory legislation, Alberta’s Environmental Protection and Enhancement

Act (EPEA), for example, where it is provided that

for the purposes of this Act, an act or thing done or omitted to be

done by a director, officer, official, employee or agent of a corpora-