Corporate Environmental Obligations and Directors' and Officers' Liability

• Author: Jamie Benidickson
• Profession: Faculty of Law University of Ottawa
• Pages: 187-210

187

chA Pter 9

CORPOR ATE

ENVIRONMENTAL

OBLIGATIONS AND

DIRECTORS’ AND

OFFICERS’ LIABILITY

A. the LiABiLity of corPorAtions

Among the principal forms of business organizations — sole proprietor-

ships, partnerships, and corporat ions — the last, corporations, ha s at-

tracted particular 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

are regarded as serious sources of potential harm whose oper ations re-

quire 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 pub-

lic interest in channel ling corporate behav iour in ways that reduce the

likelihood of environmental damage, the practical problems of inf‌lu-

encing corporate behaviour through the legal regime must be faced.

Those who rely on legal mechanisms, cr iminal s anctions in part icular,

have had to consider how a regime of prohibitions and penalties wil l

affect corporate operations. In the context of corporate accused, some

aspects of criminal law pose e specially int riguing problems. The need,

in relation to the prosecution of certain offences, to establish a gui lty

mind or some form of intent on the part of accused corporations is one

obvious example.

ENVIRONMENTA L LAW188

Although it may be argued that corporate action ultimately de-

pends on human agency, or th at the corporation can never act alone,

the tendency is to subordinate philosophical dilemmas in the context

of holding corporations responsible for wrongdoing. One analysis sets

out the normative and practical arguments. First, justice requires th at

everyone in breach of penal law be equally subject to prosecution. “It

is hardly fair,” t he analysis continues, “that individuals committing

rather petty cr imes, 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 punishment.” Second,

although individual actions within a corporate environment 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 perm it such crime to go unchecked. Moreover,

corporations, because of the collectivity of individuals involved, can

and do behave as t he persons that they, in strict point of law, are. Cor-

porations are therefore susceptible to stigmatization (harm to status or

reputation), and deterrence in the same way individuals are. Finally, ac-

cess to resources, i nformation, and expert ise makes corporations bet-

ter able to take measures to avoid the commission of crimi nal offences

than individuals ordinar ily are.1

Another approach to the conceptual challenges of holding corpora-

tions accountable for cr iminal offences attributed to them is to mini-

mize the cr iminal dimensions of the situation. Such an approach is

hinted at by Chief Justice Lamer, who expressed the opinion that “when

the criminal law is applied to a corporation, it loses much of its ‘crimin-

al’ nature and becomes, in e ssence, a ‘vigorous’ form of administrative

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 situat ion than is an individua l.2 As disc ussed

below, recent changes to the Criminal Code in the aftermath of the We-

stray Mine di saster appear to have increased the direct exposure of

corporations to criminal liability.

Corporate liability for environmental violations has rested on a

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

poration di rectly with the conduct of individuals in its employ takes

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

1 M.A. Bowden & T. Quigley, “Pinstr ipes or Prison Strip es? The Liability of

Corporation s and Directors for Environment al Offences” (1995) 5 J. Envtl. L. &

Prac. 209 at 222.

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