Category: Environment

Over the last few months there has been a huge increase in environmental compliance duties globally , to the point where, in the near future, all companies listed on international stock exchanges would have to publish their greenhouse gas emissions and explain the initiatives they are taking to reduce them.

The most notable recent news is the regulation proposal issued by the United States Securities and Exchange Commission (SEC) on March 21, 2022. If this regulation is approved, it would oblige all companies listed on the United States stock exchange, to be published:

• Your greenhouse gas emissions.
• The environmental goals that the company has, including the dates and the process to meet them.
• The experience and role of the members of the Board of Directors to face the challenges of climate change.
• Determine the risks that climate change may have on the company.

Despite the huge impact its approval would have, the SEC’s proposed rule is only part of a global trend that points to greater involvement by companies to fight climate change.

According to the OECD , 15 G20 countries have regulations that require companies to publish environmental reports on a regular basis and require the quantification of carbon emissions. Among them, the United Kingdom and Japan have been reforming their regulatory schemes so that, as of April 2022, more and more companies are obliged to publish reports on their shares and their exposure to climate change.

For its part, the European Union, which already requires large companies and financial entities to report the way they handle social and environmental challenges, proposed new rules that would expand the scope of this regulation so that it applies to all companies listed on the stock exchange. , or that meet certain size and income parameters.

Implications of international environmental compliance duties for Latin America :

The aforementioned regulation, despite coming from other countries, will have a great impact on Latin America, since the duties of publishing information related to climate change usually include the subsidiaries that companies from said countries have in the rest of the world.

Additionally, it is estimated that these duties will fall indirectly on local businesses, since it is expected that companies from countries such as the United States, the European Union and the United Kingdom choose suppliers that meet these standards, in order to facilitate regulatory compliance and achievement of the emission reduction goals of its operations.

Greater value will be given to companies that already have experience demonstrating their emission reduction:

Due to the high scrutiny that companies in the United States and Europe have received regarding the transparency and accuracy of their reports on climate change, large companies will prioritize providers that have the most experience reporting their emissions transparently.

In the last decade, lawsuits related to climate change have increased exponentially, and many of these have had to do with the information that companies have published regarding their climate footprint and proposed reduction plans.

Global trends in climate change litigation: 2021

Additionally, 58% of the judicial cases mentioned have obtained sentences ordering greater transparency and action by companies and governments to face climate change. In contrast, only 32% of the cases have obtained unfavorable sentences for organizations that advocate for climate action.

Faced with such clear figures, it is to be expected that the top managers of the companies will make great efforts to ensure that all the actors in their business chain comply with the new standards.

We are at a stage where companies must pay more attention to their environmental impacts, not only to have a better image before the public, but also to comply with new regulations to combat climate change, whose trend is clearly increasing.  

As has happened throughout history, changes in standards present great opportunities for companies that are prepared to adopt them and even take advantage of them, but they also pose great risks for those businesses that do not adapt to the new market conditions.

This October, the Regulations for the authorization and registration of stationary tanks for self-consumption of fuels (Decree 42497-MINAE-S ) entered into force, which modifies the necessary requirements to have fuel storage tanks for self-consumption.

The main considerations to take into account regarding this regulation are the following:

1. What type of tanks does it apply to?

As its name indicates, this regulation applies only to stationary tanks for self-consumption of fuel. That is, only those that are installed in a fixed site, are filled in the same place and that use is for internal consumption.

Unlike the previous regulations, the duties of this regulation apply to all fixed self-consumption tanks, regardless of their size. Therefore, those people who have self-consumption tanks that did not require authorization due to their size, have the duty to register them with the General Directorate of Fuel Transportation and Marketing (DGTCC) before February 14, 2022.

• What are the requirements to obtain authorization?

To obtain the authorization and registration of a tank, you must fill out the digital form provided by MINAE, accompanied by the following information:

1. Image of the Technical Sheet of the tank.

• In the case of a used tank that does not have a technical sheet, a ” mechanical integrity study ” must be provided that supports the use that will be given to the container. Said study must be carried out by an architect or engineer incorporated into their respective professional association.

• Technical inspection report, with no more than 6 months, carried out by the Fire Department or by a collegiate engineer or architect. Said report must have photographic support and indicate that the tank complies with current legal and technical standards in terms of prevention, human safety and fire protection.

• How long does the procedure take?

The procedure for registration and authorization by the Ministry of Environment and Energy (MINAE) has a maximum term of one month.

Within this period, the DGTCC analyzes the documentation provided and if everything is in order, it will recommend the authorization of the tanks to the MINAE Minister. In the event that the information presented by the applicant does not comply with what is required, the DGTCC must inform the applicant of the inconsistency and grant 10 business days for its correction.

• How long is the MINAE authorization valid for?

The authorization of fuel tanks is valid for 5 years. For its renewal, the digital form and a technical inspection report must be presented again in the same terms as the one required to process the tank permit for the first time.

• Breach

The operation of a stationary self-consumption tank without the conditions described above, can generate an order to remove the tank, which if not complied with can cause the non-renewal of the sanitary operating permit, the suspension of activities until the situation, and even the opening of sanctioning procedures for contempt of authority.

Despite the fact that this regulation establishes new obligations for smaller self-consumption tanks, the procedure and the requirements are simpler and clearer than those contemplated in the previous regulations. This, together with a digital procedure that will facilitate its supervision and control, constitute efforts by the authorities to simplify the regulatory compliance of companies for the handling of dangerous substances.

This week the Regulations to the Law that prohibits expanded polystyrene (stereophone) were published, which lists the exceptions through which products containing said material may be marketed, as follows:

1. Expanded polystyrene products expressly excluded from the ban:

• Packaging for household appliances and the like.
• industrial uses. The regulation does not specify what should be understood as such.
• Uses in personal protective equipment (Ex: Helmets)
• Floating equipment for aquatic rescue.
•  Uses as thermal or acoustic insulation.
• Secondary packaging that does not have direct contact with the substance or packaging for vaccines and medicines.
•  Packaging or packaging for products that meet particular medical needs for food, infant formula, and dietary supplements, that do not have direct contact with food.
• Products used as finishes in construction projects, in which the material is immobilized during the useful life of the building and is required for its functionality.

• Products whose importer or producer is responsible for their correct final disposal.

In addition to the products indicated in the previous title, any expanded polystyrene packaging that does not have direct contact with its content will be marketed, provided that its importer or producer has a collection system that allows its use of energy, recycling or destruction through a waste manager authorized by the Ministry of Health.

For this, the provisions of the Regulation for the Declaration of Special Management Waste must be followed , regarding the compliance units made up of the companies that must ensure the correct management of the waste generated by their products.  

• When there are no viable alternative materials from the environmental point of view.

Another exception to the prohibition applies to those products that for reasons of conservation or protection of the content, the use of alternative materials is not environmentally viable.

To opt for this exception, an application must be submitted to the Directorate of Radiological Protection and Environmental Health of the Ministry of Health, indicating the type of product in question, the packaging materials and detailing the risk that would be generated in the event that it is not will use expanded polystyrene, for the environment, the user or third parties.

The Ministry of Health will have a period of 10 business days to approve exception requests and these will be valid for 2 years.

Finally, it must be taken into account that this regulation develops what is established in the Law for the prohibition of expanded polystyrene , which will come into force in August 2021.