Several years ago, we wrote a detailed article explaining the new, tougher approach in the UK to the sentencing of environmental offences committed by large companies.
That article, from 2015 (see: https://www.reedsmith.com/en/perspectives/2015/10/uk-courts-get-tough-on-environmental-crime-sentenc), focussed on the Court of Appeal’s decision in R v. Thames Water Utilities Ltd  EWCA Crim 960.
In particular, we noted the court’s comments in that case that:
“To bring the message home to the directors and shareholders of organisations which have offended negligently once or more than once before, a substantial increase in the level of fines, sufficient to have a material impact on the finances of the company as a whole, will ordinarily be appropriate. This may therefore result in fines measured in millions of pounds”
“[In the most severe cases] [t]his may well result in a fine equal to a substantial percentage, up to 100%, of the company’s pre-tax net profit for the year in question… even if this results in fines in excess of £100 million. Fines of such magnitude are imposed in the financial services market for breach of regulations. In a Category 1 harm case, the imposition of such a fine is a necessary and proper consequence of the importance to be attached to environmental protection.”
Fast forward four years and the same company, Thames Water, found itself before the Court of Appeal again, challenging the imposition of a fine of £2 million imposed by the Crown Court following an admitted unlawful discharge of some 82,000 litres of untreated sewage into a brook in the Cotswolds which resulted in the deaths of many fish.
Thames Water submitted that the judge had failed to engage in the step-by-step exercise required by the Sentencing Council’s Environmental Offences Definitive Guideline (EOD Guideline) and had failed to explain how the figure of £2 million was reached. It also argued that the level of fine before giving credit for an early guilty plea was manifestly excessive.
The Court of Appeal accepted that the Crown Court judge’s sentencing remarks failed to set out clearly how the judge reached the level of fine imposed, and that the judge had not fully engaged in the step-by-step approach required by the EOD Guideline. However, the Court of Appeal nonetheless declined to overturn the fine and held that it was neither manifestly excessive nor wrong in principle.
The court said that to bring home to the directors and shareholders the need to protect the environment required a very substantial fine. In those circumstances, a fine measured in millions of pounds was entirely proportionate.
The court considered that a fine after a trial of £3 million was appropriate and that the credit given by the Crown Court judge for Thames Water’s early plea of guilty may, in fact, have been generous.