Operational Pollution Liability

Can an SME business activity provide a pollution source?

At the start of 2021 SMEs accounted for 99.9% of the business population (5.6 million businesses) (source fsb.org.uk).

Sixteen percent of all SMEs were operating in Construction, compared with less than 1% in the Mining, Quarrying and Utilities sector.
Professional, Scientific and Technical Activities accounted for 15% of all SMEs, while 10% were in the Wholesale and Retail Trade and Repair sector.

Each of these businesses and sectors is unique, however, there are similarities when it comes to polluting sources. Firstly, consider your business operations, are you storing or handling:

raw or synthetic materials;
wastes
solid, liquid or gaseous products that could impact the environment

Then consider the infrastructure of your premises and all of the potentially polluting sources and pathways:

Bulk storage - vessels you can see (e.g. drums, cans, intermediate bulk containers, known as IBCs and tanks); Underground storage you cannot visually see (e.g. oil, chemicals, sewage, effluent, wastewater in underground storage tanks and associated pipework.)

Drainage Systems – what is the current condition of your drainage? Is there an unknown collapse or break point that is unknowingly directing foul or effluent into the underlying ground and beyond the boundary of your site?

Back-up Generators – are these checked and bunded – what if they breakdown and lose fuel contents beyond the bund?

Odour – Does your site emit controlled odour through air scrubber systems – are these effectively maintained? What if there is a gradual odour release due to air filter failure that affects the local community?

Identify

Some businesses are required by law to hold an environmental permit for certain business operations that may cause harm to the environment. As such there will be a requirement to manage your liability through an active environmental management system and adherence to an environmental permit requirement issued by the environmental regulator (Environment Agency / SEPA / NIEA / Natural Resource Wales).

For business with no such requirement, an active approach to mitigating your environmental exposures should be undertaken. This can be achieved by undertaking a business review, highlighting all potential sources, pathways and receptors of contaminants should they unexpectedly be released to land, air or water from both your own site activity, transportation and third-party operations.

Assess

To assess your business exposure to the local environment and mitigate any future impact of liability against you as a business as a result of a pollution incident the following can be undertaken:

Obtain an environmental desk-top report which provides a non-intrusive overview of the environmental setting and sensitivity of your site in the local environment (below and above ground).
Work with a specialist third party environmental consultant to conduct a health check audit of your own operating locations; identifying polluting sources and how to effectively manage these in-line with current UK guidance and regulation. Subsequently formulating an environmental risk plan for your business.
If your business already has environmental policies and procedures these can be reviewed and stress tested to ensure that they are fit for purpose;
A physical intrusive survey of your property (phase 2) to assess the actual condition of the ground beneath your business including a contamination risk assessment and mapping of its extent. This is sometimes required for high risk sites. Our partner provider ELM Law can advise on the pros and cons if a Phase 2 is recommended by technical consultants.

How can the SPILL product help my business?

We can assist in the process of understanding and mitigating against your operational liabilities:

Step 1

We can source you a suitable environmental consultant to conduct a health screen of your business with regards to operational environmental liabilities

Step 2

Following the initial screening process, should environmental management procedures be absent, they can compile environmental management plans and procedures bespoke to your requirements including pollution spillage response plans

Step 3

We can provide a financial provision in the form of a SPILL insurance policy to off-set the financial impact of a pollution claim made against you and the necessary clean-up, that results from a new pollution incident that you become legally liable for, resulting from your own site operations and from any business operations you undertake at 3rd party property. In addition, for your own property only, the insurance policy will cover claims arising from any pre-existing (historical) contamination that manifests on, at, under or migrating from your property that you become legally liable for.