The Ministry of Environment and Energy (RIS) recently submitted to the Parliament a draft law that regulates, among other things, the institution of compliance checks with environmental legislation. The provisions of the bill aggravate an already problematic situation and are far from international practices. They also demonstrate a centralized view of public administration, where the autonomy and accountability of administrative units is limited and everything is under political control.
The bill provides for the establishment of a committee in the RIS that will supervise the environmental controls, will be established by decision of the minister and will be chaired by a general secretary. The audits will be limited to ascertaining whether there have been breaches of environmental legislation and to drawing up a compliance plan. The deadline for compliance will depend on the seriousness of the infringements and the cost of compliance and will be up to three years. After the deadline for compliance, a new autopsy will be performed and in case no compliance is found again, penalties will be charged.
With the proposed procedure, environmental controls and sanctions become political decisions. As the oversight committee is overseen by the minister, substantive controls and sanctions will not be approved if he does not agree. As a result, the minister will come under pressure from illegal companies to avoid sanctions. The possibility that such companies will have to “fall into the soft” is enhanced as the proposed procedure gives the competent administrative bodies a great discretion regarding the deadline for compliance and the imposition of sanctions, without at the same time providing accountability for their performance, performance indicators etc.
The above are far from international practices. In many European countries, such as the United Kingdom, Ireland and Italy, environmental audits have been entrusted to independent authorities with adequate resources and accountability. In countries such as France and Portugal, where audits are carried out by services of the Ministry of the Environment, these services have significant functional autonomy and there is generally a stronger culture of autonomy and accountability in public administration.
A second problematic element is that environmental controls are limited to infringement findings and compliance recommendations, with any sanctions imposed after years. Some comparisons are helpful here. What if tax audits that found infringements only provided three-year compliance recommendations? Tax evasion would skyrocket. What would be the consequences for corporate governance if the Hellenic Capital Market Commission could only provide compliance recommendations to companies whose audits found financial irregularities?
The above comparisons show that the proposed environmental controls will not have a deterrent effect. They also demonstrate the importance of the autonomy and accountability of administrative units. The tax audits were transferred to an independent authority (AADE) by the Ministry of Finance (during the memoranda and despite strong reactions) to reduce tax evasion, as the audits would not be subject to political pressure and there would be accountability. Checks on compliance with labor law are also carried out by an independent authority, and the Hellenic Capital Market Commission is an independent authority. In all cases, the aim is for the process to be carried out by an administrative body that is accountable to the political leaders but has guarantees of independence.
A third problematic factor is the lack of clarification of responsibilities between the audit services of RIS and those in the regions and the decentralized administrations, especially now that private auditors are being added to the mix. Blurred responsibilities favor the diffusion of responsibilities and lack of accountability.
A strong environmental monitoring body is essential. The same is true in general for a public body that monitors and advocates for the quality of the environment – as independent authorities do in the countries mentioned above. Without this infrastructure, the country will hardly be able to protect its natural capital and meet the major challenges of the future, such as the protection of biodiversity, the circular economy and climate neutrality.
* Mr. Dimitris Vagianos is Professor of Finance at the London School of Economics, member of the Pissaridis Committee and member of the Board. of WWF Greece.