Transnational Environmental Crime and Extraterritorial Corporate Liability

Transnational environmental crime (TEC) has emerged as one of the most pressing challenges of our time. As the third most profitable criminal activity worldwide, TEC exacerbates climate change, undermines human rights, and threatens peace and security. Despite the scale and gravity of TEC, the international legal framework remains weak and fragmented. Multilateral environmental agreements are poorly equipped to tackle criminality, generally falling short of imposing obligations on criminalisation and enforcement cooperation. Unlike other serious transnational threats, no suppression convention exists against TEC.

This international legal vacuum is exacerbated by the prominent role of corporate actors in driving or facilitating TEC. While the nexus with organised crime is well documented and often reflected in global policy (e.g. under the Preamble of the United Nations Convention against Transnational Organised Crime), the role of corporations in the perpetration of TEC remains underexplored. Adopting a supply chain perspective, this contribution aims to shed light on the blurred lines that exist between licit and illicit businesses that harm the environment on a global scale, with the goal of bringing corporate impunity to an end.

What Is a Transnational Environmental Crime?

At present, there is no internationally-agreed definition of TEC. International organisations and literature generally categorise types of TEC into two main offence areas. Natural resource crimes typically include illegal wildlife trade, illegal logging, and illegal, unregulated, and unreported (IUU) fishing. Whereas, pollution crimes cover illegal waste trafficking and illegal trade in ozone-depleting substances. However, these categories remain broad and descriptive, failing to constitute specific legal offences. Regulatory misalignments across jurisdictions, interdisciplinary approaches, and systemic crime convergence – especially with corruption and drug trafficking – make defining TEC particularly challenging.

Against this fragmented and multifaceted backdrop, the new Environmental Crime Directive (ECD) 2024/1203 replacing Directive 2008/99/EC, is at the cutting edge: it expressly addresses the cross-border dimension of environmental crimes and codifies a detailed list of relevant conducts to be criminalised under domestic law. Among numerous developments introduced by the 2024 revision, it is noteworthy that the list of offences has expanded from nine to twenty, now covering most of the traditional areas of TEC: in particular, illegal wildlife trafficking, logging, waste trafficking, and trade in ozone-depleting substances. This codification is crucial as it ensures legal certainty and provides a starting point to discuss liability.

Unpacking Corporate Involvement: The Legal-Illegal Business Continuum

Moving to real-world dynamics, the perpetration of TEC simultaneously involves a broad spectrum of actors, including organised criminal groups, corporations, members of local communities with limited means of subsistence, and public-private facilitators. Within ubiquitous criminal networks, these subjects establish personnel and business arrangements and perform complementary roles along criminal supply chains in origin, transit, and destination countries. As the Global Initiative against Transnational Organized Crime points out, this perspective reveals a grey area where licit and illicit economies intersect, making TEC particularly insidious. By shifting the focus from the rigid view of organised TEC committed by the “stereotypical” criminal, this chain-of-custody approach highlights the existing continuum between licit and illicit business and identifies complex patterns within the dynamics of globalisation.

In this regard , a report the United Nations Office on Drugs and Crime released recently identifies different degrees of corporate involvement in TEC. The unknowing participation of legitimate companies, along with negligent or intentional due diligence failures, lies at the most passive end of this spectrum. At the other extreme, corporations may be established with the sole or primary purpose to break the law, usually operating through shell and front companies. In the middle ground, legally-established corporations may opportunistically engage in illegal activities to complement their business practice, especially by leveraging their placement on the legal market for concealment. Commodity laundering is a key strategy.

Studies document that illegally logged timber is exported from the Democratic Republic of Congo with fraudulent or falsified documentation, mingled with legal stocks in Uganda and Rwanda, and transferred to European and Asian licit markets. Another emblematic case illustrates how global value chains of the fashion industry are embedded with TEC, particularly when it comes to deforestation. Earthsight found that Brazilian companies of the Horita Group and SLC harvest cotton on illegally logged areas in the Cerrado region export crops to manufacturing companies in Bangladesh, Pakistan and Indonesia. Then, these factories supply multinational corporations, including H&M and Zara, with finished products for sale on Western markets.

Recognising these patterns reveals that corporations are systemic rather than peripheral actors in TEC, thereby raising compelling questions about the issue of extraterritorial corporate liability.

Corporate Liability for Environmental Crimes Abroad: Existing Legal Bases and Emerging Prospects

In the face of the scenario described above, the revised ECD has introduced a jurisdictional clause which may prove crucial in the fight against corporate TEC. The new Article 12 enables Member States to exercise jurisdiction when the environmental crimes listed under the Directive are committed abroad “for the benefit of a legal person established in [their] territory.” In the pursuit of substantive justice, this provision essentially enshrines a benefit-and-burden approach to jurisdiction, long endorsed by scholars, most notably De Schutter, as a desirable response to curb the impunity of transnational corporations.

Nevertheless, this jurisdictional clause remains optional, thereby raising questions about its uptake across Member States. With the ECD transposition deadline approaching in May 2026, it remains uncertain how many Member States will incorporate this provision into their legal systems and actually exercise jurisdiction on this ground. Admittedly, the benefit clause is not unprecedented under European Union (EU) law: similar wording features in previous instruments addressing other threats – including human trafficking, corruption, and market abuse. This jurisdictional ground is also mandatory in relation to terrorism.

Another promising avenue under EU law may be represented by the Single Economic Unit Doctrine (SEUD), developed under European jurisprudence to establish parental liability for competition law infringements. In a groundbreaking judgement, the then European Court of Justice held that “the fact that a subsidiary has a separate legal personality is not sufficient to exclude the possibility of imputing its conduct to the parent company.” As the Court established, separate legal persons may form a single economic unit when the subsidiary is subject to the parent’s decisive influence and merely performs its instructions. In case of wholly-owned subsidiaries, decisive influence is presumed on the basis of the so-called Akzo presumption. In case of lower ownership rights, other indicators must be assessed, including reliance on parental assets or joint management structures.

Nowadays, the possible transposition of the SEUD to other domains of law has sparked debate. In particular, Ulfbeck argues for an extension of the doctrine to EU environmental criminal law, alongside its application to global value chains. Indeed, extending the logic underpinning the SEUD to corporate TEC would better reflect supply-chain dynamics, where lead firms often exercise control comparable to decisive influence over foreign contractual suppliers.

Interestingly, legal models across jurisdictions may suggest a pattern toward parental corporate liability for transnational crimes. For instance, the Italian Legislative Decree 231/2001, which pioneered a tertium genus of liability within the civil law tradition, may ground the responsibility of legal persons for listed crimes committed abroad, either in part – as in the Snamprogetti case – or in whole, provided that the conditions under Articles 7 to 10 of the Criminal Code are fulfilled. Furthermore, Italian jurisprudence has clarified that the liability system under the Decree applies to corporate groups.

Moving to other legal systems, Article 21 of the so-called Loi Sapin II establishes French jurisdiction over corruption offences committed abroad by persons carrying out all or part of their economic activity in France. Similarly, Article 7 of the Belgian Code of Criminal Procedure enables to prosecute any person who commits an offence on behalf of a legal person registered in Belgium.

At the international level, the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions upholds the principle of functional equivalence. Accordingly, the Convention ensures that legal persons may not escape liability through related or unrelated intermediaries, including third-party agents, consultants or contractors.

Another key development that is worth monitoring closely is the ongoing negotiation for a United Nations binding instrument to regulate the activities of transnational corporations and other business enterprises with respect to human rights – the so-called ‘UN Legally Binding Instrument’. Notably, the most recent draft clarifies the definition of ‘business relationship’ under Article 1.6 by explicitly mentioning ‘value chains’, thereby covering a wide range of corporate relations. Furthermore, Article 9 on jurisdiction would commit States Parties to prosecute human rights abuses carried out by legal persons domiciled in their territory or jurisdiction. Although environmental concerns have been somewhat diluted under the last draft, the mentioned provisions mark a significant progress and hold the potential to establish new international standards.

Conclusion

In our globalised world, corporate accountability for cross-border environmental harm calls for a stronger criminal law approach to complement existing due diligence frameworks. In particular, understanding global value chains driving TEC is essential to align global governance responses with the systemic and ubiquitous nature of corporate involvement. In light of recent legal developments, the EU seems uniquely positioned to lead this effort and to address the issue of “economically dependent but legally independent entities.” Notably, a solid EU track record under the new Article 12 of the ECD may resonate in the negotiations of the UN Legally Binding Instrument and set extraterritorial accountability standards, thereby reinforcing the ethics of globalisation and disrupting perpetration patterns.