Compliance in energy, climate, and environmental law within industrial companies and the Whistleblower Protection Act
The Whistleblower Protection Act entered into force on 2 July 2023. The transitional period for private employers with 50 to 249 employees ended on 17 December 2023. In principle, Section 12 of the HinSchG obliges employers with generally at least 50 employees to establish an Internal reporting office. In addition, special regulations apply to certain sectors. This means that almost all manufacturing and energy-intensive companies must implement these new requirements. These include sectors such as the automotive, food and chemical industries, as well as data centres and rail operators.
The law is closely connected with the requirements that Companies in energy, climate, and environmental law have to comply with. This connection is also made clear by the origin of the law: it was partly created in response to environmental scandals such as the diesel scandal. In this article, we will explore how energy, environment, climate and the Whistleblower Protection Act are related.
Compliance in Energy, Climate, and Environmental Law
Companies with high energy consumption must operate in a particularly dynamic legal field. In recent years, there have been many innovations and constant changes in this area. Practically every week, existing laws have been revised or entirely new regulations created, presenting companies with ever-new challenges. The focus has particularly shifted in energy and climate law:
Subsidies and Privileges in Energy Law
Previously, much of energy law revolved around financial relief for energy-intensive companies. The aim was to prevent so-called carbon leakage – the relocation of companies abroad due to high energy costs. These regulations included, among other things, the reduction of electricity and energy taxes or the (now abolished) EEG surcharge. New regulations, such as the Energy Financing Act or the Carbon Leakage Regulation continue to be added. In this area, it was often about compliance with measurement and reporting obligations. Terms such as „third-party quantity allocation“ have caused a lot of consultancy effort in the past.
New obligations arising from regulatory provisions
In recent years, regulations have been added that are not linked to subsidies or benefits. Example: The Energy Efficiency Act generally obliges companies with an average total annual final energy consumption of more than 7.5 gigawatt-hours to establish an energy or environmental management system. In particular, an energy management system in accordance with DIN EN ISO 50001 or an environmental management system in accordance with EMAS are permitted. The specific deadlines are governed by Section 8 of the Energy Efficiency Act (EnEfG). Also the Building Energy Act and the Heat Planning Act set new targets for the use of renewable energy.
Environmental law
Unlike energy law, environmental law has always placed a stronger focus on strict rules and obligations, such as compliance with limit values, the installation of measuring equipment, or mandatory reporting duties. Subsidies play a lesser role here.
Overall, the biggest compliance challenge for companies is the multitude of detailed obligations, which change often. Anyone who loses track here runs the risk of breaching regulations.
Learn in 5 minutes
Before you book a live demo appointment with LegalTegrity, you can get to know our software in just 5 minutes. Request our demo video to get an overview of all the system's important features and customisation options. You will receive the demo video via email.
How whistleblower systems can improve compliance
Errors occur in companies due to the many changes and complexity in energy and environmental law. These are often unintentional and arise from being overwhelmed by the regulatory jungle. Particularly in medium-sized businesses and rural areas, there is often a lack of qualified personnel to safely implement all requirements.
Digital whistleblowing systems can enable confidential and, if offered, anonymous reports. The statutory Protection against reprisals: applies only if the requirements of the HinSchG are met. In addition, not every internal reporting channel is automatically open to all external persons. Our experience shows that the mere existence of such systems leads to companies taking reports of risks more seriously and acting more quickly.
The situations where employees notice a violation and report it to their superiors or company management are particularly conceivable. However, the issue is not resolved – for example, for economic reasons. In such cases, as a last resort, there could be a Report on the whistleblower system anonymously handed over to avoid being directly targeted by the authorities as the person directly responsible in an administrative offence procedure.
Even if reports are rare, whistleblower systems – based on our consulting experience – strengthen the Sense of responsibility and promote compliance, particularly in complex legal fields such as energy and environmental law. At the same time, the position of those within the company who are responsible for ensuring compliance with energy and environmental law in their area of responsibility is also strengthened.
Compliance challenges due to the Whistleblower Protection Act
Alongside the positive effects, there are also challenges. One of these concerns external service providers who work for companies, such as engineering firms, IT experts, and ESG consultants. The internal reporting channel must be open at least to the company's own employees and seconded agency workers. Furthermore, the company can open the channel to other natural persons who are in contact with the company in the course of their professional activities, such as employees of external service providers. Whether these individuals can use the channel therefore depends on its specific design.
Follow If the internal reporting channel is opened to external persons, the statutory confidentiality rules apply to the processing of the report. However, protection against retaliation presupposes that the whistle-blower falls within the personal and material scope of application and fulfils the requirements of Section 33 of the Whistleblower Protection Act (HinSchG). In practice, disadvantages cannot be guaranteed, but they are prohibited by law in the case of protected reports.
I would like to do that with a Example illustrate
When a company identifies a breach of emission limit values at a facility and commissions an engineering firm to rectify it, the client must disclose details of the breach.
A contractual confidentiality clause does not automatically preclude a report or disclosure protected under the HinSchG. However, whether the specific sharing of information is protected depends on the scope of application, the conditions for protection and potential statutory exceptions. The statement should therefore not be generalised without a case-by-case assessment.
This creates uncertainty, particularly for businesses that rely on external expertise.
However, despite these challenges, the positive effects that whistleblower systems can have on compliance outweigh them.
Summary
Compliance in energy, climate and environmental law is an increasing challenge for medium-sized industrial companies. This is further exacerbated by the obligation to legally implement the Whistleblower Protection Act. In this heavily regulated sector, compliance risks for company management are increasing due to the pressure of reports concerning legal violations by employees or service providers.
However, from our perspective, the positive effects clearly outweigh the negatives. It can be assumed that the duties of the Whistleblower Protection Act in itself and a company-wide cultural shift will have a very positive long-term effect on the implementation of compliance requirements.
(The male form used refers to all persons, regardless of gender.)
Secure your business immediately – without IT effort: With our whistleblowing system, you meet all the requirements of the EU Whistleblower Directive in just a few minutes – data protection compliant & anonymous. Discover a user-friendly alternative to your existing system with LegalTegrity.
Find out now why so many companies are switching to LegalTegrity.
