Compliance in energy, climate, and environmental law within industrial companies and the Whistleblower Protection Act
Since December 2023, the Whistleblower Protection Act for all companies with 50 or more employees. This means that almost all manufacturing and energy-intensive companies will have to implement these new regulations. This includes 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 (EnFG) or the Carbon Leakage Regulation (BECV) 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 introduced that are not linked to subsidies or incentives. Examples include the Energy Efficiency Act (EnEfG), which has obliged energy-intensive companies to take measures such as energy management systems according to ISO 50001 since January 2024. The Building Energy Act (GEG) and the Heat Planning Act (WPG) 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 often change. Anyone who loses track here runs the risk of violating regulations.
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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.
Here Whistleblower schemes They enable employees or external individuals to report violations anonymously without fear of reprisal. Our experience shows that the mere existence of such systems leads companies to take indications of risks more seriously and to act 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
In addition to the positive effects, there are also challenges. One concerns external service providers who work for companies, such as engineering firms, IT experts, and ESG consultants. If employees of these service providers notice a violation of energy or environmental law during the course of their service for a company, they can report it via their client's whistleblowing system.
Follow The reporting office must then keep the identity of the reporter confidential, and the reporter and their employer must not fear any disadvantages due to the report.
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.
While an NDA (non-disclosure agreement) can oblige external parties to maintain confidentiality, it does not prevent them from reporting violations. This creates uncertainty, especially for companies 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 negative ones. It can be assumed that the duties under the Whistleblower Protection Act itself, along with a company-wide cultural change, will have a very positive long-term impact on the implementation of compliance requirements.
(The male form used refers to all persons, regardless of gender.)
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