Floods are natural phenomena that frequently cause destruction and significant losses, such as those in the state of Rio Grande do Sul, Brazil. In addition to natural factors, corporate actions can exacerbate the effects of these disasters, affecting thousands of people.
Certain business sectors are more susceptible to scrutiny, including (a) agricultural, logging, and construction companies, which often deforest areas to expand operations, reducing the soil’s capacity to absorb water and increasing flood likelihood; (b) companies involved in the construction of large developments, which frequently impermeabilize the soil, preventing rainwater from infiltrating the soil and increasing runoff into rivers; (c) companies that discharge industrial and chemical waste into rivers, contaminating and obstructing watercourses, thus reducing their flow capacity and contributing to flooding; and (d) mining companies and dam constructors, which can alter the natural river courses, heightening flood risks in previously unaffected areas.
Therefore, companies must ensure social welfare, based on the social function of property and environmental defense, including differentiated treatment according to environmental impact of products and services and their production and service processes. This is the rule established in Article 170, item VI, of the Federal Constitution, as amended by Constitutional Amendment No. 42/2003.
Moreover, according to Law No. 9.605/1998, legal entities can be held administratively, civilly, and criminally liable when an offense is committed by a decision of their representative or collegiate body in the entity’s interest (Art. 3). This is a rare exception in Brazilian criminal law, where corporate liability is generally not admitted. Responsibility extends beyond the employee framework to include technicians, auditors, and agents aware of and authorizing environmental degradation, contributing to natural disasters.
In the state of Rio Grande do Sul, the liability of private entities for the disaster is not yet appraised, as the floods have not subsided and El Niño and a new cyclone are affecting the region until the end of May 2024.
In any case, the Mariana (Minas Gerais) dam rupture in 2015, resulting in a mudslide, was a milestone for corporate criminal liability in Brazil, with responsible companies facing criminal charges and hefty environmental fines.
Therefore, to avoid criminal liability, companies must adopt environmental and risk management practices, including (i) robust compliance programs to ensure that all company activities comply with environmental legislation; (ii) environmental impact assessments and risks mitigation measures; (iii) investment in projects to recover degraded areas; (iv) training of employees on sustainable practices and environmental preservation; and (v) cooperation with authorities in the voluntary disclosure of environmental violations or risks.
Companies must be aware of their legal obligations and adopt proactive measures to mitigate their environmental impact. By doing so, they not only avoid legal penalties but also contribute to the sustainability and protection of communities affected by floods.