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Belgium Ariane Brohez, Julien Lecler and Atdhe Krasniqi Loyens & Loeff

practiceguides.chambers.com 2020 BELGIUM Law and Practice Contributed by: Ariane Brohez, Julien Lecler and Atdhe Krasniqi Loyens & Loeff see p.15

Contents

1. Regulatory Framework p.3 10. Contractual Agreements p.8 1.1 Key Environmental Protection Policies, 10.1 Transferring or Apportioning Liability p.8 Principles and Laws p.3 10.2 Environmental Insurance p.9

2. Enforcement p.3 11. Contaminated Land p.9 2.1 Key Regulatory Authorities p.3 11.1 Key Laws Governing Contaminated Land p.9

3. Environmental Incidents and Permits p.4 12. Climate Change and Emissions Trading p.10 3.1 Investigative and Access Points p.4 12.1 Key Policies, Principles and Laws p.10 3.2 Environmental Permits p.4 12.2 Targets to Reduce Greenhouse Gas Emissions p.10

4. Environmental Liability p.5 13. Asbestos p.11 4.1 Key Types of Liability p.5 13.1 Key Policies, Principles and Laws Relating to Asbestos p.11 5. Environmental Incidents and Damage p.6 5.1 Liability for Historical Environmental 14. Waste p.11 Incidents or Damage p.6 14.1 Key Laws and Regulatory Controls p.11 5.2 Types of Liability and Key Defences p.7 14.2 Retention of Environmental Liability p.11 6. Corporate Liability p.7 14.3 Requirements to Design, Take Back, Recover, Recycle or Dispose of Goods p.11 6.1 Liability for Environmental Damage or Breaches of Environmental Law p.7 15. Environmental Disclosure and Information p.12 6.2 Shareholder or Parent Company Liability p.7 15.1 Self-Reporting Requirements p.12 7. Personal Liability p.7 15.2 Public Environmental Information p.12 7.1 Directors and Other Officers p.7 15.3 Corporate Disclosure Requirement p.12 7.2 Insuring Against Liability p.7 16. Transactions p.12 8. Lender Liability p.7 16.1 Environmental Due Diligence p.12 8.1 Financial Institutions/Lender Liability p.7 16.2 Disclosure of Environmental Information p.13 8.2 Lender Protection p.7 17. Taxes p.13 9. Civil Liability p.8 17.1 Green Taxes p.13 9.1 Civil Claims p.8 9.2 Exemplary or Punitive Damages p.8 9.3 Class or Group Actions p.8 9.4 Landmark Cases p.8

2 BELGIUM Law and Practice Contributed by: Ariane Brohez, Julien Lecler and Atdhe Krasniqi, Loyens & Loeff

1. Regulatory Framework These acts determine the framework for issuing permits in the environmental domain. In the Flemish and Walloon Regions, 1.1 Key Environmental Protection Policies, several aspects of one project or facility have been integrated Principles and Laws into a single permit. Article 23 of the Belgian Constitution enshrines the right to live a dignified human existence, which includes the right to protec- General, sectorial and specific environmental conditions are tion of a sound environment. This article has no direct effect but determined by implementation decrees and orders, as follows: entails a standstill principle. This was confirmed by the Council of State in an arrest of 20 February 2019. • For soil protection: (a) the Ordinance of 5 March 2009 relating to the manage- Belgium is a federal country. The competencies are divided ment and sanitation of contaminated soils applicable in between the Federal State and, notably, the three Regions: the the Brussels-Capital Region; Brussels-Capital Region, the Walloon Region and the Flemish (b) the Decree of 1 March 2018 relating to management Region. and soil sanitation applicable in the Walloon Region; and Competencies relating to environmental protection have been (c) the Decree of 27 October 2006 concerning soil sanita- attributed to the Regions. The Federal State remains compe- tion and soil protection applicable in the Flemish tent for the establishment of product norms and for protection Region. against ionising radiation (including radioactive waste), as well • For waste management: as for specific matters in the North Sea. (a) the Ordinance of 14 June 2012 relating to waste applicable in the Brussels-Capital Region; The regulatory framework governing environmental protection (b) the Decree of 27 June 1996 relating to waste applicable is thus divided between the Federal State and the three Regions. in the Walloon Region; and (c) the Decree of 23 December 2011 concerning the Environmental policies and principles are mainly implemented sustainable management of waste applicable in the from European and international regulatory frameworks. It is Flemish Region. therefore necessary to consider supranational regulatory frameworks and to refer to them where and when appropriate. Non-compliance with the environmental protection regulations may lead to criminal, civil and/or administrative sanctions. The most important environmental legal regulations for general environmental principles are as follows: 2. Enforcement • the Code for Air, Climate and Energy of 2 May 2013 applicable in the Brussels-Capital Region; 2.1 Key Regulatory Authorities • the Environment Code of 27 May 2004 applicable in the Environmental policy and enforcement are applied at national, Walloon Region; and regional and local levels. • the Decree of 5 April 1995 containing general provisions on environmental policy applicable in the Flemish Region. At the national level, the most important regulatory authorities are the competent federal minister(s), the Department for The most important environmental legal regulations for the Public Health, Safety of the Food Chain and Environment sup- environmental permit policy are as follows: porting the competent minister(s), the Directorate General for Environment taking care of the co-ordination and collaboration • the Ordinance of 5 June 1997 relating to environmental between the different parties involved, and the Federal Inspec- permits applicable in the Brussels-Capital Region; tion for Environment in charge of enforcement, as well as the • the Decree of 11 March 1999 relating to the environmental public prosecutor when it concerns criminal sanctions. permit applicable in the Walloon Region; and • the Decree of 25 April 2014 concerning the environmental At the regional level, besides the competent ministers the most permit applicable in the Flemish Region. important regulatory authorities are as follows:

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• in the Brussels-Capital Region: Brussels Environment, an and installations with a more substantial environmental impact integrated environmental body, responsible notably for the are required to operate under an environmental permit. Other granting of permits and for control and inspection; less environmentally sensitive activities and installations can be • in the Walloon Region: the Department for Agriculture, operated without any environmental permit, or are only subject Natural Resources and Environment, including the Depart- to a notification obligation. ment for Soil and Wastes; and • in the Flemish Region: the Department of the Environment The classification of the activities, the competent authority for and the OVAM, which is the Flemish agency ensuring the the granting of an environmental permit and the procedure management of waste, materials and soil contamination. depend on the Region in which the activities are operated.

At the local level, provinces and municipalities are also entrust- Brussels-Capital Region ed with the granting of permits as well as control and inspection. In the Brussels-Capital Region, the installations subject to authorisation are classified in four main categories: 1A, 1B, 2 and 3. The installations classified 1A, 1B and 2 are subject to an 3. Environmental Incidents and environmental permit, while the installations classified 3 are Permits subject to a notification. The regional authority – Brussels Envi- ronment – is competent to decide on an environmental permit 3.1 Investigative and Access Points application in class 1A and 1B (and on certain class 2 permit Each competent authority establishes its own surveillance applications). The College of Mayor and Aldermen of the rel- regime for the enforcement of environmental protection regu- evant municipality is competent to decide on the vast majority lations, including investigative and access powers. In addition to of environmental permit applications in class 2. specific environment-related competencies, the judicial authority has extensive investigative and access powers, based on the The granting authority assesses the permit application within general criminal law. the following time periods:

In general, specific officers (also called the reporting author- • 450 days for a class 1A permit application; ity) are appointed by authorities in order to monitor the proper • 160 days for a class 1B permit application; and implementation of environmental regulations. They act as • 60 days for a class 2 permit application. judicial police officers and their key investigative powers are as follows: These time periods are subject to extension and run from the date on which the application is ruled complete and admissi- • accessing facilities, premises and lands; ble. In the absence of a decision, the environmental permit is • carrying out examinations and investigations, and collecting deemed to be refused. all kinds of information with relation to their duty; and • collecting samples and analysing them, whenever needed. The (absence of a) decision of the authority can be appealed by the permit applicant, any authority and any person concerned Within the scope of their competencies, the authorities are within 30 days to a regional administrative body, the Environ- competent to take preventative measures and apply remedia- ment College, which assesses the appeal within 60 to 75 days. In tion measures and sanctions – ie, criminal (to be imposed by the the absence of a decision, the decision of the granting authority judicial authority only) and/or administrative sanctions. Fol- (including the deemed refusal) is confirmed. lowing their inspection and in case of infringement, the officers may usually either warn the author of the infringement and let The (absence of a) decision of the Environment College can be him remedy the situation or record the infringement and draw appealed by the permit applicant, any authority and any person up an official report. Official reports recording an infringement concerned within 30 days to the Government, which assesses must be notified to the public prosecutor. the appeal within 60 to 90 days. In the absence of a decision, the decision of the Environment College (including the deemed 3.2 Environmental Permits refusal) is confirmed. An environmental permit is an administrative authorisation required for the operation of classified activities and installa- As a general principle, the appeal has no suspensive effect. tions – ie, those that are likely to harm humans and/or the environment. The activities and installations are classified according to the level of their environmental impact. Only those activities

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Walloon Region The competent authority assesses the permit application within In the Walloon Region, the installations subject to authorisa- 105 to 120 days. This time period is subject to extension and tion are classified in three categories: 1, 2 and 3. The installa- runs from the date the application is ruled complete and admis- tions classified 1 and 2 require an environmental permit, while sible. In the absence of a decision, the environmental permit is the installations classified 3 are subject to a notification. The deemed to be refused. College of Mayor and Aldermen of the relevant municipality is competent to deliver an environmental permit in the vast The (absence of a) decision of the authority can be appealed by majority of cases. the permit applicant, any authority and any person concerned within 30 days to (i) the province if the municipality is the grant- The College of Mayor and Aldermen assesses the permit appli- ing authority or (ii) the Flemish Government if the province is cation within the following time periods: the granting authority. An administrative appeal is not possible against a decision rendered by the Flemish Government. • 140 to 170 days for a class 1 permit application; • 90 to 120 days for a class 2 permit application. Final administrative decisions can be appealed within 45 days to the Council of Permit Dispute, which rules on requests in the These time periods are subject to extension and run from the annulment of administrative decisions. The suspension of such date on which the application is ruled complete and admissi- decisions as well as provisional measures can also be obtained in ble. In the absence of a decision, the environmental permit is exceptional circumstances, especially to prevent material dam- deemed to be refused, unless the technical report issued dur- ages to the protected interests. ing the procedure is favourable. In this case, the environmental permit is deemed to be granted on the conditions set out in the The Council of Permit Dispute’s decision can be appealed to the technical report. Council of State within 30 days. In that case, the Council of State only considers legal irregularities. The (absence of a) decision of the authority can be appealed by the permit applicant, any authority and any person concerned In addition, both the Flemish and Walloon Regions provide for within 20 days to the Government, which assesses the appeal an integrated approach, whereby both environmental and con- within 100 days for a class 1 permit application or within 70 struction aspects of the same project are dealt with in the same days for a class 2 permit application. In the absence of a deci- permit (application). sion, the decision of the granting authority is confirmed. In the absence of a decision from the granting authority, the decision Very often, applications for environmental permits are sub- will be based on the technical report issued during the appeal ject to various (technical) advices and trigger the obligation to procedure, if any. organise a public enquiry, authorising any third party to oppose the project and/or an environmental impact assessment (ie, As a general principle, the appeal has no suspensive effect. a study of the impact the installations/activities can have on humans and/or the environment). In both the Brussels-Capital and Walloon Regions, final administrative decisions can be appealed to the Council of State, which rules on requests in the annulment of administrative decisions. 4. Environmental Liability The suspension of such decisions as well as provisional measures can also be obtained in exceptional circumstances, especially to 4.1 Key Types of Liability prevent material damages to the protected interests. Under Belgian law, environmental issues are primarily administrative matters. However, administrative liability is not the only Flemish Region risk following an environmental breach: potential criminal and In the Flemish Region, the installations subject to authorisa- civil liabilities must also be considered. tion are classified in three categories: 1, 2 and 3. The installations classified 1 and 2 require an environmental permit, while Official reports recording an infringement must be notified to the installations classified 3 are subject to a prior notification. the public prosecutor, who can decide to immediately prosecute Depending on the project, the Flemish Government, the prov- the offender, to investigate further, or to dismiss the case. inces or the municipalities are competent to deliver the environmental permit.

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In most cases where the public prosecutor decides not to pros- (ie, the holder of the environmental permit), and then (iii) ecute, the case is subject to an administrative procedure, lead- the owner or the holder of rights in rem on the land. ing to administrative sanctions being imposed on the offender • In the Flemish Region, the execution of the soil obligations (most often a fine). must be performed by (i) the operator of the site (ie, the holder of the environmental permit), and then (ii) the owner If the public prosecutor decides to prosecute, the court can or the holder of rights in rem on the land. However, the impose criminal sanctions, depending on the severity of the liability of the responsible person, when it is evidenced that infringement, such as a fine and/or imprisonment. The specific it did not cause the contamination and that the contami- regional regulations can authorise the court to impose other nation was generated before they became the operator or measures, such as the remediation of the infringement or other owner, is limited to the amount of fees necessary to prevent corrective measures like the closure of the plant or cease and the contamination spreading or becoming an imminent desist orders. danger. • In the Brussels-Capital Region, depending on the nature of Civil liability also plays a role when an environmental breach the contamination, a cascade system also exists, involving occurs and harms a third party. Civil liability could lead to the the person who (presumably) caused the contamination, the obligation to pay damages to the claimant. For the civil claim to operator of the site and the owner. be successful, the claimant must prove the existence of a fault, a damage and a causal relation between the fault and the damage. Based on the general civil law, the person who executed the soil sanitation obligations will be entitled to (try to) recover the costs Non-fault liability regimes can also apply. One is the objec- incurred from the liable party. tive liability regime introduced by Directive 2004/35/CE on environmental damages, transposed in Belgium through sev- The historical character of an environmental incident or damage eral regulations, whereby, for example, the producer of toxic plays an important role regarding soil contamination. In both waste will be responsible for the damage caused by its waste the Flemish and Walloon Regions, historical contamination (ie, even though no fault has been evidenced. Another one is the contamination caused before 28 October 1995 in the Flemish liability for abnormal disturbance, which establishes a liability Region and before 30 April 2007 in the Walloon Region) is sub- for the abnormal disturbance caused to a third party using a ject to risk management, requiring sanitation only in the case of right (eg, the operation of installations or activities that cause a major threat to the environment. contamination to the neighbouring soil). The following statutes of limitation apply:

5. Environmental Incidents and • In terms of civil liability, in principle the injured party has to Damage act within five years of the day following the day on which it became aware of the damage or its aggravation and the 5.1 Liability for Historical Environmental identity of the responsible person. This time period cannot Incidents or Damage exceed 20 years after the day following the day on which the The “polluter pays” principle is applicable in Belgium. Accord- event that caused the damage occurred. ingly, an operator or landowner should not be held liable for an • In terms of criminal liability, the statute of limitation environmental incident or damage caused by another person/ depends on the severity of the criminal infringement (eg, entity. In a share deal transaction, the risks and liabilities, if any, pursuant to the Criminal Code: 20, 15 or ten years for remain with the target company and are de facto transferred crimes, five years for offences and one year or six months for to the purchaser/new shareholder, including for any historical small offences). Environmental criminal infractions gener- environmental incidents or damage. ally qualify as offences or small offences. • From an administrative point of view, the time period However, based on the soil regulations, an operator might be within which the authorities can impose an administrative liable for historical environmental incidents or damage since fine can be limited pursuant to the applicable environmen- the three Regions apply a “cascade system”: tal laws. In the Brussels-Capital Region, for instance, an administrative fine for environmental infringement cannot • In the Walloon Region, the execution of the soil obligations be imposed more than five years after the day the offence must be performed by (i) the person having (presumably) occurred. In the Walloon Region, an administrative fine caused the contamination, then (ii) the operator of the site for environmental infringement cannot be imposed more than 180 days after the date of the official reports recording

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the infringement. In the Flemish Region, an administrative by their subsidiary as such, unless the shareholder/parent com- sanction for environmental infringement cannot be imposed pany was involved, de iure or de facto, in the management of the (i) more than five years after the date of the official reports company, and it is evidenced that they made a fault. recording the infringement, and (ii) more than 20 years after the day the infringement occurred. 7. Personal Liability 5.2 Types of Liability and Key Defences Under Belgian law, environmental issues are primarily adminis- 7.1 Directors and Other Officers trative matters. However, administrative liability is not the only Directors and other officers can be held personally liable for risk following an environmental breach: potential criminal and environmental damage or breaches of environmental law (from civil liabilities must also be considered. a civil and criminal point of view). As per the General Criminal Law, the criminal liability of legal entities does not exclude the In the case of civil liability, the three criteria of fault, damage and criminal liability of their directors or officers if it can be evi- causal relation must be demonstrated by the claimant, and can denced that such individuals committed the breach or partici- be challenged. In most cases, the defendant shall try to argue pated therein. The penalties will depend on the environmental that there is no causal relation between the fault and the dam- breaches and the specific applicable legislation (eg, the payment age that occurred. of a fine and/or imprisonment).

In the case of criminal liability, it can either be argued that the As per the Code on Companies and Associations, company defendant did not deliberately commit the offence, or argu- directors can be held civilly liable towards the company in the ments can be sought to mitigate the penalty. case of management fault.

In the case of administrative liability, one can challenge the 7.2 Insuring Against Liability lawfulness of the authority’s decision (ie, the way the authority It is possible for directors and officers to insure – or to let the exercised its powers). company insure – their civil liability against financial consequences related thereto (ie, financial damages claimed by third In all cases, it could be argued that the authority/the public pros- parties). Exclusions will generally apply (eg, wilful loss or dam- ecutor did not respect the applicable procedures. One could also age, misuse of corporate assets, etc). Criminal liability is usually try to challenge the factual elements of the case (eg, the evidence not insurable. of the offence or incident). 8. Lender Liability 6. Corporate Liability 8.1 Financial Institutions/Lender Liability 6.1 Liability for Environmental Damage or Generally, lenders will not be liable for the borrower’s envi- Breaches of Environmental Law ronmental damages and breaches of environmental law, except There is no specific corporate liability scheme for environmental in the case of factual management. If the lender becomes the damage or breaches of environmental law, but corporate enti- owner of the borrower’s property (ie, in the enforcement of the ties can be held liable for environmental damage or breaches of mortgage), the relevant liability connected to that property may environmental law, pursuant to the general liability principles, be transferred, such as liability relating to soil contamination or including with respect to criminal liability. permit compliance.

Since 1 July 1999, a corporate entity can be held criminally liable 8.2 Lender Protection for breaches related to the realisation of its company purpose To be protected from any such liability risk, or to mitigate this or the defence of its interests. Sanctions such as the dissolution risk, financial institutions or lenders usually also include pro- of the corporate entity or the interdiction to exercise its activi- tection clauses in their agreement. For instance, the borrower ties could be pronounced. Corporate entities can also have a could (i) confirm it has complied (and will comply) with all criminal record. environmental applicable laws, (ii) confirm that it will hold the financial institution or lender harmless against any claim from 6.2 Shareholder or Parent Company Liability third parties, (iii) commit to indemnify the financial institu- Shareholders or a parent company cannot be held liable for envi- tion or lender in the case of environmental claim or any cur- ronmental damage or breaches of environmental law committed rent or alleged breach of any relevant environmental law, and

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(iv) commit to notify the financial institution or lender of any and health-related regulations in the scope of class action. If and details of any environmental claim of which they become aware. when adopted, the implementation of the Collective Redress These representations of the borrower are usually repeated on Directive will extend the scope of class action. any interest payment date and are combined with default and acceleration clauses. However, collective interest actions regarding environmental damages are open to legal entities whose purpose is the protec- As part of the conditions precedent to draw-down, lenders shall tion of the environment. also request soil certificates (to assess the existence of a (potential) contamination or risk of contamination) and a copy of the 9.4 Landmark Cases environmental due diligence (if any). A landmark case in Belgium, known as the Climate Case, which was initiated by the association Klimaatzaak against the Federal State and the three Regions, is expected to set an important 9. Civil Liability precedent. The association Klimaatzaak requested that the Bel- gian authorities respect their commitments towards the reduc- 9.1 Civil Claims tion of their greenhouse gas emissions by 2020. This case is Civil claims for compensation or other remedies can be brought currently pending before the Supreme Court and pleadings are directly before civil courts, or can be initiated parallel to a crimi- scheduled in March 2021. nal litigation.

The claimant must demonstrate an interest in order to bring 10. Contractual Agreements the case, evidencing a fault, a (suffered) damage and a causal relation between the fault and the damage (fault-based liability). 10.1 Transferring or Apportioning Liability Indemnities or other contractual agreements can be used to Non-fault liability regimes can also apply. One is the objective transfer or apportion liability for incidental damage or breaches liability regime introduced by Directive 2004/35/CE on envi- of law. However, this is only possible on a contractual basis and ronmental damages, transposed in Belgium through several to the extent that such limitations or exclusions are not prohib- laws, whereby, for example, the producer of toxic waste will be ited by law or the public order. responsible for the damage caused by its waste, even though no fault has been evidenced. Another one is the liability for abnor- In principle, such arrangement is not enforceable towards the mal disturbance, which establishes a liability for any abnormal authorities, which are always entitled to claim against the trans- disturbance caused to a third party using a right (eg, the opera- feror. However, if such arrangement is foreseen by the law, the tion of installations or activities that cause contamination to the agreement would be enforceable towards the authorities. neighbouring soil). In the three Regions, a person or a company can voluntarily Based on the Law of 12 January 1993, the public prosecutor, a abide by the soil formalities, although they are not required to public authority or a legal entity that has the protection of the do so by law. environment in its corporate purpose and has defined in its corporate purpose the territory on which it carries out its activity In the Flemish and Brussels-Capital Regions, a person or a can request from the Court, through an accelerated procedure, company obliged to sanitise contaminated soil can assign this measures aiming to cease an act that obviously breaches the obligation to a third party under several obligations, one of environmental legal provisions. them being a financial guarantee covering the decontamination obligation. Such possibility is useful to avoid a delay in a real 9.2 Exemplary or Punitive Damages estate transaction. In the Walloon Region, a person can transfer Belgian courts cannot award exemplary or punitive damages. its obligations by agreement to another party. In particular, in The damages awarded in a civil liability action are intended to an asset deal, both parties can agree upon the transfer of soil repair the damage caused to the injured party only. obligations. Such transfer is made on a voluntarily basis and must be notified to the competent authority. 9.3 Class or Group Actions Belgian law allows class actions in limited cases, which do not Criminal liability cannot be assigned under Belgian law. include the breach of environmental legal regulations in the broad sense. At the European level, the proposal of Collective Redress Directive does include infringements of environmental

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10.2 Environmental Insurance rights in rem encompasses the granting of a long-term lease Two types of environmental insurance are available. right or a right to build, the sale of a property in an asset deal, mergers, absorptions and splits; A company can insure its environmental liability, which used to • by the permit applicant in the case of an environmental be covered by civil liability insurance but is increasingly exclud- permit request for a risky activity; ed from it. Specific environmental liability insurance is now • by the operator in the assignment of an environmental available, typically covering the civil consequences of a breach permit covering a risky activity; of the environmental legal regulations. However, contractual • by the operator upon the termination of an environmental and criminal liabilities are not covered. Furthermore, in the permit covering a risky activity; and framework of a real estate transaction, Warranty and Indemnity • by the permit applicant in the case of a building permit insurance generally covers environmental representations and request for works implying a contact with the soil on more warranties, except for those relating to soil and ground water than 20 metres. pollution, asbestos and other hazardous substances. In the Flemish Region, a soil survey must be conducted notably: A company can also insure the environmental damages to its property – eg, in the case of soil contamination or technical equip- • by the assignor in the case of a transfer of risky land; ment failure. Operating losses can also be insured in such cases. • by the operator upon the closing of a risky establishment; • by the operator upon the start of the operation of risky establishments; and 11. Contaminated Land • by the curator in the bankruptcy of the owner of risky land.

11.1 Key Laws Governing Contaminated Land In the Walloon Region, a soil survey must be conducted notably: The legal framework governing contaminated land is established by the three Regions, with the key laws governing con- • by the permit applicant in the case of a building permit taminated land in Belgium being as follows: on land registered as (possibly) contaminated, depending on the scope and nature of the works (ie, works with soil • the Ordinance of 5 March 2009 relating to the manage- impacts and modification of the type of use towards a more ment and sanitation of contaminated soils applicable in the restrictive use, generated by the modification of affectation); Brussels-Capital Region; • by the operator in the cessation of its (risky) installation/ • the Decree of 1 March 2018 relating to management and soil activity; sanitation applicable in the Walloon Region; and • by the operator in the termination of the environmental • the Decree of 27 October 2006 concerning soil sanitation permit; and soil protection applicable in the Flemish Region. • by the operator in the definitive withdrawal of the environmental permit; Each Region determines the type and/or level of contamination • by the operator in a judicial decision prohibiting the opera- for which measures are imposed. tion of the (risky) installation/activity; and • by the operator in the case of bankruptcy. Each Region has an inventory of contaminated soils, managed by an administrative body – ie, Brussels Environment in the In a transfer of rights in rem (asset deal), a soil certificate Brussels-Capital Region, the Direction of the Soils Protection must be requested from the authority and communicated to in the Walloon Region and the OVAM in the Flemish Region. the assignee. This certificate is based on the inventory of the contaminated soils and contains the available information. A Each Region has determined certain events that trigger the transfer of rights in rem might also trigger the obligation of a obligations to perform soil surveys and, as the case may be, soil survey, depending on the Region (see above). sanitation. In the three Regions, depending on the results of the survey and In the Brussels-Capital Region, a soil survey must be conducted the scope of the contamination, a second (more detailed) survey notably: might be imposed. After this second survey, a risk management programme or a sanitation procedure shall be imposed. The • by the assignor in the case of a transfer of rights in rem authority can also impose follow-up measures on the person concerning risky land (ie, land on which an activity deemed subject to soil treatment. dangerous for the environment is operated). The transfer or

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In addition, in the Flemish and Brussels-Capital Regions, a per- Directive 2003/87/CE regarding the Emission Trading System son or a company obliged to sanitise contaminated land can has been transposed in Belgium by: assign this obligation to a third party under several obligations, one of them being a financial guarantee covering the decon- • the Ordinance of 2 May 2013 on the Brussels Code on Air, tamination obligation. Such possibility is useful to avoid a delay Climate and Energy Management for the Brussels-Capital in a real estate transaction. In the Walloon Region, a person can Region; transfer its obligations by agreement to another party. In an • the Decree of 10 November 2004 establishing a greenhouse asset deal, both parties can agree upon the transfer of soil obli- gas emission trading system for the Walloon Region; and gations (eg, sanitation). Such transfer is made on a voluntarily • the Decree of 5 April 1995 on environmental policy for the basis and must be notified to the competent authority. Flemish Region.

Carbon neutrality can also be achieved by establishing energy 12. Climate Change and Emissions performance for buildings. Directive 2010/31/EU on the energy Trading performance of buildings has been transposed in Belgium by: 12.1 Key Policies, Principles and Laws • the Ordinance of 2 May 2013 on the Brussels Code on Air, Belgium is a member of multiple international treaties regarding Climate and Energy Management for the Brussels-Capital climate change, including the Kyoto Protocol and the Climate Region; Agreement as presented at the Climate Conference of Paris • the Decree of 28 November 2013 on the energy performance 2015. The key policies in Belgium regarding climate change of buildings for the Walloon Region; and mainly derive from the objectives set out in the Kyoto Protocol • the Decree of 8 May 2009 on the energy policy for the Flem- and Paris Agreement, including the goal to keep global warm- ish Region. ing below 2 °C. 12.2 Targets to Reduce Greenhouse Gas In addition to this, Belgium aims to achieve the targets for Emissions greenhouse emissions set out by the European Union in its The European Union set out the following targets to reduce European Green Deal. In particular, the main goal is to achieve greenhouse gas emissions for Belgium: carbon neutrality by 2050. • by 2020, the emission of greenhouse gases must be reduced The objectives related to the reduction of carbon emissions are by 15% in comparison with the emission of greenhouse part of the Co-operation Agreement on Burden Sharing 2013– gases in 2005. Based on the co-operation agreement dated 2020 and the National Energy and Climate Plan 2021–2030, 12 February 2018, the Regions committed to reduce the which includes the policies and measures of the federal and emission of greenhouse gases by 8.8% for the Brussels- regional authorities. The National Energy and Climate Plan Capital Region, 14.7% for the Walloon Region and 15.7% 2021–2030 provides that measures must be taken through for the Flemish Region, in comparison with the emission of greenhouse emission reduction, energy efficiency, supply secu- greenhouse gases in 2005; and rity, the internal market and innovation. • by 2030, the emission of greenhouse gases must be reduced by 35% in comparison with the emission of greenhouse In addition, the Governmental Declaration of Intent of 30 Sep- gases in 2005 (and at least 55% in comparison with the tember 2020 mentions that the new government will take all emission of greenhouse gases in 1990). Note that the reparti- the necessary measures in order to reach the reduction of 55% tion of the burden between the three Regions must still be of carbon emissions by 2030 and carbon neutrality by 2050. fixed by a co-operation agreement.

Key national regulations related to climate change concern the In its communication dated 27 February 2019, the European emission trading system and the energy performance of build- Commission warned that, without additional measures, Bel- ings, for instance. gium was expected to miss both its 2020 and 2030 greenhouse gas emission reduction targets. The situation is pending and will Each Region has enacted an action plan establishing the objec- need to be followed up. tives regarding climate change and energy, and determining the guidelines and measures that need to be taken in order to attain the objectives, pursuant to EU climate policy.

10 BELGIUM Law and Practice Contributed by: Ariane Brohez, Julien Lecler and Atdhe Krasniqi, Loyens & Loeff

13. Asbestos collection and transportation of hazardous waste, as well as its storage and treatment, the prohibition of abandonment, dump- 13.1 Key Policies, Principles and Laws Relating to ing or uncontrolled management of waste in violation of the Asbestos law, safety measures, sanctions, etc. In addition, waste treatment The use of asbestos substances has been prohibited in Belgium installations are subject to an environmental permit. since 1998, and totally banned from the sale of construction materials since the Royal Decree of 23 October 2001. Regard- The shipment of waste, in substance, within the European ing health and safety in the workplace, the Royal Decree of 16 Union and with non-EU states is governed by Regulation No March 2006 relating to the protection of workers against the 1013/2006 of 14 June 2006 on shipments of waste. risks linked to asbestos exposure imposes several obligations on employers regarding asbestos. Specific regional regulations on waste depending on the type of waste are also applicable, such as the Decree of 18 December All activities likely to involve a risk of exposure to asbestos are 2008 on the management of waste from the extractive industry subject to a risk assessment in order to determine the nature, applicable in the Walloon Region or the Ordinance of 22 April degree and duration of a worker’s exposure to asbestos. Depend- 1999 on the prevention and management of waste from paper ing on the results of the risk assessment, the employer shall have and/or cardboard products applicable in the Brussels-Capital the concentration of asbestos fibres in the air at the workplace Region. measured, in order to ensure compliance with the limit value. Asbestos removal is not always imposed. For instance, an asbes- 14.2 Retention of Environmental Liability tos management programme can be imposed (and be updated A producer can retain liability for waste after it has been dis- every year) in order to reduce the risk of asbestos exposure. posed of by a third party if the producer does not comply with the obligations set out in the applicable waste legislation. Both the removal and disposal of asbestos are governed by regional provisions, so there are differences in the Walloon, When the waste is transferred from the original producer (or Brussels-Capital and Flemish Regions regarding the removal holder) to a dealer or an establishment or undertaking that car- of asbestos (that can be subject to an environmental permit, ries out waste treatment operations or is arranged by a com- depending on the cases) and the disposal of asbestos waste (that petent private or public waste collector, the responsibility for is subject to the regional waste regulatory framework). carrying out a complete recovery or disposal operation shall not be discharged as a general rule.

14. Waste The Brussels-Capital Region waste regulatory framework establishes that the producer shall not be discharged of his liability 14.1 Key Laws and Regulatory Controls for carrying out a complete recovery or disposal when transfer- The waste legal framework in Belgium is based on Directive ring waste to the competent persons. In addition, it is foreseen 2008/98/EC on waste, which was implemented in the three that the producer must ensure that the waste is treated using Regions through regional waste management plans and the the best available techniques in terms of health and environ- following Ordinance and Decrees: mental protection. The producer is required to ensure that the obligations in terms of treatment and recycling are met. In the • in the Brussels-Capital Region by the Ordinance of 14 June Walloon Region, the producer or holder of waste must ensure 2012 on waste; that its management does not harm human health and the • in the Walloon Region by the Decree of 27 June 1996 on environment. To that regard, the initial producer or holder of waste; and waste is not discharged of its liability for carrying out a complete • in the Flemish Region by the Decree of 23 December 2011 recovery or disposal when transferring waste to the competent concerning the sustainable management of waste. person.

The waste regulatory framework defines waste as being any 14.3 Requirements to Design, Take Back, Recover, substance or object which the holder discards or intends or is Recycle or Dispose of Goods required to discard. Under European law, the disposal of waste is now considered a last resort measure. There is, however, no general and harmo- These regulations contain several prohibitions and obligations, nised obligation to choose a specific type of waste processing, such as a waste hierarchy imposing a priority order in waste considering the measures taken by the authorities are not the prevention and management, regulations on the production, same in each Region and do not concern all kinds of waste.

11 Law and Practice BELGIUM Contributed by: Ariane Brohez, Julien Lecler and Atdhe Krasniqi, Loyens & Loeff

For instance, it is known that the Brussels-Capital and Walloon The Aarhus Convention and Directive 2003/4/EC have been Regions have concluded agreements with stakeholders in order transposed in Belgium by the Law of 5 August 2006 on public to implement the recycling and take back of waste such as bat- access to environmental information. The three Regions also teries, used wheels, paper waste, outdated medicaments, etc. In have their own legal framework: the Ordinance of 16 May 2019 addition, for instance, some waste is subject to take back obli- relating to the publicity of the administration applicable in the gations in order to be recovered within the three Regions (eg, Brussels-Capital Region, Book 1 of the Environment Code of 27 Order of 1 December 2016 applicable in the Brussels-Capital May 2004 applicable in the Walloon Region, and the Decree of Region, Order of 23 September 2010 applicable in the Walloon 7 December 2018 on the management applicable in the Flem- Region and Order of 17 February 2012 applicable in the Flem- ish Region. ish Region). The public authorities have the obligation to provide information spontaneously (active publicity), and have to answer every 15. Environmental Disclosure and information request from citizens, who are not obliged to justify Information any interest in order to make such request (passive publicity). Such request can be refused for several reasons, such as the pro- 15.1 Self-Reporting Requirements tection of fundamental rights (eg, the protection of private data) There are requirements to self-report environmental incidents and the confidentiality of information. or damage to regulators. In that regard, the regional soil protection legislation provides for a reporting obligation in case of Public authorities and bodies are broadly defined and encom- (possible) contamination of the soil. pass the Federal State, the Regions, the municipalities, administrative authorities, the parliaments, the governments, etc. The Brussels-Capital Region explicitly imposes that any event likely to result in imminent soil contamination must be declared 15.3 Corporate Disclosure Requirement by the perpetrator of the event as soon as possible to Brussels The Code of Companies and Associations provides that the Environment and, if they can be identified, to the holder of annual report of several companies must include a statement rights in rem and the operator of the land concerned. The same on the development and results of the company’s business and obligation applies to the discovery of soil contamination. its position, as well as a description of the main risks and uncer- tainties being faced. In the Walloon Region, the operator and the person who has custody of land on which there is contamination exceeding the The analysis should also include – to the extent necessary for standards must, if informed of the presence of such contamina- an understanding of the development of the company’s busi- tion, notify the competent authority thereof without delay. The ness, results or position – key performance indicators of both same goes when there is a risk of the contamination migrating a financial and non-financial nature relating to the company’s outside the land. specific activity. This includes information relating to environmental issues. In the Flemish Region, there is an obligation for the operator, user (ie, holder of rights in rem) or owner of the land to notify the competent authority of a contamination accident, without 16. Transactions delay. 16.1 Environmental Due Diligence 15.2 Public Environmental Information Both zoning and planning and environmental review are usual At the European level, the Aarhus Convention (Convention on for property transactions, focusing on property-related aspects Access to Information, Public Participation in Decision-Making such as zoning compliance, building requirements, fire safety, and Access to Justice in Environmental Matters signed on 25 environmental permits, soil contamination, environmental June 1998) and Directive 2003/4/EC of 28 January 2003 regulate taxes and asbestos. In additional to due diligence, asset deals public access to environmental information. require compliance with specific information and formalities, especially with respect to soil. According to Article 32 of the Belgian Constitution, everyone has the right to consult any administrative document and to For M&A transactions, environmental due diligence is per- receive a copy thereof, unless otherwise stipulated by law. formed on aspects of compliance and permits for health, safety and environment aspects.

12 BELGIUM Law and Practice Contributed by: Ariane Brohez, Julien Lecler and Atdhe Krasniqi, Loyens & Loeff

Depending on the target (and its environmental activities) and Offshore character of the deal (asset or share), several environmental In order to finance and encourage the production of renewable aspects can be reviewed, such as: energies, Belgium has established green taxes such as the offshore surcharge. The nature of this tax is discussed as to whether • the presence of and compliance with permits and approvals; it should be qualified as being part of a taxation regime or para- • the enforcement actions completed, pending or announced; fiscality. • environmental taxes; and • site-related aspects (eg, zoning and planning, soil, asbestos). In the context of promoting renewable energies and in order to achieve the objectives set by the European Union, Belgium has Aside from the legal due diligence, it is also highly advisable to decided to support the production of electricity from offshore have a technical environmental due diligence performed by an wind turbines, on the one hand, by introducing a mechanism of environmental expert. offshore green certificates and, on the other hand, by imposing an obligation to purchase those green certificates (ie, a public Lenders shall also request copies of the permits and soil certifi- service obligation) on Elia, which is the transmission system cates, as well as copies of the environmental due diligences, as operator for high-voltage electricity in Belgium. In order to part of the conditions precedent. finance this public service obligation, the Belgian State allowed the grid operator to establish a surcharge (ie, the offshore sur- 16.2 Disclosure of Environmental Information charge), whereby it transfers all costs relating to the purchase Asset deals trigger administrative formalities relating to the of the offshore green certificates to the final consumers of elec- environment. The seller is legally obliged to request some tricity. documents and information from the authority and to disclose them to the purchaser (eg, soil certificate, listing of permits). Investment Deduction The transaction shall not be completed if these mandatory for- Industrial, commercial or agricultural companies and individu- malities are not fulfilled. al practitioners are entitled to claim depreciable (over a period of at least three years) tangible or intangible assets that are newly In addition, the seller is very often requested by the purchaser acquired or achieved during the tax year and which are used in to disclose environmental information in both asset and share Belgium for professional activities as investment deductions for deals. The disclosure of important environmental information eligible assets. Assets that are not solely used for professional is also prudent since, based on the civil law principles, it could activities or whose use is transferred to a third party via a lease be argued that the seller is obliged to provide such information agreement or another right in rem or in personam are excluded. (to a reasonable extent) to prevent him from being liable for The investment deduction for companies amounts to 13.5% for misinforming the purchaser, which might have an impact on patents, energy-efficient investments, environmentally friendly the validity of the purchase agreement. Parties are also obliged investments for research and development, and smoke exhaust by law to negotiate in good faith. and aeration systems in the hotel and catering industry, and to 3% for investments encouraging the reuse of packaging materials for beverages and industrial products. The percentage applies 17. Taxes on the investment value, which also serves as a basis to determine the yearly depreciation. 17.1 Green Taxes Article 170 of the Constitution authorises each level of power The investment deduction is applied on the taxable profits and, to levy taxes. This is why several authorities in Belgium, the in the absence of sufficient profits for a given year, it can be Federal State, the Regions and the municipalities have all levied carried forward subject to a maximum amount to be deducted green taxes, with the most important ones being listed below. per year. These green taxes are generally established in order to discourage the use or operation of installations and activities that can In terms of formalities, the company must fill in the dedicated have a negative impact on the environment, and usually apply enclosure to its own tax return. Energy-efficient investments on waste, water discharges, and the operation of non-environ- and environmentally friendly investments for research and mentally friendly activities or cars. At the federal level, the so- development are also subject to an official confirmation issued called “investment deduction” incentive also applies. Recently, by the competent regional authority in order to be eligible. Belgium has been urged by the OECD to encourage environmental taxes in order to consolidate public finances.

13 Law and Practice BELGIUM Contributed by: Ariane Brohez, Julien Lecler and Atdhe Krasniqi, Loyens & Loeff

Federal State On 1 January 2015, the Brussels-Capital Region introduced an At the federal level, the most important taxes related to the environmental charge known as the COBRACE-tax, imposed environment are: on office parking spaces, in order to reduce greenhouse gas emissions and control the use of energy. It aims to reduce the • the excise duties on energy and electrical products; and number of parking spaces available in the vicinity of office • the ecotaxes applicable to drink containers, disposable cam- buildings, thereby discouraging workers driving to work. The eras, batteries, and the packaging of certain products (ink, accessibility of the office by public transport is first assessed, glues and solvents) for professional use. depending on its location within the territory of the Brussels- Capital Region as divided into three zones. A maximum num- Regions ber of parking spaces for office m² is allowed per zone, free of The three Regions have maintained the former federal road tax. tax. If this maximum number of parking spaces is exceeded, The following taxes on waste and water discharges also apply: based on the environmental permit for those parking spaces, each parking space in excess is subject to an environmental tax. • Brussels: service charge for spilling waste water; • Flanders: service charge for collecting ground water, service Local Level charge for collecting surface water, service charge for spilling Municipalities are also levying service charges and taxes, mainly waste water, service charge for waste; and on waste, but some of the Brussels municipalities are also taxing • Wallonia: service charge and tax for water intake, tax for parking spaces. spilling industrial and domestic water, tax on waste.

14 BELGIUM Law and Practice Contributed by: Ariane Brohez, Julien Lecler and Atdhe Krasniqi, Loyens & Loeff

Loyens & Loeff has an environmental law practice that is part up of two partners, one counsel and nine associates. The team of a fully integrated (tax and legal) firm with home markets advises clients on the development of new projects and facili- in the Benelux countries and in Switzerland, as well as offices ties, and on complex environmental issues in real estate trans- in all the major financial centres, such as London, New York, actions. Loyens & Loeff’s expertise includes soil protection, Paris and Hong Kong. In Belgium, the environmental law prac- permits, environmental taxes, environmental liability, energy tice is integrated within the real estate practice, and is made and state aid.

Authors

Ariane Brohez is a partner in the real Atdhe Krasniqi is an associate in the real estate practice group in Belgium. She has estate practice group in Belgium and a particular expertise in structuring real member of the public and administrative law estate funds, investments and financing, team. He focuses on advising clients on and has broad experience of real estate and public and administrative law, real estate taxation-related matters and environmental law and town planning questions in the framework of these types issues. He also has broad knowledge of of transactions. public law and regulatory matters. Atdhe has been registered with the Ordre Français des Avocats of the Brussels Bar since 2019, and holds a master’s degree in public and international law.

Julien Lecler is a member of Loyens & Loeff’s real estate practice group in Belgium and of the public and administrative law team. He was appointed counsel in March 2018 and has considerable experience in all aspects of real estate law, particularly administrative law, advising clients on town planning and environmental law issues. This experience enables him to advise clients during all steps of a real estate development, including zoning, permits, soil issues, construction and leases.

Loyens & Loeff Tervurenlaan 2 1040 Brussels Belgium

Tel: +32 2 743 43 43 Fax: +32 2 743 43 10 Email: [email protected] Web: www.loyensloeff.com/be/en/

15 Trends and Developments BELGIUM

Trends and Developments Contributed by: Ariane Brohez, Julien Lecler and Atdhe Krasniqi Loyens & Loeff see p.20

Belgium’s New Government In addition, the fund for energy transition will be used as a A new federal coalition government (called Vivaldi) was formed priority for innovative projects (ie, projects that are part of the on 30 September 2020. sustainable energy transition and make a real contribution to the reduction of greenhouse gas emissions and the transition After being opposition parties for more than 17 years, the two to renewable energy). Pilot projects will be encouraged, and a “green” political parties are now part of the government. Due to regulatory framework will be developed to accelerate innova- their respective electoral successes, they have obtained the key tion and sustainable projects (eg, offshore renewable energy, gas environmental competencies – ie, mobility, climate, environ- greening and the capture, reuse and storage of CO₂). ment, green deal, sustainable development and energy. One of the objectives of the Federal Holding and Investment Through its Governmental Declaration of Intent dated 30 Sep- Company will be to draw up a co-ordinated, sustainable and tember 2020, the government announced an ambitious invest- ambitious investment strategy that will aim to reduce investment plan in relation to the European Green Deal, as well as ments in fossil fuels and energies. By 2030, the Federal State, concrete measures in relation to climate and energy, a circular through the Federal Holding and Investment Company, must economy, the environment and biodiversity, and mobility. have withdrawn its shareholdings from companies that have high greenhouse gas emissions and are not involved in energy Climate and energy transition. The government will analyse how to achieve the ambi- Climate tion of climate neutrality by 2040 through an investment plan. In order to reach its target greenhouse gas emissions, the government has undertaken to adapt its contribution to the Nation- Regarding its commitment to renewable energy, Belgium plans al Energy and Climate Plan through an action plan. To this end, inter alia to double offshore wind power capacity, reinforce the co-ordination between the Federal State and the Regions will be current onshore and offshore grid and implement new grid con- improved. The climate objectives will be transposed into inter- nections (if possible) by 2025-2026. mediate objectives and will be subject to a yearly assessment. Carbon-free movement Addressing climate change will provide an opportunity to estab- The new government has stressed that all necessary measures lish new partnerships between public authorities, citizens and will be taken in order to reduce carbon emissions by 55% by the private sector. 2030 and to reach carbon neutrality by 2050.

Energy The government will work on phasing out the sale of vehicles The climate policy will be achieved through a sustainable ener- that do not meet the “zero emission” standard. gy system, in which the security of supply, sustainability and energy affordability are to be guaranteed. To this end, Belgium In addition, all new company cars will have to be carbon neu- supports the development of the capacity allocation mechanism tral by 2026. The government will investigate (in consultation in accordance with the EU’s Clean Energy Package. with the Regions) how to proceed in the same way for public transport buses, taxis and shared mobility. In general, sustain- The government seeks to ensure that electricity costs (at a fed- able mobility alternatives will be promoted (eg, public transport, eral level) will decrease, in order to ensure the competitiveness bicycles and carbon-neutral cars). of the electricity production market. In addition, sustainable energy production will benefit from a new boost, and will also Energy bills help to create new jobs and develop new skills within sustaina- The government will keep the energy bills of households and ble sectors. The Federal Government has confirmed that nuclear businesses under control, and ensure that the federal share of energy will be phased out by 2025. the electricity bill is reduced. It will also combat energy pre- cariousness.

16 BELGIUM Trends and Developments Contributed by: Ariane Brohez, Julien Lecler and Atdhe Krasniqi, Loyens & Loeff

Adapting taxation to ecological transition These changes will involve new funding to enable the national The government aims to make the tax system more favourable railway company to invest in a sustainable modal shift. Belgium to the climate and environment through adopting measures is also announcing major projects in response to the European based on the “polluter-pays” principle, with the main goal being wish to develop more and faster international (night) rail con- to discourage the use of fossil fuels as much as possible by intro- nections in Europe. Brussels will aim to become an international ducing new taxes. A support policy will have to be provided in rail hub. Belgium will also seek to reduce the number of short- order to preserve the competitive position of business and the distance flights. Connections between regional airports and the purchasing power of households. rail grid will also be studied.

Circular economy Green mobility will also be encouraged (eg, the deployment of The new government will strive for a fully circular economy to battery-powered trains, a study of the implementation of hydro- combat climate change and move towards a smarter, more effi- gen-powered trains, and efforts by the national railway company cient and more sustainable use of materials and raw materials. to produce green electricity on its own sites and buildings).

The Federal Government (in partnership with the Regions) will Sustainable Investments Within the European Union develop a federal action plan on a circular economy to signifi- Sustainability is garnering growing attention at a European lev- cantly reduce the consumption of raw materials and the foot- el, with “sustainable investment” meaning that environmental print of materials in production and consumption. To this end, and social considerations are included in investment decisions. Belgium will remove legislative and financial obstacles, normal- But to make such a decision, the investors must be provided ise products and stimulate the “cradle to cradle” principle (ie, with relevant and comparable information about the investment every material used for a product must be reusable). envisaged, and its sustainability claims must be supported by objective data. Circular economy principles will be implemented via public procurements at a federal level. This is the objective of Regulation 2020/852 of the European Parliament and of the Council on the establishment of a frame- Environment and biodiversity work to facilitate sustainable investment (the Taxonomy Regula- The national biodiversity strategy will become compliant with tion), which was adopted on 18 June 2020 and shall enter into the European biodiversity strategy and the Green Deal, and will force gradually by 1 January 2023. The Taxonomy Regulation also ensure compliance with environmental legislation and the shall not determine the sustainability of an enterprise or an asset environmental precautionary principle. but shall fix a series of criteria, which should enable the deter- mination of whether an economic activity is sustainable from For instance, Belgium will fight against illegal trade (eg, tim- an environmental standpoint, and as a result the sustainability ber and wild animals), encourage the EU to update its policy level of the investment. Combined with adequate disclosures, on plant breeding and genetically modified organisms, combat these criteria will hopefully guide investors towards more sus- plastic pollution and other forms of marine pollution, focus tainable investments. on plastics made from biocomponents, and analyse possibili- ties towards waste prevention. In addition, an ambitious plan A “sustainable economic activity” must meet the following four to reduce pesticides and adopt an ambitious attitude towards criteria: reducing chemical materials will be implemented. • it must make a substantial contribution to at least one of the Belgium will adopt national policies for the long-term manage- six environmental objectives; ment of waste (in accordance with the “polluter-pays” princi- • without causing important prejudice to (one of) the other ple). environmental objectives; • it must comply with minimum social and governance Mobility standards; and The government has declared that smooth and sustainable • it must comply with the technical screening criteria that will mobility is of paramount importance for the Belgian economy be determined by the Commission. and its citizens. However, the current mobility model affects climate change, air quality and public health. Therefore, the government has announced that it will focus on soft, collective and multimodal mobility.

17 Trends and Developments BELGIUM Contributed by: Ariane Brohez, Julien Lecler and Atdhe Krasniqi, Loyens & Loeff

The six environmental objectives are as follows: the criteria set forth by the Taxonomy Regulation, which is to date not the case for the Belgian label “towards sustainability”. • climate change mitigation; • climate change adaptation; “Green REAL ESTATE” • the sustainable use and protection of water and marine The energy performance of buildings is one of the main ways to resources; achieve climate change transition. The construction and renova- • the transition to a circular economy; tion of properties can make a decisive difference on the environ- • pollution prevention and control; and ment (eg, reducing the use of building materials and promoting • the protection and restoration of biodiversity and ecosys- their reuse, reducing the content of hazardous substances and tems. products throughout the life cycle, and reducing energy consumption and greenhouse gas emissions). This taxonomy shall be used by the EU and its Member States, certain entities of public interest and those actors in the finan- Belgium has already taken several measures towards mitigating cial markets that propose financial products. This last category the footprint of the real estate sector on the environment. includes insurance companies, investment companies, credit institutions that offer portfolio management services, retire- The increased use of green leases is to be expected. A green lease ment schemes, and fund managers (eg, AIFs, UCITS). is a lease that contains clauses establishing binding obligations between tenants and owners in order to manage and improve The Taxonomy Regulation might have major consequences, cer- the environmental (and energy) performance of a building. tainly for providers and managers of financial products, who will bear an increased information obligation – and as a result Green leases establish obligations towards both parties regard- increased due diligence inquiries – aligned on the taxonomy. ing co-operation and data sharing, cost sharing, the manage- Thanks to the information provided by these managers, inves- ment of resources, the establishment of audits, the establish- tors should be able to determine the share of their investments ment of targets (eg, energy consumption, water reduction, waste dedicated to sustainable economic activities. The sustainability management and obtaining certificates), maintenance, etc. level of the underlying activity therefore becomes part of the investment decision tree. These leases are mainly used for commercial buildings (eg, office and retail). Buildings subject to green leases could be profitable The Taxonomy Regulation applies to 67 sectors, including real not only for investors and owners, but also for tenants (eg, due estate, which is identified through four economic activities: to property occupancy costs, the impact on their commercial reputation, and compliance with environmental legislation). • the construction of new buildings; • building renovation; The Brussels-Capital Region adopted a new legal framework • individual measures and professional services aimed at regarding the energy efficiency of buildings. The users and own- increasing energy efficiency; and ers of large real estate portfolios (> 100,000 m²) are obliged to • acquisition and ownership. develop an energy management plan in order to reduce their energy consumption. By 30 December 2020, the relevant build- The report notes, for instance, that in order to be qualified as ings must be identified by the owners/users and an environmen- sustainable, the construction of a new building must provide tal co-ordinator has to be designated. Then, within 18 months, a Primary Energy Demand of at least 20% below the applica- each building must be subject to an energy audit and an actions ble national thresholds. The annexes of the report also provide programme. that non-EU states will be able to use their own thresholds and certification schemes to prove that they are sustainable, sub- Environmental Protection, Energy Measures and State Aid ject to monitoring by the Sustainable Finance Platform. While On a wider scale, environmental protection and energy meas- the regulation will facilitate sustainable real estate investments ures are on the Belgian government’s agenda. In order to within the EU, the non-EU market will not be left aside. encourage their implementation, the authorities frequently allo- cate subsidies to undertakings or exonerate them from a burden It should be noted that the Taxonomy Regulation does not cre- they would usually have to bear. By doing so, the authorities ate a European label for sustainable financial products, but only might affect competition within the internal market. assessment criteria. The Member States can therefore decide to keep their own label but only to the extent they comply with

18 BELGIUM Trends and Developments Contributed by: Ariane Brohez, Julien Lecler and Atdhe Krasniqi, Loyens & Loeff

That is why Belgium must implement such measures with The European Commission has prolonged the guidelines on respect to State aid rules. The authorities should determine State aid for environmental protection and energy 2014-2020 if their intervention can be qualified as State aid (pursuant to until 2021; until then, the adoption process of the new guide- EU law). If so, the authorities must notify it to the European lines will have to be followed. These guidelines provide com- Commission, which will then have to assess whether the aid is patibility provisions regarding, for instance, aid to energy from compatible with the internal market. renewable sources, aid for resource efficiency and waste management, aid to energy infrastructure, and aid in the form of With relation to the environment, energy and climate change, reductions in or exemptions from environmental taxes and in the guidelines on State aid for environmental protection and the form of reductions in funding support for electricity from energy 2014-2020 and the guidelines on State aid on the EU renewable sources. Emission Trading System are applicable. These guidelines establish the conditions that must be respected in order for State The European Commission has adopted a revised version of the interventions to be considered compatible with the internal guidelines on State aid on the EU Emission Trading System, in market. the context of the system for greenhouse gas emission allowance trading post-2021. They will enter into force on 1 January 2021 and replace the previous guidelines.

19 Trends and Developments BELGIUM Contributed by: Ariane Brohez, Julien Lecler and Atdhe Krasniqi, Loyens & Loeff

Authors

Ariane Brohez is a partner in the Real Atdhe Krasniqi is an associate in the Real Estate Practice Group in Belgium. She has Estate Practice Group in Belgium and a particular expertise in structuring real member of the Public & Administrative Law estate funds, investments and financing, Team. He focuses on advising clients on and has broad experience of real estate and public and administrative law, environmental real estate taxation-related matters and law and town planning issues. He also has questions in the framework of these types broad knowledge of public law and of transactions. regulatory matters. Atdhe has been registered with the Ordre Français des Avocats of the Brussels Bar since 2019, and holds a master’s degree in Public and International Law.

Julien Lecler is a member of Loyens & Loeff’s Real Estate Practice Group in Belgium and of the Public and Administrative Law Team. He was appointed counsel in March 2018 and has considerable experience in all aspects of real estate law, particularly administrative law, advising clients on town planning and environmental law issues. This experience enables him to advise clients during all steps of a real estate development, including zoning, permits, soil issues, construction and leases.

Loyens & Loeff Tervurenlaan 2 1040 Brussels Belgium

Tel: +32 2 743 43 43 Fax: +32 2 743 43 10 Email: [email protected] Web: www.loyensloeff.com/be/en/