Sanctioning environmental offenses committed by companies: the joint use of firm and employee sanctions

Violations of environmental regulations often involve multiple parties since companies, as well as employees of the companies, face regulatory obligations and can expend compliance-enhancing effort. When deterring such violations by punishing violators, court judges must determine which party or parties to punish with sanctions. Our study explores such sanction decisions made by Belgian judges in response to environmental offenses and the defendants’ intent to comply as captured by three key Belgian legal elements reflecting culpability: purpose, willingness, and knowledge. Our empirical results reveal that the three culpability factors play strong roles in shaping judges’ sanction decisions, especially the relative use of firm sanctions and employee sanctions. As important, our empirical results strongly demonstrate that judges appear to perceive firm and employee sanctions as complements.