It was the Rana Plaza tragedy and its 1,100 deaths, in Bangladesh on April 24, 2013, which, creating an electroshock, motivated the drafters of the law. The building housed the textile factories of subcontractors and suppliers to major European textile brands, who were thus condoning (because they weren’t vigilant enough) the dangerous and deplorable working conditions on the production lines. One year after the Sapin 2 law on anti-corruption, the law on the duty of vigilance gives more substance to the notion of ” compliance “, which can be understood as the concern to act ethically and responsibly. In this way, the duty of care joins the CSR theme.
What does the law say about due diligence?
The Duty of Vigilance Act of March 27, 2017 strengthens the corporate social responsibility of major French companies by instituting a “probity reflex”. This reflex is enshrined in article L.225-102-4 of the French Commercial Code. As principals, companies and their subsidiaries must ensure that human rights and the environment are not compromised at any point in the value chain. They must also prevent the risk of corruption throughout their supply chain, and not just at the bottom. To do this, they must draw up a vigilance plan.
What is a vigilance plan?
The vigilance plan is a legal obligation, introduced by French law in 2017, which requires large multinational companies to set out in a document how they organize themselves to ensure that human rights and the environment are not violated throughout their supply chain. The vigilance plan includes several standard measures.
Which companies are covered by the duty of care?
This applies to companies and groups of companies with more than 5,000 employees in France or more than 10,000 in France and abroad for two consecutive years.
What measures are provided for by law concerning the vigilance plan?
The vigilance plan required by law includes 5 measures:
- a
risk mapping
; - procedures for regularly assessing the situation of subsidiaries, subcontractors and suppliers;
- actions to mitigate risks or prevent serious harm;
- a warning and reporting mechanism, set up in consultation with the company’s representative trade unions;
- a system for monitoring the measures implemented and evaluating their effectiveness.
Is the law on duty of care useful?
A report submitted to the Minister of the Economy in 2020 concluded that this law was useful for promoting and strengthening the responsibility of companies in France and worldwide, through their network of subsidiaries, partners and subcontractors. But while some companies have made real progress, even going so far as to boycott and break off trade relations with long-standing partners, others are not applying them satisfactorily. It has to be said that the vigilance plans drawn up vary greatly from one company to another, given the vast and imprecise nature of the law’s objectives.
Today, the law is invoked before the courts, not always successfully, when NGOs want to halt controversial projects involving local communities and ecological impact, particularly in the oil industry. In such cases, the liability of the parent company or principal is sought – and where appropriate established – on the basis of civil liability under ordinary law. It is then necessary to establish fault, damage and a causal link between the fault and the damage. In other words, it proves that the absence of a due diligence plan, or its failure to be effectively implemented, is the cause of the damage suffered.
As a result, the companies concerned must constantly anticipate new risks. The simple fact of not having identified them can result in the company being ordered to pay damages. As a purchasing manager, at head office or in a subsidiary, you’re the watchdog for this new system! You can enlist the help of internal whistle-blowers. The stakes are high: damage that could reasonably have been avoided may give rise to civil liability for your company. This could result in financial penalties of up to €10,000. You can never be too careful when you’re vigilant!
Is there a European duty of care?
The French law on the duty of vigilance has set an example in Europe: a draft European directive, known as CS3D (Corporate Sustainability Due Diligence Directive), is currently being studied with a view to duplicating the measure in all 27 EU countries, by lowering the thresholds and linking it with the directive on sustainability reporting (CSRD). A first text will be on the table in 2023.
