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With the « Latitudes » section, 90° changes scale to decipher international law. In this new episode, our GPS indicates 48° 35′ 46″ north, 7° 46′ 17″ east: heading to Strasbourg, home of the European Parliament.
This article is the second of a two-part series. Find the first part here.
After a first part on the construction of the duty of vigilance, let’s zoom in on its French implementation and its European horizons.
The duty of vigilance under French law: uncertain implementation
After the Rana Plaza tragedy, France was the first country in the world to establish a duty of vigilance for ordering companies through Law no.2017-399 of March 27, 2017. In concrete terms, in France, this duty primarily materializes a specific obligation: that of active vigilance, which requires large French companies (with more than 5,000 employees in France or more than 10,000 employees in France and in their subsidiaries abroad) to « identify risks » and « prevent serious harm« , committed in France or abroad, to human rights and fundamental freedoms, the health and safety of individuals and the environment and, failing that, to repair the consequences resulting from their failure to exercise due vigilance. Crucially, the companies concerned are responsible not only for their own activities, but also for those of their subsidiaries (direct or indirect), and especially for those of their subcontractors or suppliers with whom they have an established relationship.
What we have here is a system of ab initio or ex ante prevention, requiring the implementation of measures to prevent the damage from occurring in the first place, as opposed to the more traditional mechanism of ex post reparation or rectification, which involves dealing with the damage after it has occurred.
Moreover, it is the broad scope of the obligation that gives the text its full force: by subjecting the companies concerned to the duty of vigilance, not only for their own activity, but also for those of their subsidiaries and partners, the law calls for « going beyond the notions of autonomy of the legal entity and of groups formed by the capitalistic control links« . The goal is clear: to combat activities that are detrimental to human rights and the environment, through public order prevention.
To comply, a company must publish an annual vigilance plan in accordance with the law, which involves adhering five mandatory measures. Firstly, the company must « map » the risks: identify, analyze and prioritize them. Secondly, it must implement « regular evaluation procedures for the situation of subsidiaries, subcontractors, or suppliers.« . Thirdly, it must deploy « appropriate actions to mitigate risks or prevent serious harm« . Fourthly, it must establish a « mechanism for alerting and collecting reports on the existence or occurrence of risks« . Finally, it must provide a « system for monitoring the measures implemented and evaluating their effectiveness« .
The implementation of the duty of vigilance by French courts is currently the subject of a tough legal battle. Following rulings on the jurisdiction of the courts or commercial tribunals to hear disputes over the application of the law, which ultimately led Parliament to address the issue in favor of judicial courts to expedite the law’s implementation, the first ruling on the merits ordered La Poste to supplement its vigilance plan with a risk mapping and a warning mechanism, after consulting with the trade unions, a decision that La Poste decided to appeal. Other disputes are ongoing, concerning insufficient measures to reduce greenhouse gas emissions, contribution to deforestation in Brazil, oil projects damaging the environment, potable water contamination, violations of trade union freedoms and employees’ fundamental rights, and infringements of the rights of populations affected by industrial projects… Thus, further rulings are expected on June 18, 2024, in cases involving TotalEnergies, EDF and Suez, accused of failing to take sufficient account of the climate risks associated with their activities.
These disputes are not surprising. French law, while truly a precursor, includes vague notions that need to be interpreted by judges. For example, the notion of « serious » harm raises questions about prohibited behavior: what is a serious harm? Are there non-serious harms to the aforementioned protected values? Can non-serious harm become serious if repeated or occurring in a particular context?
The strength of vigilant companies
At a time of unprecedented climate crisis, flexible self-regulation systems call for a structural effort and harmonization rules through public order.
A sign that strong decisions can be taken on the basis of the human and environmental stakes involved, the Dutch courts were the first to order the Shell oil group to reduce its emissions by 45% by 2030, finding that the company – responsible for 1.8% of all CO2 emitted by humans – « did not guarantee any reduction in its emissions and contributed significantly to exceeding the 1.5°C warming limit set out in the Paris Agreement« . As with vigilance, but based on the « duty of care », the Hague Tribunal required the group to achieve these objectives not only for Shell’s activities, but also for those of its subsidiaries, customers and suppliers.
Transforming a carbon economy at the expense of fundamental rights and the most vulnerable is a challenge against short-term profitability. Companies’ fear that this transformation will occur under disadvantageous competitive conditions to the benefit of foreign competitors must be overcome: the European Directive recently adopted by the European Parliament (see the first part of this article) allows for the imposition of a duty of vigilance on both European and non-European companies operating within the European Union, creating an opportunity to establish fairer competitive conditions from the main economic space that is the single European market.
Companies can also find their interest in playing along, both for public interest – as they generally consider that political instability resulting from polarized public opinion constitutes an economic risk – and within their private interests and investment security. Associating their image with serious violations in their subsidiaries and supply chains could have a devastating effect on public opinion, and on investors who are increasingly required to justify the ethical and responsible nature of the investments they make on behalf of third parties.
Next steps
The European Parliament having approved the text on April 24, 2024, the directive must now be formally adopted by the Council, before being published in the Official Journal. Member States will then have two years to transpose it. The new rules will gradually apply to European companies, based on their number of employees and global turnover. France will have to adapt its existing legislation, especially considering the lower thresholds targeted by the Directive. On this occasion, the concrete implementation of this vigilance obligation will likely be a source of intense debates, given the possibility for member states to adopt stricter measures and the necessity to establish a national supervisory authority. It is therefore important for the various parties involved in this text to be vigilant from the outset, and to anticipate the implementation of the forthcoming changes with appropriate legal support.
