Loi sur le devoir de vigilance : (1) Nouvelles perspectives européennes

The Duty of Vigilance Act, adopted in France in 2017, celebrated its fourth anniversary on March 27, while its "little sister" could soon see the light of day at the European Union level. While this law has raised tremendous hopes for greater inclusion of the most vulnerable populations, particularly in the Global South, it is clear that the ambition to regulate global capitalism has not yet changed the situation. The weight of shared action, at the scale of the single market, could, however, accelerate change, provided that ambitious development policies are implemented.

The "law relating to the duty of care of parent companies and contracting companies" was a landmark of François Hollande's five-year term; it was adopted on March 27, 2017. Widely supported by public opinion even before its implementation, it found its justification in the numerous environmental and industrial scandals that punctuated the news at the beginning of the century.

This law concerns companies with more than 5,000 employees, including subsidiaries, in France, or 10,000 employees internationally, companies that it requires to publish a vigilance plan intended to prevent the risks of serious attacks on human rights and fundamental freedoms, the health and safety of people as well as the environment, which may result from its activities and those of the companies it controls and its usual subcontractors or suppliers.

Imposing new standards on international businesses

France thus dreamed of being a precursor to European regulations desired by NGOs, initiating a new normative discourse intended, in the long term, to cover all economic players.

The prospects for this regulation are considerable, particularly with regard to the agricultural and agri-food sectors in developing countries, particularly in terms of human rights but also production methods, not forgetting the land issue. It is, nothing more and nothing less than, to encourage the emergence of a "CSR law" by creating a fertile ground for litigation, which suggests a paradigm shift in the articulation of the link between businesses and civil society. The judicialization of these relations is likely to harm dialogue between businesses and civil society.

Civil society organizations are pushing a narrative that combines demands for international dissemination of the legislation, on the one hand, and strengthening measures to discourage bad practices. For example, some are demanding that the state be able to suspend or resume aid paid to businesses, particularly as part of the recovery plan, in the event of non-compliance with these requirements. A group of organizations has also developed an observatory, according to which 70 of the 265 companies in France affected by the law are not complying with the obligations arising from it: proof, according to them, that the incentives or disincentives implemented by the public authorities are not strong enough.[1].

In addition to the legal risk linked to the application of this legislation, it is worth remembering the emergence of reputational risk, which has become major, which the law does nothing to mitigate and which is growing in a society marked by the all-powerful nature of social networks and the development of "name and shame".

Yet this is precisely why the regulation aims to build a social norm that will spread both positively, through actors promoting inclusion in their communication and business, and negatively, through companies fearing that their image will be tarnished by practices deemed "irresponsible" by public opinion. One could also imagine the implementation of specifications, for example in the context of public orders, of standards likely to effectively exclude companies from these markets; in any event, private actors could also implement such standards, for example by excluding a supplier because of real or supposed practices, even if they are not connected to the market concerned.

A European approach to making capitalism accountable

On March 11, 2021, the European Parliament voted by a very large majority[2] in favor of the adoption of legislation inspired by French law, at the Union level. It is now up to the European Commission to make its project known[3]It should be noted that the Covid-19 crisis is identified, in the technical report supporting this regulation, as an element reinforcing the need for such a law in view of the risks of destabilization that this health crisis poses to value chains.[4]This text marks a change of direction for a large part of European elected representatives, some parties traditionally favoring an incentive approach to the "due diligence" of companies, an approach undermined by this report which notes the ineffectiveness of this voluntary approach in the systemic defense of human rights.[5].

This initiative by parliamentarians aims to bring together the initiatives of other Member States engaged in such policies, including Germany, Austria, the Netherlands, Sweden, Finland, Denmark, Luxembourg and Spain.^[6] This involves forcing companies operating in Europe to identify, address and correct their impacts on human rights and the environment throughout the subcontracting chain, but also forcing Member States to develop a liability regime that will, where appropriate, allow recalcitrant companies to be prosecuted and the necessary compensation to be obtained.

The political path to implementing such a policy at the Community level now rests largely with the Member States and questions the relationship of each of them both to businesses and to the scope of vigilance. Thus, while France is targeting very large companies, Germany is considering a seemingly more ambitious text, concerning companies with more than 1,000 employees and going so far as to envisage potential sanctions of 2 % of turnover.[7].

The challenge of traceability

The implementation of such a policy brings the issue of traceability back to the forefront. Crucial, particularly in Africa, and even more so in sectors linked to agriculture, it represents a major challenge for the inclusion of producers, especially if it is coupled with the implementation of certification, the key, at least in theory, to better remuneration. If the European Union proves capable of putting in place functional tools, as the aforementioned report invites it to do[8], particularly in light of technologies likely to enable systemic deployment of these tools, the proposed legislation could considerably favor producers in countries of the South.

It would still be necessary to ask the question of the coherence of the policies of the Member States, particularly in terms of support for virtuous initiatives and the deployment of technologies likely to enable a more rapid transition to scale.

In any case, these regulatory prospects and the evolution of Western European public opinion raise the question of the social role of companies. The question, which goes beyond ethics, covers that of the limits of capitalism; it finds an excellent illustration in the current agri-food news: while European parliamentarians declare that such regulation will be positive for the company as a whole and its shareholders in particular^[9], they are contradicted by those of the Danone group^[10] which ended the mandate of Emmanuel Faber, a boss known for his commitment to social justice and the climate. Does Emmanuel Faber's failure at Danone mean that these two objectives, environmental and economic, are irreconcilable? " asks the newspaper The World, March 15, 2021[11].

Combining environmental, economic, and social performance is at the heart of sustainable development. European policies must certainly embrace this trajectory to make their goal of regulating the impact of businesses both virtuous and sustainable.

[1] This observatory is called the “duty of vigilance radar” and is accessible here: the duty of vigilance radar – list of companies subject to the duty of vigilance (plan-vigilance.org)

[2] 504 votes were cast in favour, against 79 negative votes and 112 abstentions.

[3] The adopted text is available here: https://responsiblebusinessconduct.eu/wp/wp-content/uploads/2021/03/Corporate-due-diligence-and-corporate-accountability-report-1.pdf

[4] " whereas the COVID-19 crisis has exposed some of the severe drawbacks of global value chains and the ease with which certain undertakings are able to shift, both directly and indirectly, negative impacts of their business activities to other jurisdictions, in particular outside the Union, without being held accountable; whereas the Organization for Economic Co-operation and Development (OECD) has shown that undertakings that have taken proactive steps to address the risks associated with the COVID-19 crisis in a way that mitigates adverse impacts on workers and supply chains, develop a more long-term value and resilience, improving their viability in the short term and their prospects for recovery in the medium to long term ". Page 6 of the report cited above.

[5] “Considers that voluntary due diligence standards have limitations and have not achieved significant progress in preventing human rights and environmental harm and in enabling access to justice”, page 9 of the same report; or again “Notes that, due to the COVID-19 pandemic, small and medium-sized undertakings face a challenging situation; believes that providing them with support and the creation of a favorable market environment are crucial objectives of the Union”.

[6] Switzerland is also developing its own regulations in this regard.

[7] This text would, with all reservations, be structured around issues related to human rights.

[8] “Notes that the traceability of undertakings in the value chain can be difficult; calls on the Commission to evaluate and propose tools in order to help undertakings with the traceability of their value chains; stresses that digital technologies could assist undertakings with their value chain due diligence and reduce costs; considers that the innovation objective of the Union should be linked to promoting human rights and sustainable governance under the future due diligence requirements”, page 10.

[9] “believes that this would be beneficial for stakeholders, as well as for businesses in terms of harmonization, legal certainty, a level playing field”, page 9 of the same report

[10] Furthermore, it has been denounced by certain NGOs for its practices with regard to the duty of care. See, for example: https://www.challenges.fr/politique/pourquoi-les-ong-epinglent-danone-le-champion-de-l-ethique_645536

[11] https://www.lemonde.fr/economie/article/2021/03/15/danone-l-echec-d-emmanuel-faber-signifie-t-il-que-ces-deux-objectifs-environnemental-et-economique-sont-decidement-irreconciliables_6073179_3234.html