France adopts corporate duty of care law
French corporate duty of care law is a first historic step towards better human rights and environmental protection
22 February 2017: The French Parliament yesterday adopted a long-awaited law establishing a duty of care obligation for parent and subcontracting companies. Friends of the Earth International welcomes this law which marks a historic step towards improving legislation to oblige corporate respect for human rights and the environment. The vote comes after several years of mobilization of French civil society, including Friends of the Earth France. The hope is it will now pave the way for similar binding regulation in other countries and at the UN, where negotiations on an international treaty have already begun.
It has long been argued that voluntary approaches to corporate responsibility and accountability have proved ineffective. France is the first country to deal with this, by adopting binding legislation covering all human rights abuses and creating binding obligations for parent and subcontracting companies across the whole supply chain.
Companies covered by the new law (it only applies to the largest French companies) have to assess and address adverse impacts on people and the planet under annual public vigilance plans. This includes impacts linked to their own activities, those of companies under their control, and those of suppliers and subcontractors, with whom they have an established commercial relationship.
When companies default on these obligations, the law empowers victims and other concerned parties to bring the issue before a judge. Judges can issue fines of up to 10 million euros if vigilance plans are absent, and 30 million euros if this absence results in otherwise preventable damages.
Although this law is a major achievement, French civil society organizations believe the law’s text could have been more ambitious. The law’s scope is limited, only covering around 100 large companies. The burden of proof still falls on the victims, who often lack the means to seek justice, further accentuating the imbalance of power between large companies and victims of abuse. Furthermore if a parent company is deemed to have implemented an adequate vigilance plan and damages occur, the company will not be liable. A company is not required to guarantee protection from damage, only that is has done everything in its power to avoid damages.
Juliette Renaud, corporate accountability campaigner for Friends of the Earth France comments:
“This vote is a huge victory for French civil society, as this law has faced fierce opposition from private sector lobbies during the whole legislative process. It is not as ambitious as we would have liked, but it is a historic first step to put an end to corporate impunity.”
It is now essential that other countries follow France’s lead, in other words, binding legislation at national, European and international levels, to advance on much needed regulation for transnational corporations and their financiers. Friends of the Earth International joins the French coalition Forum citoyen pour la RSE in asking the French Government to continue on this path and promote the duty of care law at European and international levels, and engage more actively and positively in other initiatives aimed at preventing transnationals from violating human rights and the environment, such as the UN binding treaty on transnational corporations and other business enterprises with respect to Human Rights.
For Lucia Ortiz, Friends of the Earth International economic justice programme coordinator:
“The victory of French civil society shows how people power can lead to the end of transnational corporate impunity, building binding rules from the bottom up, that will have implications for the world’s largest companies, obliging them to respect human rights in a way they have never had to do before. Other countries in the EU should follow this example and regulate their businesses at home and abroad. Eu countries should also support developing countries in leading the Intergovernmental Working Group mandated to develop a new international legally binding Treaty at the UN Human Rights Council for business in relation to human rights.”
Friends of the Earth International and social movements worldwide are mobilizing towards the next decisive step of negotiations taking place at UN in October this year in Geneva. A mobilization which is inspired by and vigilant of the implementation of the new French Law, and committed to exposing and preventing attempts by business lobbies to undermine the international process.
For more information about France’s corporate duty of care law, contact:
Juliette Renaud, juliette.renaud[at]amisdelaterre.org