This article was first published on March 22, 2016 as a guest blog post on the Business & Human Rights Resource Centre’s website (here).
Aligning the Bill with the expectations already laid out in the UN Guiding Principles would be a good starting point.
The debate on the French Bill relating to the duty of care of parent companies and contracting undertakings that will be discussed on Wednesday 23rd March by the National Assembly goes to the very heart of business and human rights: What should the legal obligations of French companies be for the adverse human rights impacts of their subsidiaries and sub-contractors overseas?
After multiple amendments, a draft was approved by the National Assembly on 31 March last year, only to be rejected outright by the Senate eight months later. The Senators stated that, “there was absolutely nothing worth keeping,” in the Bill. Although there appears to be a chasm between the two sides – those frustrated that soft law is not delivering change, and those who fear legal requirements will harm competitiveness – a common ground could be reached if the Bill were to build more clearly on concepts that have already gained the consensus of governments, companies, civil society organizations and trade unions, and which are embodied in the UN Guiding Principles on Business and Human Rights.
As currently drafted, the law would apply to French companies that have more than 5,000 employees in France, or more than 10,000 employees in France and abroad. This is approximately 150-200 companies, representing two-thirds of French companies’ international trade according to the government. These companies would be required to effectively develop and implement a “plan de vigilance” (a vigilance plan, or a care plan) which would include reasonable vigilance (or care) measures to identify and prevent the occurrence of (i) violations of human rights and fundamental freedoms, (ii) severe bodily or environmental damage, or (iii) health risks resulting from the company’s activities, the activities of the companies it controls or the activities of its subcontractors or suppliers with whom the company has an established commercial relationship. The plan would also include measures to prevent active or passive corruption.
Companies would have to make their plans public and publish them in their annual reports, and French courts would be able to compel them to do so and to demonstrate their plans’ effective implementation (“mise en oeuvre effective”). Companies can be fined up to 10 million euros for failing to meet these requirements. The requirement for an effective plan, coupled with the role of the French judge in assessing effectiveness, is the critical feature here. The Bill also allows for companies to be sued in a civil case if it can be shown that lack, or non-implementation, of a plan led to damages.
Although the Bill is commonly described as requiring human rights due diligence as described in the UN Guiding Principles, this is not quite so clear cut when reading the legislative language. While the parliamentary debates make ample reference to “diligence raisonnable” (which is the French translation of due diligence in the UN Guiding Principles, the OECD Guidelines for Multinational Enterprises and the European Union’s directive on non-financial information), the legislators opt to require “vigilance raisonnable” (reasonable vigilance) in the text of the legislation.
By creating this new duty of care, the French judges would have sole responsibility to decide whether or not a company took appropriate measures in its plan. They can refer to the UN Guiding Principles which set the internationally agreed standard of human rights due diligence, but French companies could find themselves subject to different standards if the courts interpret this term differently. We risk moving towards a compliance-based and legalistic approach to due diligence.
Making clear that human rights due diligence – as described in the UN Guiding Principles – is expected will help in a number of ways:
- It will clarify the expectations set by the law. Human rights due diligence is a process through which companies assess what impacts on people’s human rights could be associated with their business, take action to prevent or mitigate those impacts, and track and communicate the success of these efforts. It focuses on risk to people, not just risk to the business, and it requires meaningful engagement with stakeholders, including workers and communities who could be impacted. This will be a different process than that followed for environmental impacts and corruption, also addressed in the same Bill.
- It will move companies beyond a compliance approach to focus instead on building a culture and behaviours that support respect for human rights and deliver continuous improvement.
- It will help ensure that companies prioritize due diligence where the impacts on people may be the most severe, rather than where the company’s influence is the greatest.
- It will encourage French companies to build and exercise collective leverage with other stakeholders when human rights issues are too challenging to tackle alone.
- It will push companies to identify whether their own actions or omissions may be contributing to harm in their supply chains.
- It will encourage companies to think about other aspects of the UN Guiding Principles, including the provision of remedy to those harmed.
- Finally, companies could benefit from the multitude of guidance available in this area, including the UN Guiding Principles Reporting Framework, the European Commission’s sector guides and relevant OECD guidance.
Will a mandatory approach to human rights due diligence decrease negative impacts on human rights? The jury is still out. Gathering input to the Bill from French companies that are actively implementing human rights due diligence, similar to the UK Government’s approach when it adopted the Modern Slavery Act, can help the process. If the Bill becomes law, clarity will help companies put in place more effective and impactful due diligence, to the benefit of workers and communities.