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France: Historic Vote for Corporate Accountability

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The French National Assembly passed an historic bill on the 31st March 2015. If approved by the Senate, it would considerably improve French companies’ responsibility for their impact worldwide. The Assembly is now calling for European action.

The most egregious human rights abuses are taking place in the global supply chains

With the tragedy of the Rana Plaza garment factory in Bangladesh still fresh in our memories, it is beyond doubt that there are significant human rights and environmental risks hidden in complex supply chains. However, until now, in the absence of a legal framework outlining rules recognising corporate liability, it is extremely difficult to hold to account European companies for their impact outside Europe, and even more so in their supply chains. The most tragic consequence of this situation is that workers pay the price with their lives, and victims are left without compensation.

A landmark decision in Europe and worldwide

The European Coalition for Corporate Justice (ECCJ) and its French member Forum Citoyen pour la RSE, which has been mobilising for a mandatory duty of vigilance by parent companies for the past 3 years, recognise this is a major step forward. Under the new requirements, large French companies would have to implement and publish ‘vigilance plans’(also called due diligence plans) prior to conducting business with companies in France and abroad – whether they are subsidiaries, subcontractors or suppliers. These plans are meant to prevent human rights violations and environmental abuses from taking place, as companies would have to effectively identify and respond to any foreseeable human rights and environmental related risks. Such measures currently exist to avoid money laundering, but this is the first time such legislation is adopted in relation to environmental and human rights impacts of corporate activity.
Reluctant companies could be asked by a judge to publish this plan and a report on how they have been implementing it. Even a civil fine might be imposed.
And in case of human or environmental disaster, mother companies or subcontracting companies could be held liable if they have failed to comply with this duty of vigilance.

Yet, the David against Goliath struggle would continue for victims

Forum Citoyen pour la RSE fears that the law does not go as far as initially planned (see our article here). Fierce lobbying by French companies has certainly played its part in the weakening of the proposal.

Of major concern, victims would still have to prove that the company committed a fault. Human rights claims are far too serious and access to evidence far too complicated for victims. Companies should be the ones proving their activity did not cause any abuse. The bill would only apply to very large groups with 5,000 employees in France or 10,000 employees working abroad. As such, French-domiciled companies with fewer employees than the specified requirements escape the duty to be more vigilant even if they operate in high-risk sectors (in relation to the Rana Plaza disaster, the bill would apply to Carrefour but not to Camaïeu who was also sourcing from the garment factory). The bill mandates companies to look only at subsidiaries and subcontractors, but not all business relationships that may contribute to human rights violations.

A call for European Action

The French National Assembly adopted a resolution on the 12th May calling on the European Union to adopt a similar legislation at European level. If endorsed by other Member State parliaments, this initiative could trigger a European reform.

As the saying goes, “With great power comes great responsibility”, and it is high time companies also take their share of responsibility for abuses happening outside Europe and down their supply chain.

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