the role of vigilance is developing in Europe and in France

The duty of monitoring of large companies in their supply chains is the subject of increasing scrutiny in France and of a proposal for a directive from the European Council, but NGOs accuse States of making it less strict than initial project of the European Commission.

In France, companies employing more than 5,000 employees in France and more than 10,000 worldwide are required since 2017 to ensure respect for basic human rights and the environment throughout the value chain of their products.

Since the first scheme was launched in 2019, actions have increased. Today, 23 procedures – 17 formal notifications and six subpoenas – have thus been carried out based on this law, i.e. twice as many compared to March 2021.”, according to a report published on Tuesday by the business law firm De Gaulle Fleurance. The first company sued in 2019 was TotalEnergies for an oil project in Uganda and Tanzania. EDF has been appointed in 2020 for a wind project in Mexico and Suez in 2021 for its water management in a city in Chile.

Also in 2021, Casino was accused in court of participating through its South American subsidiaries in deforestation in the Amazon. Last March, cosmetics group Yves Rocher was sued by former employees of a Turkish subsidiary for failing to fulfill its obligations in terms of freedom of association and basic workers’ rights. The number of companies subject to the duty of vigilance shall be expanded by a European directive entitled CSDDD (Corporate sustainability due diligence directive), which was the subject of an agreement in the European Council on December 1st.

Is the financial sector excluded?

There is no date of entry into force yet, but the obligations attached to the new text will only be effective in EU states three years after the adoption of the directive, which must still be reviewed by the European Parliament before ratification.

The European Commission has recommended that companies with more than 500 employees and more than 150 million euros in turnover be concerned, with the threshold lowered to 250 employees and 40 million euros in turnover for sectors where the risk of violations of human rights or the environment are high. , such as textiles, agriculture or mineral extraction.

But the European Council took a position on December 1 so that, initially, only companies employing more than 1,000 employees and achieving more than 300 million euros in turnover are concerned. Each state will also be free to exempt the financial sector from the vigilance role, a decision that has raised eyebrows among NGOs.

The financial sector, which plays a critical role in shaping the behavior of the private sector, can unfortunately continue to finance human rights abuses and damage the planet with impunity.“, lamented Léa Guérin, advocacy officer on the regulation of multinationals at Oxfam France. A European association for the defense of listed companies, EuropeanIssuers, in contrast defends the exclusion of banks.

NGOs and Europe are on the wrong track when they put the duty of vigilance on the shoulders of banks“, because it’s the last”are incapable of making an unbiased judgment on the climate impact of the projects companies submit to them for funding. These issues are too technical for them“, declared its president Luc Vansteenkiste, who was present at the presentation of the De Gaulle Fleunce report.

Without waiting for a European directive, Germany has already adopted its own law (the LkSG law) which will concern from January 1 onwards companies with more than 3,000 employees and from January 1, 2024 those with more than 1,000 employees. . Unlike French law, German law provides for a body to monitor compliance with the duty of care by companies, which can impose financial penalties in the event of violations.

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