The COVID-19 outbreak is causing a significant impact on the global economy, with serious repercussions on the poorest and most vulnerable. Under such circumstances it is important to highlight that properly carried out due diligence would ensure the respect of human rights, including the promotion of the health of employees and communities.
France’s Duty of Vigilance Law (Loi n. 2017-399 of 27 March 2017) is seen as the first of its kind in Europe. It introduced an obligation on large enterprises to establish, publish, respect and evaluate a vigilance plan that identifies risks and prevents damage to human rights, health, safety and environment within their sphere of influence.
In its Evaluation Report, commissioned by the Minister of Economy and Finance, France’s General Council of Economy calls for the EU to adopt similar legislation. This would enhance global sustainability and introduce a level playing field for businesses across the EU. A study recently published by the Directorate-General for Justice and Consumers of the European Commission suggested to base future legislation on the French law.
Then, the question is: three years on from its adoption, what are the pros and the cons of this law?
It is now binding law for multinational corporations to conduct human rights and environmental due diligence along their supply chains. This is a huge improvement. It has levelled the playing field among the largest businesses operating in France.
Additionally, the law has led businesses to be more conscious about their supply chains and the risks related to them, thereby bringing a shift in the corporate culture.
The report analyses the problems that have arisen from the application of this law and formulates five suggestions for France’s policymakers:
- include additional types of corporations in the scope of the law (such as Société en nom collectif and Société à responsabilité limitée)
- charge a public authority with the responsibility to promote the duty of vigilance, with access to data that is not available to the public
- carry out a careful review with the Administration to measure the need to clarify certain elements of the law and thus reduce uncertainties
- promote sectorial and multi-party approaches to harmonise the best-practices
- call for the EU to adopt a similar legislation, coincidentally with the amendment (review) of the Non-financial Reporting Directive to integrate these obligations
amfori believes that an EU-wide approach would entail benefits for businesses, such as harmonisation, legal certainty, a level playing field and greater leverage. We have published a Position Paper to highlight our members’ interests while engaging with EU policymakers.
Our experts from the Advocacy team are monitoring legislative developments to help our members stay informed. Keep an eye on our website for further updates.
If you want to know more about amfori’s due diligence advocacy roadmap, please get in touch with email@example.com, Social & Environmental Policy Advisor.