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France was one of the first countries to legislate for responsible business and sustainable supply chains. The Duty of Vigilance law (Loi de Vigilance) was established in 2017, requiring due diligence in human rights and environmental responsibility within a company’s own parent and subsidiary operations as well as its supply chain. For all intents and purposes, the French law is similar to Germany’s Supply Chain Act (Lieferkettengesetz) and the Corporate Sustainability Due Diligence Act in the EU.
Companies subject to this law are required to develop a vigilance plan demonstrating appropriate measures taken to prevent and avoid human rights and environmental harm caused by its business activities. The plan must specifically outline five key areas:
In addition to the company’s direct boundaries, the plan must include due diligence on subsidiaries, contractors, and suppliers, even those in non-contractual relationships. The French law does not specify whether this includes suppliers beyond the first tier.
One key requirement of the Duty of Vigilance law is to publicly disclose their vigilance plan for open input during its development. This provides opportunity for engagement between the company and its various stakeholders that are affected by the vigilance plan.
The law provides for civil liability and a redress mechanism, which means that individuals can sue a company for violations and the violating companies must take remediation measures. When vigilance measures are deemed inadequate, companies can be ordered to clean up their act.
The law currently applies to about 150 of the largest French companies with more than 5,000 employees in France or 10,000 worldwide. Companies that fail to meet the requirements could be hit with court-ordered injunctions or financial penalties and held liable for damages (including those incurred by third-parties) arising from an ill-prepared vigilance plan or absence of one.
On 24 February 2022, a study looked at vigilance plans published between 2018 and 2019 to evaluate the application of the law. It found that the majority of companies within scope have formalised vigilance plans. A third have engaged with stakeholders on their plans, and many alert mechanisms are in the form of whistleblowing channels. Procurement processes have been updated to identify risks. Monitoring systems use pre-existing ethics or CSR processes, with more than half of companies using measurement indicators.
The implementation of the Duty of Vigilance law has seen increased efforts in mapping human rights risks and resource allocation to this area. Cases have already been brought to court over companies that fail to fulfil their obligations. As France continues to observe the application of this law, the development of the EU Corporate Sustainability Due Diligence Act raises questions as to the degree of overlap or conflict with France’s Duty of Vigilance Law and whether one will supersede or limit the terms of the other.