Year 1 Companies Must

THE LAW ON DUTY OF VIGILANCE OF PARENT AND OUTSOURCING COMPANIES YEAR 1: COMPANIES MUST DO BETTER MEMBERS OF Editors: Juliette Renaud (Friends of the Earth France) Françoise Quairel, Sabine Gagnier, Aymeric Elluin (Amnesty International France) Swann Bommier, Camille Burlet (CCFD-Terre Solidaire) Nayla Ajaltouni (Collectif Ethique sur l’étiquette) Proofreaders and contributors : Chloé Stevenson (ActionAid France – Peuples Solidaires) Lorette Phillipot, Lucie Pinson (Friends of the Earth France) Sandra Cossart (Sherpa) Spell checking : Elisabeth Maucollot Graphic design : Antoine Guinet Translation : Maria Gioia Date of publication : February 2019 4INTRODUCTION PART 1. General summary of the 6plans published and how they conform to the law 1 The content of the law P.7 General summary of the implementation 2 of the law: broadly insufficient plans P.10 PART 2. Sectoral analysis 20Extractive sector P. 20 Arms sector P. 25 Agri-food sector P. 30 TABLE OF CONTENTS TABLE Banking sector P. 35 Garment sector P. 40 GENERAL 46CONCLUSION AND PROSPECTS INTRODUCTION For many years now our organisa- the activities are distributed between impact of its activities – including tions have been documenting cases branches, subcontractors, suppliers those of its subsidiaries, suppliers of human rights abuses by multina- and other commercial partners. As and subcontractors, wherever they tionals, as well as the many ways in these are supposedly independent may be in the world – it is the first which the victims’ access to justice legal entities, each under disparate legislation worldwide that proposes has been restricted. The tragedy in jurisdictions, the parent and outsour- surpassing the independence of the Bhopal, India, the dumping of toxic cing companies are not held legally legal entity. This law is based in par- waste in the Ivory Coast, the pollu- responsible for any serious acts of ticular on the United Nations’ Guiding tion caused by the Erika tanker on environmental and human rights abuse Principles on Business and Human the French coast, dumping by Shell committed by their subsidiaries or by Rights (UNGPs) 4, which is currently the in Nigeria and by Chevron/Texaco other companies within their sphere of internationally recognised standard in Ecuador, or even the much publi- influence (subcontractors, suppliers, of reference on this matter. Unani- cised collapse of the Rana Plaza in etc.). Indeed, the independence of mously passed by the United Nations Bangladesh are emblematic and dra- the legal person allows the parent Human Rights Council in 2011, these matic examples of this. Recently, in company to be protected from any non-binding guidelines affirm the cen- January 2019, a new mining tral role of the government in catastrophe in Brumadinho in the protection and promotion the state of Minas Gerais shook of human rights in companies, Brazil and claimed 300 lives1. the priority of a risk-based These cases demonstrate that A legally binding approach for third parties, the national and internatio- and the extended liability nal regulatory framework in within the value chain, and general do not allow for the framework is emphasise that it is manda- economic players to be held tory for companies to respect responsible when it comes to therefore human rights by recognising human rights or for payments that their liability extends to for damages to be requested necessary their business dealings as a wherever they may have occur- whole. red in the world. France is the first country to This situation reveals that voluntary action taken against it as a result of have adopted legislation such as the standards, only framework that cur- its subsidiary’s actions. This ‘corporate law on duty of vigilance. Other similar rently exists on an international level, veil’, in reality, is a major obstacle initiatives are being developed across are not enough to prevent the human for anyone representing the victims Europe and the world. However, in rights abuses and environmental in their search for justice and com- order to be efficient on a global level, damages committed by companies. pensation. an international binding treaty would A legally binding framework is there- be necessary so that all companies fore necessary. The French law on the corporate everywhere in the world could be held duty of vigilance of the parent and accountable for their actions and sub- Transnational corporations carry out outsourcing companies (Law No. ject to effective sanctions. A crucial activities in multiple countries and 2017-399 of 27 March 2017)3 wanted step regarding this was taken when on therefore depend on multiple juris- to address this issue. By placing the 26 June 2014, following the initiative of dictions. Organised in groups of com- burden of responsibility of prevention Ecuador and South Africa, the United panies via long and complex chains of on the multinational and, above all, Nations Human Rights Council adop- subcontracting in different countries2, by incurring its civil liability for the ted the 26/9 resolution establishing an 1. This catastrophe arrives three years after Samarco’s mining dam collapse in Mariana, involving the same mining giant, Vale, and when the victims from 2015 are still awaiting compensation. See the press release of 26 January 2019 from MAB (Movement of People Affectif by Dams) in Brazil: http://www.mabnacional.org.br/noticia/le-mouvement-des-personnes-affect-es-par-les-barrages- 4 d-nonce-le-nouveau-crime-commis-par-va INTRODUCTION intergovernmental working group with it comes to the concerned parties, 2.See the ITUC report on 50 of the largest this aim. Mandated to “elaborate an both the government and companies, transnational companies which shows that international, legally binding instru- in order for the implementation of this they only directly employ 6% of workers; 94% are employed by subcontractors and sup- ment to regulate, under international law to meet its principal objective: the plier : https://www.ituc-csi.org/frontlines-re- human rights law, the activity of trans- prevention of violations of fundamen- port-2016-scandal?lang=en national corporations”, this working tal rights to fundamental rights and group achieved a historical milestone environmental damage. 3. The text of the law on duty of vigilance is when in its fourth session in October available here: https://www.legifrance.gouv. fr/eli/loi/2017/3/27/2017-399/jo/texte 2018, for the first time in the UN’s This study is not an exhaustive review history, the member States opened of all the plans published in this first 4. The text on the UNGPs can be found here: negotiations for a first draft treaty. year of implementation. Our organi- https://www.ohchr.org/documents/publica- sations have chosen to select certain tions/guidingprinciplesbusinesshr_fr.pdf Until such a treaty is adopted, the large companies operating in speci- French law on duty of vigilance pre- fic sectors due to their high risks of sents the first opportunity worldwide human rights abuses and damage to to prevent as best as possible the the environment that we have docu- important risks associated with mul- mented using information gathered tinationals’ activities and to grasp the in the field. complexity of their structures and value chains. In the first section, the study gives a general analysis of the vigilance plans The purpose of this study is to pro- published in order to determine the duce a summary of the first year in positive elements and shortfalls and which this new legislation has been to present our main observations and implemented in France. Our gene- recommendations. ral observation is that the first plans published in 2018 only very partially The second section presents secto- meet the objectives and requirements ral analyses to underline the specific of the law, notably in terms of iden- challenges in sectors particularly at tifying the risk of abuse, their location, risk: garment, food industry, arms, and measures put in place to prevent weapons and extractive industries. them. Our organisations thus wish to In each sector, the vigilance plans of express here their expectations when three companies have been analysed. 5 Part 1 General summary of the plans published and how they conform to the law 6 tation of this vigilance plan. In case of « 3° Appropriate actions to mitigate non-compliance, the civil liability of risks or prevent serious impacts; the company may be incurred before a French judge and then, if need be, « 4° A whistleblowing mechanism the company may be ordered to repair that collects reports of existence or damages caused and compensate the materialisation of risks, elaborated in 1 victims. Before any damage, if the consultation with the representative company does not establish its vigi- trade unions organisations within the lance plan, make it public or efficiently company; THE CONTENT implement then it can be obliged to do so by a judge if necessary, with « 5° A system monitoring the imple- OF THE LAW financial penalties. mented measures and evaluating their effectiveness. The law defines a minimum content The law on duty of vigilance concerns for the vigilance plan and conditions « The vigilance plan and the report on companies established in France with regarding how it should be elaborated: its effective implementation must be over 5,000 employees in France or published and included in the report 10,000 employees in the world (within « The plan shall include adequate, mentioned in Article L.225-102.» the companies and their direct and reasonable vigilance measures to indirect subsidiaries). There may be identify risks and to prevent serious Extract from Article 1 of the law of 27 around 300 of these companies, but impacts on human rights and fun- March relative to the duty of vigilance since no comprehensive list of com- damental freedoms, the health and (article L. 225-102-4.-I inserted in the panies subject to this law has been safety of individuals and the envi- Commercial Code).

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