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Countries should follow France’s lead on corporate accountability

The European Coalition for Corporate Justice (ECCJ), along with the French corporate accountability platform, Forum Citoyen pour la RSE, has called for European countries, EU institutions and the wider international community to follow the lead of France which has established  a duty of vigilance obligation for parent and subcontracting companies. The ECCJ said that this law marked an historic step towards improving corporate respect for human rights and the environment.

The law, which applies to the largest French companies, will make the latter assess and address the adverse impacts of their activities on people and the planet, by making them publish annual, public vigilance plans. This includes impacts linked to their own activities, those of companies under their control, and those of suppliers and subcontractors, with whom they have an established commercial relationship.

If companies fail to comply with these  obligations, the ECCJ said that the law empowers victims and other concerned parties to bring the issue before a judge. Judges can apply fines of up to € 10 million when companies fail to publish plans. Fines can go up to € 30 million if this failure resulted in damages that would otherwise have been preventable, the ECCJ said.

However, the ECCJ added that French civil society organisations argue that the law’s text could have been more ambitious. The law’s scope is limited and only covers around 100 large companies. The burden of proof still falls on the victims of the impacts of companies, the ECCJ said and as these may be the people who often lack the means to seek justice there may be an accentuation of  the imbalance of power, the ECCJ believes exists between large companies and victims of abuse. Furthermore, if damages are incurred despite a parent company having implemented an adequate vigilance plan, the company will not be liable: a company is not required to guarantee results, but only to prove that it has done everything in its power to avoid damages, the ECCJ explained.

ECCJ and the Forum Citoyen pour la RSE called on the French government to promote the duty of vigilance law at European and international level, and show support for other initiatives aiming to improve corporate accountability, like the UN Treaty on Business and Human Rights. Although France is the first country to adopt binding legislation of this sort, the development is part of a larger movement across Europe, the ECCJ said. Similar legislation is currently being considered in Switzerland, the ECCJ said, where the necessary signatures had been collected for a referendum on mandatory human rights due diligence.

What do you think?