More than 10 years after the collapse of the Rana Plaza building in Bangladesh, the implementation of the Corporate sustainability due diligence takes new steps forward.
In 2017, France was the first country to adopt a law introducing a corporate sustainability due diligence (Law no. 2017-399 of March 27, 2017), thereby creating an obligation for certain companies to identify, prevent and mitigate social, environmental and governance risks associated with their operations but also to their partners, subcontractors and suppliers.
Although, the entities concerned are primarly large companies employing, for two consecutive financial years, at least 5,000 employees in France or more than 10,000 employees in France or abroad, all companies must pay close attention to these regulations.
As the obligation applies to their entire supply chain, these large companies must pass it on to the partners with whom they wish to collaborate, whatever their size.
In concrete terms, these large companies are required to draw up, implement and publish a due diligence plan to prevent environmental, human rights and corruption risks for their own activities and those of their subsidiaries, subcontractors and suppliers, both in France and abroad.
The due diligence plan must include the following elements:
– Risk mapping: Identify, analyze and prioritize human rights and environmental risks.
– Assessment procedures: Regularly evaluate the situation of subsidiaries, subcontractors and suppliers with regard to identified risks.
– Mitigation actions: Implement appropriate actions to mitigate risks or prevent serious harm.
– Alert mechanism: Establish an alert and risk-reporting mechanism, in consultation with representative trade unions.
– Follow-up mechanism: Monitor the measures implemented and assess their effectiveness.
Any person with a legitimate interest may refer the matter to the judicial authorities to order the company concerned to comply with its due diligence obligations, if it has not done so within three months of receiving formal notice.
The Paris Court of Appeal and Judicial Tribunal have exclusive jurisdiction throughout France to deal with disputes arising from the application of these regulations.
In March 2024, France, once again a pioneer in this field, created a chamber within the Paris Court of Appeal dedicated to “emerging litigation”, in charge of cases concerning due diligence obligations and ecological responsibility. On September 2, a specialized chamber was also created within the Paris Judicial Court.
Certain aspects of the new applicable procedure were clarified by the new chamber of the Court of Appeal, which ruled on June 18 in three cases raising the question of the admissibility of injunction proceedings brought against EDF, TotalEnergies and Suez:
– A formal notice is a prerequisite for legal action, it will otherwise be inadmissible. However, the existence of prior amicable negotiations is not a condition for the validity of the seisin.
– The demands made in the summons must be sufficiently related to the obligations set out in the formal notice. On the other hand, as the due diligence plan may be modified between the sending of the formal notice and the summons, it cannot be a condition of admissibility that the formal notice and the writ of summons target exactly the same version of the due diligence plan.
– Local authorities can take legal action provided they can demonstrate that the risk has had a specific impact on their territory.
– An action for breach of due diligence obligations can be brought in conjunction with an action for liability for ecological damage under article 1252 of the French Civil Code.
In addition, a European directive came into force on July 25, 2024, extending the scope of the due diligence.
A greater number of companies are concerned, since medium-sized companies are covered (threshold of 250 employees), as well as non-European companies if they have significant activities on the EU market.
The directive also introduces a supervisory authority to oversee implementation of the due diligence, and a new framework for administrative and financial penalties.
Member States must transpose the directive by July 26, 2026.
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For more information on your obligations under the corporate sustainability due diligence regulation and to assist you in complying with them, our corporate team remains at your disposal.
Philippe Schmidt
Aude Le Tannou
Sara Buonomo
