Latest news regarding the French Corporate Duty of Vigilance Law

Since the publication in 2017 of the French Corporate Duty of Vigilance Law, cases brought before French courts on ESG issues are increasing. The first cases indicate that the law could indirectly impact companies not required to publish a vigilance plan and that the dispositions of the law are broad and need to be defined.

1. The “Corporate Duty of Vigilance Law”

The  Corporate Duty of Vigilance Law applies to every company having its head office in France and employing 5,000 employees within the company and its subsidiaries in France; or 10,000 employees within the company and its subsidiaries in France and abroad.

Through the publication of a due diligence plan (referred to as a vigilance plan), the law requires the identification of every risk threatening human rights and fundamental freedoms, personal health/safety, and the environment that might result from the activities of the parent company, its subsidiaries, its controlled affiliates, and its suppliers/subcontractors. Then the company must take appropriate actions to mitigate those risks or prevent serious harm and implement a system to ensure that alerts are raised for every risk that emerge, that should be mentioned in the vigilance plan.

If the outlined requirements are not fulfilled by the company, “any person with a legitimate interest” – NGOs, stakeholders, unions, individuals – can bring a claim before French courts claiming the non-compliance of the vigilance plan.

2. Recent issues raised by vigilance plans.

Case against BNP Paribas on its substantial contribution to climate change by supporting fossil fuels

The last and most recent claim brought by NGOs before French courts is against BNP Paribas and is the world’s first climate lawsuit against a commercial bank.

On 23 February 2023, 3 NGOs - Oxfam, Friends of the Earth and Notre Affaire à Tous - sued BNP Paribas over its massive support to fossil fuels and for its substantial contribution to climate change. The NGOs allege the bank's loans to big oil and gas companies breach the bank duty, under the Corporate Duty of Vigilance Law, to ensure its activities do not harm the environment.

Case against Danone on its plastic use

Several weeks before, in January 2023, summons was delivered by 3 other NGOs - Zero Waste France, ClientEarth and Surfrider Foundation Europe - to Danone, which was the first French listed company to become a “Société à mission”.

The NGOs argue that Danone’s vigilance plan is "silent” on the plastic issue whereas they expect a complete assessment of Danone’s plastic use, "from the production, to transport, through logistics, promotion and marketing of plastic products”.

They are requesting the Court order Danone to pay € 100,000 per day if it delays the issuance of a new plan beyond six months.

The summons of Danone follows a formal notice delivered in September 2022 to multiple food and retail companies (Auchan, Casino, Carrefour, Danone, Lactalis, McDonald’s France, Les Mousquetaires, Nestlé France and Picard Surgelés) in relation to their plastic use throughout their value chains.

As of now, NGOs consider that Danone, unlike other targeted companies “responded very late and remains in a state of immobility” and that no mention of the term "plastic" is indicated in Danone's vigilance plan which, for the NGOS, is surprising for a company that uses plastic as a raw material.

This case raises the question of whether the use of plastics, which is itself regulated by a specific European regulation, should be included in the scope of the vigilance plan required under the French Corporate Duty of Vigilance Law.

As the environmental risks have not been specified in the law, it will be up to the court to determine whether the use of plastic can be qualified as a serious environmental damage within the meaning of the Corporate Duty of Vigilance Law.

Questions raised by the claims on the analysis and interpretation of companies’ duty of vigilance

This claim underlines the difficult questions raised by the Corporate Duty of Vigilance Law: what has to be included in the vigilance plan and to what extent?

A first response has been provided in a claim against TotalEnergies, sued for not complying with its legal obligations under the Corporate Duty of Vigilance Law to prevent human rights and environmental damage that could emerge from its oil mega-projects in Uganda and Tanzania.

NGOs argued that substantial environmental risks had not been taken into account by TotalEnergies in its vigilance plan and asked a Court, in summary proceedings, to order TotalEnergies to amend its vigilance plan and to stop its projects.

In this landmark case, the first decision of a French jurisdiction asked to rule on the Corporate Duty of Vigilance Law was issued on 28 February 2022.

The Court dismissed the claims on procedural grounds:

• the requirement of a formal notice was not complied with;

• the claim falls within the jurisdiction of the Paris Court ruling on the merits, and not the court ruling in the context of interim proceedings.

In this ruling, the Court underlined some points about the Corporate Duty of Vigilance Law:

• The content of the vigilance measures remains general: the French legislator did not intend to give a precise outline to the general measures that are imposed on certain companies in the context of the duty of vigilance and a decree has been announced but has not been published yet;
• but the French legislator expressly stated its intention to see this vigilance plan be developed through a collaborative process as to ensure its efficiency. Therefore, any claimant is requested to send a formal notice before lodging any claim before a jurisdiction. In this case, the judge ruled that this requirement was not met: the arguments raised in the formal mandatory notice sent to TotalEnergies in June 2019 were about its vigilance plan of 2018 and were substantially different to the requests eventually brought to the Paris Court, about the vigilance plan of 2021;
• as there is no regulation specifying the standard of a normally vigilant company, the grievances and breaches of duty of vigilance alleged against TotalEnergies must be the subject of an in-depth examination exceeding the powers of the interim relief judge.

This first ruling on the Corporate Duty of Vigilance Law underlined the points to discuss in the context of an increasing number of claims brought under the Corporate Duty of Vigilance Law and the discussions on the draft EU Directive on Corporate Sustainability Due Diligence.

3. Extension of the claims to the activities of companies’ suppliers and its possible consequences

Last but not least, NGOs are also targeting companies not only for their actions but also for the actions of their subsidiaries and/or suppliers, which is provided for by the Corporate Duty of Vigilance Law.

For example, the Casino Group was brought before the French Court by an NGO because its subsidiaries, located in Brazil and Columbia, had been allegedly buying meat from specific suppliers identified as engaging in the deforestation of the Amazon and grabbing land of indigenous communities.

Therefore, a company not caught by the thresholds previously mentioned, and therefore by the obligation to provide a vigilance plan, may be indirectly affected by the French legislation: that company’s clients may have to comply with the law and consequently produce a vigilance plan listing their activities, as well as the activities of its suppliers, presenting risks that may need the development of safeguards.

That is why, in order to be able to answer every demand from its clients and to help its clients to prepare and be accurate in their vigilance plan, a company should be able to produce information about the environmental impact of its activity/products and relevant information indicating how it complies with human rights and fundamental freedoms, the personal health/safety of its employees and environmental regulations. These considerations are very likely to be taken into account or stated by its clients in their own vigilance plans.