The French Law on Duty of Vigilance (DoV) has initiated a wider policy movement at the European level. While it is far too soon to analyze the effect of the EU Corporate Sustainability Due Diligence Directive, CSDDD, in this post we aim to draw some lessons from the French case. We begin with a short genealogy of the French law and its origin in strategic litigation, drawing on recent literature critically assessing the law and on reports emanating from different institutions. We then comment on the potential prospects and limitations of this duty of vigilance turn.

The genesis of the law: A strategic legislative proposal rooted in civil society

While the formal journey of the law began with its submission to the Law Commission of the French Parliament in 2013 by 3 MPs, the strategic intent originated years before. It was the result of a progressive awareness of its proponents that existing non-binding mechanisms (OECD National Contact Points (NCPs), Corporate Social Responsibility (CSR) platform) dealing with CSR issues were insufficient. This awareness had emerged at different speeds within NGOs and labor unions involved in CSR issues, as early as the 1990s within the Collectif Ethique sur Etiquette. Since the 2000s, different actors contributed to a progressive public framing of events considered as accidental into CSR scandals involving MNC responsibilities. NGOs like Sherpa tried to bring to court these CSR scandals but the results were disappointing. One exception was the Total case in Burma for which Total, without recognizing its legal responsibility, accepted to finance a foundation for workers and their families who suffered from forced labor. From a strategic litigation perspective, the DoV law can be interpreted as an attempt to fill the accountability gap of unchallengeable CSR mechanisms: the new law would open the way for judicial proceedings against corporations.

Originally, the coalition of NGOs and labor unions that organized themselves in 2011 to push for the adoption of a binding law aimed to create a new regime of responsibility (under tort law) for parent companies and to hold them legally responsible for harms caused by their subsidiaries or suppliers. This goal resembled a Copernican revolution in private law putting into question the cardinal principle that legal entities cannot be held liable for the harmful conduct of other legal entities, which some French pro-business legal scholars considered as the equivalent of natural law.

The political context behind the adoption of the Law

During his term, President Hollande implemented a range of pro-business policy with the removal of wealth tax and the creation of a flat tax for financial revenues. Yet, in the fall of 2016 the President was still seeking reelection in 2017, and was looking to adopt a law which would cement a winning rainbow majority (from the left to the center right).

When the newly appointed Minister of Economy Michel Sapin took over the file, which had been purposefully put on ice for several years by his predecessor Emmanuel Macron, he quickly convinced the rapporteur of the law to abandon the initial proposal in exchange for a rapid adoption. In return, M. Sapin proposed to rely on a duty of vigilance (a compliance approach), which he had already utilized in the Sapin 2 law on corruption and anti-bribery. While clearly disappointing for some, NGOs and labor unions quickly embraced a tactical win for which they had spent so many resources. It was an unlikely turnaround after more than 4 years of filibustering.

The final outcome: A due diligence obligation

From a strategic litigation perspective, it is too early to conclude whether the law has converted voluntary CSR mechanisms into legally binding ones. While some tend to interpret this law as having transformed lead into gold, through an alchemist process, others doubt the ability of such human rights due diligence laws to curb and harness the powerful forces of capitalism and its systematic tendency to violate human rights and the environment. Only time and the courts’ decisions in the currently 15 pending procedures will tell us more about the actual transformative effects of the Law.

Early research has shed light on the trend towards managerialization of the French Law. Such managerial interpretation is itself the result of conflicting dynamics inside firms. At corporate headquarters, legal and sustainable development departments have taken leadership on duty of vigilance issues, yet with different goals and cultures. The latter, confident in the curative virtues of transparency, see duty of vigilance as an opportunity to publicize risk and engage with stakeholders, while the former fear potential legal consequences. Procurement departments are spurred to integrate due diligence in their processes, which conflicts with financial pressures to buy at lowest cost. Human resources departments are coming to grips with the issue, seeing the improvement of human rights practices through a “business case” lens of creating value.

The result seems to be internal competition within businesses to recapture the notion of risk couched in the law (legal, reputational, business, risk of adverse impacts) and its interpretation. Conflicting approaches emerge. A compliance-based approach favours reliance on traditional contractual mechanisms, running the risk of cosmetic compliance and cascading responsibility to lower tiers of the supply chain. While a risk-based approach may seem more focused on adverse impacts, it scrutinizes measurable risks at the expense of other issues and jeopardizes the need for ‘rights-enabling economies’. Eventually, more and more organizing is undertaken in the name of risk through a “riskification” process of human rights and environmental violations. This is where external actors come into play.

The rat race in the “business of human rights” is stronger than ever. The auditing industry is still going strong as certifications and CSR audits, with which firms are familiar, remain the dominant due diligence mechanism in the supply chain. The legal industry also starts to capture a market share in the prevention and management of disputes, as well as AI merchants that promise monitoring of the supply chain and automatic CSR risk analysis with a predictive capacity. Along these actors, a closed circle of Parisian experts from business-funded NGOs (e.g. Entreprises pour les Droits de l’Homme or the UN Global Compact) advise companies on the interpretation and implementation of this vague law, while rulings in pending cases are awaited like oracles from the Pythia of Delphi.

On the civil society side, labor unions remain skeptical of the value of the Law, as they are little consulted in the due diligence process. The same applies to NGOs which, accordingly, resort to litigation as a means of developing a body of case law. 

But maybe the success of this law lies elsewhere, in the enshrinement of the ideas popularized by J. Ruggie on the governance gap triggered by globalization and the fact that national public-based legal and administrative mechanisms aimed at preventing human rights and environmental abuses are powerless to curb abuses in global supply chains.

Conclusion 

While it is far too early to outline future directions that the law on the duty of vigilance might take, it can be argued that it is currently far from satisfying its advocates’ original intents to facilitate strategic litigation and enable social change. Unraveling the political genesis of the text, as a compromise in which due diligence mechanisms were favored against a reform aimed at broadening the scope of tortious liability applicable to corporations, provides clues as to why businesses have shown little concern and cases have been so few. 

These insights might be of help considering the recent adoption of the CSDDD. The directive was watered down throughout the negotiations in which business lobbies had the upper hand: the result is a text with a reduced scope and no personal liability of executives. Though, the very fact these laws faced so much resistance show there is something at stake. Whether mandatory human rights due diligence leads to effective improvement of workers’ conditions on the ground remains to be demonstrated.