It would be wise for procurement professionals to pay close attention to France’s new sustainable procurement legislation. The Duty of Care law, which affects organisations with over 5,000 employees, is likely to have some influence on other nations, starting with those in the EU.
If similar human rights legislation is implemented across the globe; forewarned is forearmed, and sustainable, ethical procurement is a hot topic that’s only getting hotter!
Whilst the progress of global sustainability standards have traditionally been pushed by individual businesses and activist groups, things are changing. This month saw the publication of ISO20400, (International Standard for Sustainable Procurement), which creates a standard for every organisation in the world to follow.
The Duty of Care Law
In its much-awaited decision last month, the French constitutional council has given a green light to the “Duty of Care” law (Devoir de Vigilance) although they stated that there remain some provisions to the French constitution.
The major points of the law, requiring French companies with at least 5 000 employees, including in their French direct or indirect subsidiaries (or 10 000 employees in their direct or indirect subsidiaries worldwide) to develop a diligence plan (“plan de vigilance”), are recognised of general interest. The intent is for the diligence plans to prevent serious risks related to human rights and fundamental freedoms, health and safety of persons and the environment. The constitutional council considers however that the sanctions initially included in the law violate the constitutional principle that penalties must have a sound legal basis. As a result, the civil fine of up to €10 million, as well as its increase to €30 million in case of damages that could have been prevented by implementing the diligence plan, are removed from the law.
Developing A Diligence Plan
The obligation of implementing a diligence plan however, as well as the formal notice and the civil liability mechanisms in case of lack or deficiency of the diligence plan, are constitutional. Consequently, companies are still compelled to implement a diligence plan, even if the law loses some of its deterrent effect, which makes for the first law of this type: it introduces an obligation much more stringent than a mere reporting obligation, such as the ones required by the UK Modern Slavery Act or the California Transparency Act. Companies are required to implement specific concrete actions and cannot limit themselves to reporting on what they do (or do not do).
There are also some talks of developing similar regulations at European Union level. Eight national parliaments have called for a corporate duty of care towards the human rights and local environment impacted by the company’s operations. They have jointly proposed that the European Commission take action on this matter. This shows that the French “Duty of care” law is indeed the first step of a generalized global movement requiring companies to address their Corporate Social Responsibility (CSR) risks, including throughout their supply chain.
This article was first published on the EcoVadis Blog.