The duty of care : a pioneer law for holding companies to prevent environmental risks and human rights abuses in its subsidiaries
Multinationals above laws?
Today, multinational companies are clearly above laws, some of them are even more powerful than states by increasing social and economic power until the advent of consumerism and higher household. But law does not follow this rhythm, and there aren’t binding obligations under international laws for this kind of companies. Domestic law could be part of the solution.
In fact, if companies respect countries rules in terms of environmental law, why are many firms relocating? It is simple, they can make more profits with less important salaries and many of the times with less or inexistent environmental laws. In France we found a legal way of binding this multinational to force them respect the rules in the relocated country, or to be responsible for events or risks occurring in relocated companies.
This is called duty of care, and was adopted on March,27th of 2019, one of the main causes of this adoption, was the catastrophe of the Rana Plaza in 2013 in Bangladesh, where a building which contained clothing factories collapsed on employees. 1127 people died, and brands were not directly legally responsible.
What is the duty of care implied by this law?
It obligates a company to a civil liability and act with vigilance, with due diligence. They establish a duty of care – a legal obligation to adhere to a standard of reasonable care, while performing any acts that could foreseeably imply abuse of human rights or environmental impacts. Those harmed could bring a civil action and claim remedy, and not just attempt the image of the brand. In a less juridical way to explain, it prevents than an event like Rana Plaza or any other environmental impact caused by a company can happen again. It makes the holdings or mother companies being responsible for events made by its subsidiaries in relocated companies. Before, holdings were not legally responsible for what could happen over there.
Which companies are concerned?
The duty of care concerns French companies employing, “at the end of 2 consecutive fiscal years, at least 5,000 employees in France or at least 10,000 employees in the entire world, including the workers of the subsidiaries”. It means that all companies of a certain size are concerned whatever their production is, they are obligated to deal with all human rights and environmental impacts.
A “vigilance plan”
Each company have to write a “vigilance plan” (plan de vigilance), which have to prevent risks occurring in a holding company and its subsidiaries, preventing human rights abuses and negative impact on the environment. It is composed by “reasonable vigilance measures to adequately identify risks and prevent serious violations of human rights and fundamental freedoms, risks and serious harms to health and safety and the environment”.
The effect of this pioneer law?
It is too soon to say, it is for sure a surprising and a pioneer law in the world and in France, thanks to civil society organizations as Sherpa.
We have to notice that we have to deal with bad faith of companies because some of them only write about the economic risk involved and the impacts for the benefits, and not environmental or human risks.
The firms concerned have to write the vigilance plan and respect what they wrote in, if not they can be sued. It differs from the usual French social responsibility of the companies because it is obligatory for the firm. If it really improves the respect for human rights and environmental impacts of companies of a certain size, there is still progress to make to have a real efficient vigilance plan to reduce and prevent the risks and achieve to actually prevent another catastrophe as the one of the Rana Plaza happen again. If consumers have a part of responsibility as well, it is time for powerful multinational companies to be bound by law.
Devoir de vigilance : une victoire contre l’impunité des multinationales, Olivier Petitjean, C. L. Mayer, 2019
Les patrons de la vertu : de la responsabilité sociale des entreprises au devoir de vigilance, Pauline Barraud de Lagerie, Rennes : PUR, DL 2019
The duty of care of international organizations towards their civilian personnel : legal obligations and implementation challenges, Andrea de Guttry, Micaela Frulli, Edoardo Greppi, Chiara Macchi, editors ; foreword by Jean-Pierre Lacroix, The Hague : Asser Press, 2018
Keywords : Duty of care, Environmental law, human right abuses, fastfashion, holding companies impunity