Corporate due diligence (part 2/2): no longer applying just to large French corporations

While French companies that are subject to national due diligence legislation since 2017 display their goodwill in applying the text, their representative bodies display less enthusiasm behind the scenes.  Documents obtained by the Corporate Europe Observatory NGO indicate that corporate representative bodies, namely the French Association of Private Enterprises (AFEP representing multinational corporations), and the Movement of the Enterprises of France (Medef, France’s largest employers federation) spearheaded lobbying of the European Commission in an attempt to curb the scope of the proposed directive published in February 2022. In particular, the report cites attempts to promote voluntary-based sectoral initiatives instead of companies individually bearing the due diligence responsibility, as well as trying to limit the number of companies concerned by imposing a high employee threshold. However, while the threshold in France stands at 5,000 employees, the European Commission retained the lower number of 500.

A European Directive for greater legal security

Some 14 months down the line and MEPs have proposed an even more ambitious threshold of 250 employees. If this threshold is selected and and the text is adopted, then European legislation will be applying corporate due diligence obligations to an even greater number of corporates. This Directive, which the regulatory authorities in Brussels hope to see adopted by the end of 2023 during Spain’s 6-month presidency of the EU, must provide another crucial element, namely the establishment of independent national administrative authorities responsible for monitoring companies complete with the power to sanction. “The establishment of these authorities is good news because they can  support companies, harmonise practices, and establish a public interpretation of the obligations”, welcomes lawyer and founder of the CM law firm Charlotte Michon. “Article 10 requires that the vigilance system be the subject of a formal policy. We have been calling for this for several years, when in fact the guiding principles are rarely set out in the due diligence plans,” adds Patrick Viallanex, a partner at the Paris-based A2 Consulting firm. Agathe Grossmith, CSR project manager at Carrefour also welcomes the initiative,…