by Brian Collett — Large French companies will soon be subject to a tighter law compelling them to report on their human rights and environmental policies.
The comprehensive legislation, due to come into effect next year, is based on the due diligence requirements of the UN Guiding Principles on Business and Human Rights.
However, it will apply to only a relatively small number of companies – those with 5,000 staff in France or 10,000 altogether in their French and foreign operations. Industry analysts calculate only about 150 corporates will fall into this category.
The rules, nevertheless, are precise and strict. Companies must establish and implement a diligence policy stating measures taken to uncover and prevent human rights and environmental risks.
The risks involved would be from the companies’ own activities, and those of the enterprises under their control and third parties such as subcontractors and suppliers.
Companies would therefore have to ensure that wages and conditions were fair in their own operations and in their suppliers’ activities. The duty is then extended to sustainability of goods as the legislation is applied to environmental risks too.
The procedures by which risks are identified would have to be “developed in consultation with the legitimate trade unions operating within the company” and would have to be stated clearly.
Finally, the overall plan would have to be drawn up with input from civil society organisations.
The proposals have been likened to the UK’s Modern Slavery Act. However, this legislation obliges companies only to record their plans on their websites. The French companies would have to report them publicly.
Under the French proposals companies that do not show they have written and implemented a plan could be fined up to €10m ($10.7m, £8.36m). In Britain the only consequence is reputational damage.
Although the number of French companies affected by the proposals is small, ethical business specialists hope the measure will encourage other European countries to copy. At the very least they expect constructive debate and positive change in corporate practices to be triggered.