Online version: February 2021
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Law no. 2017-399 of March 27, 2017 relating to the duty of vigilance of parent companies and companies that give orders introduced Articles L. 225-102-4 and L. 225-102-5 into the French Commercial Code in order to require certain group companies that employ a significant number of employees with their subsidiaries to implement a “vigilance plan” relating to corporate social responsibility (CSR).
Article L. 225-102-4 of the French Commercial Code requires companies that, at the end of two consecutive fiscal years, (i) employ at least 5,000 employees within the company and in its direct/indirect subsidiaries if their registered office is in France, or (ii) employ at least 10,000 employees within the company and in its direct/indirect subsidiaries if their registered office is in France or abroad, to publish a vigilance plan.
This plan includes "reasonable vigilance measures designed to identify risks and prevent serious violations of human rights and fundamental freedoms, the health and safety of persons and the environment, resulting from the activities of the company and those of the companies it controls within the meaning of paragraph II of Article L. 233-16, directly or indirectly, as well as from the activities of subcontractors or suppliers with which it has an established business relationship, when these activities are related to this relationship”.
The plan includes the following measures:
The plan is intended to be drawn up in association with “the company’s stakeholders” and, where appropriate, within the framework of multi-stakeholder initiatives within the same industry or at the territorial level. By expressly referring to the company’s stakeholders, the law of March 27, 2017 underlines the importance of “stakeholders”, a core concept in compliance and CSR.
When the company does not draw up a vigilance plan or draws up one that does not meet the requirements of the French Commercial Code, a formal notice to comply mechanism is provided for. If the company does not meet its obligations within three months as from the formal notice to comply, then any person with a legitimate interest in the matter at stake may petition the competent court to issue an injunction to comply with law, subject to a potential financial penalty, and the president of the court, ruling in summary proceedings, may be petitioned for the same purpose.
Finally, civil liability can attach in case of failure to comply with the duty of care. The person in breach shall compensate the prejudice that the performance of his/her obligations would have avoided.
To be noted – Competent court:In January 2020, a number of associations and local authorities brought a lawsuit against Total before the Nanterre District Court, alleging that Total had failed to accurately map the risks in its 2018 vigilance plan and that it did not take adequate measures to prevent climate damage resulting from greenhouse gas emissions caused by its activities. The District Court of Nanterre declared itself incompetent in favor of the commercial court.
Our team remains available to assist you in developing or improving your vigilance plan in order to comply with best market practices.