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18 Feb 2015

Elodie Aba, Legal Researcher, Business & Human Rights Resource Centre

Opportunity for France to hold companies legally responsible for human rights abuses by subsidiaries abroad

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[This is a translation by Business & Human Rights Resource Centre of an op/ed by Elodie Aba originally published on the Rue89 news website.]

“I spoke about people dying. They answered by referring to the CAC 40”: We cannot stop here!

“I hope that the principles of responsibility of parent companies for the actions of their overseas subsidiaries on matters of health and environmental rights will be enacted into law.”[1] François Hollande, 11 April 2012, during his presidential campaign.

In April 2014, several NGOs asserted that Auchan had lied to consumers about working conditions in its overseas factories after labels for its “In Extenso” clothing brand had been discovered among the rubble of the Rana Plaza factory in Bangladesh. This factory had collapsed in April 2013, killing several thousand people and injuring hundreds. Auchan rejected the accusations. In January 2015, the French courts dismissed the complaint. The issue of responsibility of parent companies for the activities of their subsidiaries and suppliers continues to spark lively debate.

The United Nations Guiding Principles on Business and Human Rights highlight the responsibility of firms to ensure that their activities, including those within their supply chains, do not have adverse human rights impacts. They also acknowledge the need for victims of business-related human rights abuse to have effective access to remedy.

In November 2013, three members of the French National Assembly introduced a Bill on the duty of care of parent companies towards those affected by their overseas subsidiaries and suppliers. The text would create civil and criminal responsibility for firms headquartered in France in the event of human rights violations overseas. Furthermore, it would reverse the burden of proof, thereby making firms responsible for demonstrating that they have implemented the necessary measures to prevent human rights violations.

Parliament to examine the text on 30 March 2015

On 29 January 2015, members of the French National Assembly chose to refer the text back to committee to reformulate it, on legal and technical grounds. A new review is expected on 30 March.

This innovative Bill represents a step forward in the area of business and human rights. Multinational firms would no longer be able to hide behind the corporate veil or their suppliers, in order to shirk their responsibility for actions harmful to the environment or human rights. According to a poll, 76% of French people consider that French multinationals should be held legally responsible for serious accidents caused by their subsidiaries and suppliers.

However, employers’ organizations have expressed their reservations about the text and have highlighted the existence of ethical charters and codes of conduct for firms. They also seem to think that it would hinder competitiveness, as illustrated by the statement by Danielle Auroi, one of the authors of the text, during discussions in committee:

“I spoke about people dying. They answered by referring to the CAC 40 [the principal French stock market index].”[2]

Thus, the human rights performance of firms is coming under increased scrutiny. A law on corporate responsibility for human rights would almost certainly improve companies’ image and reputation, and might even attract responsible consumers and investors. It would allow firms to have a degree of legal certainty. Without a law of this kind, the courts would have to decide on a case-by-case basis, creating a climate of uncertainty.

Rights without responsibilities for companies?

It is ironic for firms to refuse to be held legally responsible at a time when they are seeking to obtain more rights and protection in international commercial agreements. The text of the Transatlantic Trade and Investment Partnership (TTIP) currently being negotiated between the European Union and the United States would enable firms to take action against a State if they felt that its policy hindered their commercial activities. This measure raises a great deal of concern about the potential for firms to prevent a government from passing laws to protect public health or the environment, for example.

It is now time to act to ensure that victims of corporate human rights violations are able to access justice and obtain remedy, which is still difficult in France.

Due to the lack of adequate laws on the responsibility of parent companies, victims and their representatives have taken action against firms on grounds of “misleading commercial practice”. The purpose of doing so has been to denounce the contradiction between firms’ public statements about their environmental and social commitments, and their practices.

A case in point is that of complaints against Auchan (re allegations of having produced garments in Rana Plaza factory) and Samsung (allegations of child labour in its Chinese factories).  Both cases were recently dismissed. NGOs have expressed their strong regret that “despite the overwhelming facts implicating the companies concerned, justice has not been served to the victims,” and have called for “the enactment of the Bill on the duty of care in order to prevent environmental or social tragedies from happening in the future”[3]

An emerging issue in several countries

In other countries, the issue of corporate responsibility to respect human rights, even overseas, is a hot topic.

  • In Germany, the government plans to take a fresh look at its legislation on corporate responsibility as a consequence of the National Action Plan on Business and Human Rights that it is currently developing.
  • In Switzerland, the “Initiative pour des multinationales responsables” association has launched a people’s initiative on this topic. Late last year, the Federal Council announced that it would draft a report on access to remedy for victims of corporate human rights violations.

France has the opportunity to lead the way in the area of business and human rights by imposing a duty of care on parent companies towards those affected by the activities of their subsidiaries and suppliers overseas in order to prevent another tragedy like Rana Plaza. Members of the French National Assembly will hopefully seize this opportunity in March to propose a robust new text, not a watered down one.

“It isn’t always possible to control everything in the supply chain. All we are asking is that the behaviour of firms should be like that of ‘a good father’, a prudent and diligent person,”[4] said Olivier de Schutter, a lecturer at the Catholic University of Louvain and former UN Special Rapporteur on the right to food, in an interview.

[1] Translation from original French statement by Business & Human Rights Resource Centre.

[2] Translation from original French statement by Business & Human Rights Resource Centre.

[3] Translation from original French statement by Business & Human Rights Resource Centre.

[4] Translation from original French statement by Business & Human Rights Resource Centre.