CSDDD Directive and judicialization of the duty of vigilance

While the first deliberations of the Paris Court of Appeal on the duty of vigilance are expected in June, the European Parliament approved on April 24 the CSDDD directive going beyond what currently provides for French law.

French law no. 2017-399 of March 27, 2017 on the duty of vigilance, a pioneering obligation, establishes the obligation for companies with more than 5.000 employees whose headquarters are in France and those with more than 10.000 employees whose headquarters are in France. foreigner, to establish a vigilance plan. This aims to identify risks and prevent serious attacks on human rights and fundamental freedoms, the health and safety of people and the environment. Establishing this plan involves carrying out risk mapping, implementing procedures for evaluating subsidiaries and partners, risk mitigation actions and a risk alert and reporting mechanism.

If the case law relating to this obligation remains almost non-existent, its construction has begun since La Poste was condemned in December 2023 for breach of its duty of vigilance due to its risk mapping considered too imprecise.

Furthermore, the creation of a “chamber for emerging disputes – duty of vigilance and ecological responsibility” at the Paris Court of Appeal (chamber 5-12) was announced last January. As mentioned above, it will deliver its deliberations on June 18 in three cases concerning TotalEnergies, Suez and EDF.

In parallel with this national development, the CSRD Directive applicable since last January now regulates the reporting extra-financial sustainability of companies. 

The new European directive CSDDD (Corporate Sustainability Due Diligence Directive) aims at corporate governance. A gradual entry into application is planned, between 3 and 5 years depending on the size of the companies: 

Scope
Parent companies and companies: > 1 people and > €000 million in turnover   And franchises in the EU: Turnover > €80 million and if at least €22,5 million was generated by royalties.    Companies, parent companies and franchises from third countries meeting the same thresholds.
Coming into force
2027	> 5 employees > €150 million turnover
2028	> 3 employees > €900 million turnover
2029	All companies falling within the scope of the directive and those: > 1 employees > €450 million in global turnover

This directive imposes a duty of “due diligence” on companies to mitigate human rights and environmental risks. 

Obligated companies will have to put in place systems aimed at identifying, preventing, mitigating and remediating human rights and environmental violations resulting from their own activities as well as those of their business partners. 

With a view to prevention, they will have to adopt general policies, codes of conduct, a vigilance plan and review the clauses of contracts governing relations with their subcontractors and suppliers. They will provide for complaints mechanisms to report violations of human or environmental rights or the risk of violations thereof.

In the event of non-compliance with these new obligations, and in particular in the absence of a vigilance plan, companies will be exposed to liability and to a fine of up to 5% of the figure. global net business.

The duty of vigilance can constitute a real opportunity for the company, its development, it is a challenge to take up which can be meaningful.

At a time when the duty of vigilance is being judicialized and the legislative arsenal in this area is being tightened, sustainability now constitutes an inevitable subject for all companies and their compliance a real challenge.