Duty of Vigilance: Holding Companies Responsible for Environmental and Human Rights Abuses

By Ella Sohn 
Ella Sohn is a first-year studying English in the College of Arts & Sciences. 

Three environmental groups are taking Danone, a French yogurt and bottled water company, to court. The  NGOs accused Danone in early January of failing to reduce the use of plastic within its supply chain. It is  perhaps unsurprising that this particular company—France’s largest dairy group, and the world’s ninth  largest plastic polluter—is facing a lawsuit over its environmental impact. Yet the fact that the lawsuit is a  possibility at all stems from a groundbreaking duty of vigilance law, enacted by the French government in  2017, that has since spurred a wave of legislation expanding companies’ duty to address social and  environmental problems. [1]

The Vigilance Law obligates French companies with more than 5,000 workers on French soil, or more  than 10,000 workers globally, to establish a “vigilance plan” laying out measures for the protection of  human rights and the environment. The company is responsible for identifying and preventing human  rights violations and environmental harm resulting from its direct activity, as well as the activity of suppliers and subcontractors with whom it shares an established commercial relationship. When a company fails to fulfill its obligations, the court can order its compliance. The company is also liable for damages caused by its noncompliance, constituting the “duty of care” that is the basis of the civil lawsuit against Danone. [2] 

The law is innovative in several ways. It was the first in Europe to incorporate the duty of vigilance into  domestic law, requiring companies to not only report its measures related to human rights and the  environment, but to further monitor and ensure their proper implementation. The law also sets up a two step enforcement mechanism for compliance: first a formal notice, then a court order with a penalty for  delays. 15 formal notices have been issued under the Vigilance Law since 2017, and eight cases have gone to civil court. The companies facing lawsuits include Total, a multinational energy corporation that published inadequate emission reduction measures, and Casino, a retail group with links to deforestation  in South America. [3] 

At first glance, the enforcement mechanism would appear to be working effectively. However, an  assessment by French NGOs Sherpa and CCFD-Terre Solidaire based on open data found that over 40  companies—15% of the companies within the scope of the law, including high-profile companies such as  Lactalis and Altrad—have yet to publish vigilance plans. The vast majority have not been subject to any  legal consequences for their noncompliance. [4] 

The numbers hint at the wider challenges of implementing the Vigilance Law. First, companies are struggling to design comprehensive, detailed vigilance plans. Vague risk prevention measures and poor monitoring systems have undermined the practical impact of plans, even in cases of genuine effort on the company’s part. NGOs and trade unions seeking to hold companies accountable must prove a causal link between the breach of a vigilance obligation and a specific damage—a task complicated by the global distribution of supply chains and the remoteness of certain environmental damages. [5] 

Despite its limitations, the 2017 law has inspired other countries to adopt similar legislation in respect to  corporate duty of vigilance. Germany’s Supply Chain Due Diligence Act, which took effect on Jan. 1 of  this year, obligates large companies to set up procedures within their global supply chain to prevent and minimize risks surrounding the environment and human rights. Although violators face administrative  fines and exclusion from public procurement, the law differs from its French equivalent in that companies  cannot be held liable in a civil lawsuit for failing to uphold vigilance duties. [6]

In addition to Germany, Norway, and the Netherlands, the spread of mandatory due diligence in regard to  social and environmental harm has reached the European Union. In February 2022, the EU proposed a  Corporate Sustainability Due Diligence Directive to make corporate responsibility legally binding. If  enacted, the directive would require companies that either meet employee number cutoffs or operate in  high-risk sectors like mineral extraction to identify, prevent, and mitigate human rights violations and  environmental damages. Like the French law, the proposal would establish an enforcement mechanism  that includes sanctions and civil liability. [7] 

While duty of vigilance legislation is gaining momentum in Europe, it has yet to find a foothold in the  United States. The wider debate over corporate purpose may explain why Congress has not passed such a  law. Under U.S. corporate law, a company can face legal action for breaching its “fiduciary duties” to  shareholders. The theory of shareholder primacy affirms that this duty to shareholders—maximizing  company value—should be prioritized above all other interests. The opposing model, stakeholder  governance, requires that the firm consider a much wider net of interests, including those of employees,  customers, and the public, when making decisions. Duty of vigilance laws differ from existing legislation because they require a new level of thoroughness from companies; when any affected individual can access published vigilance plans and sue for noncompliance, companies are incentivized to research environmental and human rights abuses along their supply lines beyond the bare minimum needed to avoid financial ruin. [8] 

The U.S. Code’s closest approximation to the litigious aspect of duty of vigilance laws is the Alien Tort Statute, which gives federal courts jurisdiction over civil actions brought by a foreign national for a tort that violates international law or a U.S. treaty. Individuals have used the ATS to sue multinational corporations, including the petroleum company Shell for its operations in Nigeria and Exxon Mobil for human rights abuses in Indonesia. However, decisions in court have ensured that its extraterritorial application remains extremely limited. [9]

Most recently, the Supreme Court case Nestle v Doe restricted the ATS’s ability to hold U.S.-based companies accountable for overseas conduct. Furthermore, the court emphasized that it is the role of Congress, not the judiciary, to create a cause of action empowering aliens to sue for violations of international law. The decision limits the application of ATS to torts that breach “specific, universal, and obligatory” legal norms, such as torture and infringement on ambassadors’ rights. Many violations that companies commit beyond U.S. borders therefore fall outside the statute’s scope, and expanding the list of historically recognized causes of actions would require an act of Congress. [10]

There are alternate pathways for enforcing corporate responsibility. Last year the Securities and  Exchange Commission proposed rule changes requiring registrants to disclose climate-related risks,  including greenhouse gas emissions, and a bill currently in committee would make plastic producers responsible for waste and recycling programs. Environmental groups have utilized state consumer protection laws to sue polluting companies for false advertising. [11] 

However, the enforcement potential of these measures lacks the weight of a true duty of vigilance law. If  the environmental groups win the Danone lawsuit, the Paris court can order the company revise its  vigilance plan within six months to include action steps for eliminating its plastic packaging use by 2025.  Danone may also face 100,000 euros in damages for each day of delay in releasing its new plan. In the  absence of a duty of vigilance law, it is difficult to envision a company in the United States facing similar  penalties for failing to reduce its plastic footprint.

[1] Meheut, Constant and Catherine Porter. “French Food Giant Danone Sued Over Plastic Use Under  Landmark Law.” The New York Times, January 9, 2023. https://www.nytimes.com/2023/01/09/world/ europe/danone-sued-plastic-use-france.html?searchResultPosition=10. 

[2] Loi 2017-399 due 27 mars 2017 relative au devoir de vigilance des sociétés mères et des entreprises  donneuses d'ordre [Law 2017-399 of March 27, 2017 on the Corporate Duty of Vigilance], Journal  Officiel de la République Française [J.O], March 28, 2017. 

[3] “Les affaires en cours.” Le radar du devoir de vigilance, https://plan-vigilance.org/les-affaires-en cours/. 

[4] “La liste des entreprises.” Le radar du devoir de vigilance, https://plan-vigilance.org/recherche/. 

[5] Savourey, Elsa and Stéphanie Brabant. “The French Law on the Duty of Vigilance: Theoretical and  Practical Challenges Since its Adoption.” Cambridge University Press, February 17, 2021.  https://www.cambridge.org/core/journals/business-and-human-rights-journal/article/french-law-on-the duty-of-vigilance-theoretical-and-practical-challenges-since-its-adoption/0398716B2E8530D9A9440EEB20DB7E07. 

[6] Gesley, Jenny. “Germany: New Law Obligates Companies to Establish Due Diligence Procedures in  Global Supply Chains to Safeguard Human Rights and the Environment.” Library of Congress, August  17, 2021. https://www.loc.gov/item/global-legal-monitor/2021-08-17/germany-new-law-obligates companies-to-establish-due-diligence-procedures-in-global-supply-chains-to-safeguard-human-rights and-the-environment/. 

[7] Melin, Ives et al. “The EU aims to introduce mandatory supply chain due diligence obligations.” Reed  Smith, November 21, 2022. https://www.reedsmith.com/en/perspectives/2022/11/the-eu-aims-to introduce-mandatory-supply-chain-due-diligence-obligations. 

[8] Palladino, Lenore and Kristina Karlsson. “Towards Accountable Capitalism: Remaking Corporate  Law Through Stakeholder Governance.” Harvard Law School Forum on Corporate Governance, February  11, 2019. https://corpgov.law.harvard.edu/2019/02/11/towards-accountable-capitalism-remaking corporate-law-through-stakeholder-governance/. 

[9] “Alien Tort Statute.” Legal Information Institute, Cornell Law School, June 2022. https://www.law.cornell.edu/wex/alien_tort_statute.

[10] Nestle USA, Inc. v. Doe et al., 593 U.S. ___ (2021)

[11] “SEC Proposes Rules to Enhance and Standardize Climate-Related Disclosures for Investors.” U.S.  Securities and Exchange Commission, March 21, 2022. https://www.sec.gov/news/press-release/2022- 46.
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