Introduction

Scope of application

Compliance program

Protection of whistleblowers

Audit and sanctions

Rules arising from the Sapin II Law

EU law

French law

Rules derived from competition law

Sapin II Law/Competition

Scope ratione personae

Scope ratione materiae

Scope

Development of plan

Measures included in plan

Inclusion in management report

Vigilance plan

Injunctions

Civil liability

Sanctions

Duty of vigilance (devoir de vigilance)

CSR programs

Reporting

Communication

Reporting and communication

Judicial sanctions

Risk to reputation, strategy and stability

Corporate Social Responsability (CSR)

Middlenext Code

IFA Corpus

AFEP - MEDEF Code

Types

Principles of governance

Principles incorporating CSR values

Principles

Comply or explain

Binding force

Private codes of conduct

Compliance

The duty of vigilance does not apply to all undertakings, but only to those territorially attached to France and which meet certain conditions relating to their corporate form, workforce and registered office.

To determine which corporate forms are covered by the duty of vigilance, reference should be made to the divisions of the Commercial Code in which the relevant provisions are to be found, and to the national cross-references to these provisions. Articles L. 225-102-4 and L. 225-102-5, which govern the duty of vigilance, are classified in the section relating to public limited companies. It goes without saying, therefore, that the duty of vigilance applies first and foremost to them. But they are not the only ones concerned.

In effect, through a series of cross-references, the regulations also apply to sociétés en commandite par actions (partnerships limited by shares) , European  Companies (Societas Europaea)  and sociétés par actions simplifiées (simplified joint-stock companies) . With specific reference to the latter, Article L. 227-1 stipulates that the rules governing sociétés anonymes (limited liability companies), with the exception of Article L. 224-2, the second paragraph of Article L. 225-14, Articles L. 225-17 to L. 225-102-2, L. 225-103 to L. 225-126, L. 225-243, I of Article L. 233-8 and Article L. 236-17, are applicable to simplified undertakings. A reading a contrario thus makes it possible to consider that the duty of vigilance is applicable to such companies .

Conditions relating to number of employees and registered office are also required. Article L. 225-102-4 stipulates that the duty of vigilance applies to any undertaking which employs, at the close of two consecutive financial years, at least five thousand employees in its own company and in its direct or indirect subsidiaries whose registered office is located in France, or at least ten thousand employees in its own company and in its direct or indirect subsidiaries whose registered office is located in France or abroad. In the absence of precise details, some authors consider that the situation at the end of the financial year can be assessed by taking into account the guidelines set out in Articles L. 1111-2 and L. 1111-3 of the Labor Code . In accordance with these articles, full-time staff on open-ended employment contracts and home-workers, as well as employees on fixed-term employment contracts, must be included in the undertaking's workforce in proportion to the time they have worked for the company over the previous twelve months, employees proprietors of intermittent employment contracts, employees made available to the undertaking by an external company who are present on the premises of the user undertaking and have been working there for at least one year, and temporary employees, unless they are replacing an absent employee or an employee whose employment contract has been suspended. Part-time employees, whatever the nature of their employment contract, are taken into account by dividing the total number of working hours specified in their employment contracts by the legal working hours or the agreed working hours. However, apprentices, “initiative-emploi” (government incentive to encourage companies to take on new workers) contract holders, “contrat d'accompagnement dans l'emploi” (employment support contract) holders and “contrat de professionnalisation” (professional training contract) holders are not included in the workforce until the end of the contract period, in the case of fixed-term contracts, or until the end of the professional training course, in the case of open-ended contracts.

In addition, Article L. 225-102-4 introduces an exemption for subsidiaries or audited companies that exceed the thresholds: they are deemed to comply with the vigilance requirements if the company that audits them, within the meaning of Article L. 233-3, draws up and implements a vigilance plan covering the activity of the undertaking and all the subsidiaries or companies it controls . In the case of groups of undertakings, it is therefore important to identify precisely the legal entity liable for the obligation to draw up a due diligence plan, failing which an application for an injunction to adapt the plan may be declared inadmissible . However, should the parent company fail to meet its obligations, the exemption does not apply, and the burden of drawing up a corporate diligence plan falls on the subsidiary if it meets the threshold conditions itself .

The Directive on corporate sustainability due diligence (CS3D) , definitively adopted on 24 May 2024, will further extend the scope of French law on the duty of vigilance. In effect, it will apply to undertakings incorporated in accordance with the legislation of a Member State and meeting one of the following conditions:

- have employed an average of more than five hundred employees and achieved net sales of more than one hundred and fifty thousand euros worldwide during the last financial year for which annual financial statements have been adopted;

- not have reached these thresholds, but have employed more than two hundred and fifty employees on average, and have implemented net sales of more than forty million euros worldwide during the last financial year for which annual financial statements have been drawn up, provided that at least 50% of this net turnover was achieved in one or more of the following sectors: (i) manufacture of textiles, leather goods and related products (including footwear) and the wholesale of textiles, clothing and footwear; (ii) agriculture, forestry, fishing (including aquaculture), the manufacture of food products and the wholesale of agricultural raw materials, live animals, timber, foodstuffs and beverages; (iii) exploitation of mineral resources wherever extracted (including crude oil, natural gas, coal, lignite, metals and metal ores, as well as all other non-metallic ores and quarry products), manufacture of basic metal products, other non-metallic mineral products and metal products (except machinery and equipment) and wholesale of mineral resources, basic and intermediate mineral products (including metals and metal ores, building materials, fuels, chemicals and other intermediate products).

The directive specifies that the number of part-time employees is calculated on a full-time equivalent basis. In addition, temporary agency workers are included in the calculation of the number of employees in the same way as if they were workers directly employed by the undertaking for the same period.

The directive will also apply to undertakings set up in accordance with the legislation of a third country and meeting one of the following conditions:

- net turnover of more than one hundred and fifty million euros in the EU during the financial year preceding the last financial year;

- a net turnover of more than forty million euros but not exceeding one hundred and fifty million euros in the EU during the financial year preceding the last financial year, provided that at least 50% of its worldwide net turnover was implemented in one or more of the sectors listed above.

Conseil général de l'économie assessment report 2019/12/CGE/SG, 17.

BRABANT et SAVOUREY, Devoir de vigilance, le champ de la loi, les sociétés soumises aux obligations de vigilance, in dossier "La loi relative au devoir de vigilance - Une perspective pratique et multidimensionnelle, Rev. int. Compliance 2017, Study 92.

CA Paris, 18 June 2024, LawLex202400004579JBJ, holding that once the parent company has drawn up and implemented the disputed due diligence plan, its subsidiary, thereby deemed to satisfy the obligation referred to in Art. L 225-102-4, I, does not have standing to defend the action.

CA Paris, 1 June 2023, LawLex202300008255JB.

CA Paris, 18 June 2024, LawLex202400004580JBJ.

Directive No 2024/1760 of 13 June 2024 on  corporate sustainability due diligence with regard to sustainability and amending Directive (EU) No 2019/1937 and Regulation (EU) 2023/2859, OJ L of 5 July 2024.

102. Legal thresholds