Duty of vigilance: two companies notified

Civil society organizes itself by meeting within collectives. Several associations, trade unions, local authorities and NGOs are already standing up against multinationals to remind them of their CSR obligations. In 2019 alone, three letters of formal notice were sent to multinationals reminding them of the breaches of their obligations.

The injunction is always the same: adapt their vigilance plan to comply with the law. Specifically, they want companies to identify and accurately describe the risks of serious violations of human rights, fundamental freedoms, health, personal safety and the environment.

They also call for appropriate measures to prevent or mitigate these risks and for indicators to be put in place to measure the effectiveness of the measures taken and the evolution of the associated risks.

Total group

Grievances against the Total Group:

— Letter of formal notice for failure to comply with its duty of vigilance in climate matters. The multinational is asked to reduce its greenhouse gas emissions in order to align itself with the objectives of the Paris Agreement on Climate.

— Six days later, two NGOs and four Ugandan associations issued a further notice to the oil group for failing to comply with its duty of vigilance in the protection of human rights and the environment with regard to the activities of its subsidiary and subcontractors in Uganda.

The world leader in Teleperformance Call Centers:

He was the recipient of the letter of formal notice issued by an NGO and an international trade union federation for failing to comply with his duty of vigilance, and accused the multinational of having insufficiently taken into account in its vigilance plan the risks of serious infringements of workers’ rights in several of its subsidiaries abroad.

Advance alerts

The Sherpa association, which is part of the collectives that gave rise to the challenge of the two groups, is not in its first wake. Indeed, Total’s first inquiry into these breaches dates back to October 2018.

The warning that climate change was not included in the group’s first alert plan was initially lifted. The Total Group then developed a second one. However, the association noted that the full range of risks were not included and the appropriate measures to prevent and mitigate them were not included.

Today, the vigilance plans published by many companies are not in compliance with the legal requirements. Many companies on the list drawn up by Sherpa and CCFD-Solidaire have not yet published a vigilance plan, so they are already out of the law.

However, one question remains: what follow-up will the government give to companies that have not published a plan?

The door is closed? Let’s go through the window: the case of dubious business practices

In a press release dated 3 July, Sherpa and ActionAid France announced that they had obtained the indictment of Samsung Electronics France and its parent company in Korea against which they had filed a complaint for misleading commercial practices.

“The company is posting ethical commitments on workers’ rights that it would not respect in its factories in China, Korea and Vietnam,” said the press release. “This is the first time in France that an investigating judge (Renaud van Ruymbeke, who has since retired) is examining a company – in this case, not subject to the duty of vigilance – considering that its failure to comply with its CSR commitments can constitute misleading business practices.

The states are not spared: a legal action against the French state

In France, the Affair of the Century petition, launched at the end of 2018 with the aim of bringing an action for liability against the French state for “climate inaction”. This project, launched by four NGOs (the Fondation Nicolas Hulot pour la nature et l’homme, Greenpeace France, Notre aut à tous et Oxfam France), has been very successful (more than two million signatures in a few weeks).

The purpose of this petition? To seek compensation for the damage caused by this inaction. This request was rejected by the government on February 15th. A month later, the four NGOs filed a full appeal to the Paris Administrative Court.

The applicants ask the administrative judge to recognize the ecological damage – which has so far been recognized only in the Civil Code – “related to the state’s climate inaction”. In concrete terms, they ask the court to instruct the State “to adopt all necessary measures to put an end to it and to prevent the aggravation of the damage”.

Finance is not on the margin: investor protection

On 24 October 2019, the US Financial Industry Regulatory Authority (FINRA*), sentenced BNP Paribas Securities Corp. and BNP Paribas Prime Brokerage, Inc. to a fine of USD 15 million. The reasons? The fight against money laundering and supervisory failures involving deposits and resales of small unit-value shares (“Penny Stock”).

FINRA’s grievances concern, inter alia, the lack of a financial transaction monitoring program to detect suspicious transactions

Insufficient staff resources

The authority recalled that “when customers engage in high-risk transactions involving low-priced securities and foreign currencies, the company must devote sufficient resources to its anti-money-laundering programme, including the monitoring of electronic transactions and transfers.” It gave three months to BNP Paribas to upgrade.

The CPRA also reminded the French banks about their foreign subsidiaries and the inadequate controls put in place in the fight against money laundering. This reminder to order is certainly not disconnected from the debate about the creation of a European authority to combat money laundering, a central authority in the image of the European Central Bank (ECB).

What can we conclude?

With little success in detecting astronomical sums from illegal activities, failure to comply with regulations concerning the protection of the environment, child labour and workers in general, modern slavery of poor populations, detection and reporting of non-compliance should be the action of all (Financial Institutions, Civil Society and major groups), not only that of supervisors and regulators.

Compliance must have been established “By Design” and “By Default”, like the GDPR, in all our actions and at all levels. To start with, monitor the “Supply Chain” of our food, our clothes… If the price is too low and attractive, it is that there is at the end of the chain someone who is paying the bill for us.

*In the United States, the Financial Industry Regulatory Authority, Inc. (FINRA) is a private company operating as a self-regulatory body (SRO: Self-Regulatory Organization). FINRA succeeds the National Association of Securities Dealers (NASD). It is a non-governmental organization that regulates member brokerage companies and foreign exchange markets. The Securities and Exchange Commission is the government agency that acts as the ultimate regulator of the securities sector, including FINRA.