Duty of care: two companies given formal notice

Civil society is getting organized by joining together in collectives. Several associations, unions, local authorities and NGOs are already standing up to multinationals to remind them of their CSR obligations. In 2019 alone, three letters of formal notice have been sent to multinationals to remind them of their breaches of obligations.

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

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

The Total Group

Grievances against the Total Group:

- Letter of formal notice for failure to comply with its duty of care in climate matters. The multinational is being asked to reduce its greenhouse gas emissions to align with the objectives of the Paris Climate Agreement.

- Six days later, two NGOs and four Ugandan associations sent another formal notice to the oil company for failing to exercise due diligence in protecting human rights and the environment with regard to the activities of its subsidiary and its subcontractors in Uganda.

The world leader in call centers, Teleperformance :

It has received a letter of formal notice from an NGO and an international trade union federation for failure to comply with its duty of care. They accuse the multinational of not having taken sufficient account in its due diligence plan of the risks of serious violations of workers' rights in several of its subsidiaries abroad.

Advance alerts

The Sherpa association, which is part of the collectives behind the formal notice of the two groups, is not the first time it has been warned. Indeed, the first challenge to Total on these failures dates back to October 2018.

The alert concerning the fact that climate change was not included in the Group's first Compliance Plan was initially lifted. Total then drew up a second plan. However, the association found that it did not include all the risks or the appropriate measures to prevent and mitigate them.

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

Nevertheless, one question remains: what action will the government take for companies that have not published a plan?

Is the door closed? Let's go through the window: the case of dubious commercial practices

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

"The company claims ethical commitments on workers' rights that it does not respect in its factories in China, Korea and Vietnam," the press release said. This is the first time in France that an investigating judge (Renaud van Ruymbeke, who has since retired) has investigated a company - in this case, not subject to the duty of care - considering that the failure to respect its CSR commitments may constitute deceptive commercial practices.

States are not spared: a legal action against the French state

In France, the Affaire du siècle petition, launched in late 2018 with the aim of bringing a liability action against the French state for "climate inaction." This project, launched by four NGOs (the Nicolas Hulot Foundation for Nature and Man, Greenpeace France, Notre affaire à tous and Oxfam France), has met with great success (more than two million signatures in a few weeks).

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

The petitioners are asking the administrative judge to recognize the ecological damage - which is so far only recognized in the in the Civil Code - linked to the State's climate inaction". Specifically, they ask the court to enjoin the State "to adopt all necessary measures to put an end to and prevent the aggravation of the damage".

Finance is not on the sidelines: investor protection

On October 24, 2019, the U.S. Financial Industry Regulatory Authority (FINRA*), fined BNP Paribas Securities Corp. and BNP Paribas Prime Brokerage, Inc. $15 million. The reasons? Anti-money laundering and supervisory failures involving deposits and resales of small unit value ("Penny Stock").

FINRA's grievances include the lack of a financial transaction monitoring program to detect suspicious transactions

Insufficient resources in terms of personnel

The authority reminded 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 program, including the monitoring of transactions and wire transfers". It has given BNP Paribas three months to get up to speed.

The ACPR has also called French banks to order concerning their foreign subsidiaries and the insufficient controls put in place in the fight against money laundering. This call to order is certainly not disconnected from the debate around the creation of a European authority to fight against money laundering, a central authority similar to the European Central Bank (ECB).

What can we conclude from this?

With the lack of success in detecting the astronomical sums of money coming from illegal activities, the non-respect of regulations concerning the protection of the environment, child labor and workers in general, the modern slavery of poor populations, the detection and denunciation of non-compliance should be the action of all (Financial Institutions, Civil Society and large groups), and not only that of the supervisors and regulators

Compliance must be established "By Design" and "By Default", like the RGPD, in all our actions and at all levels. To begin with, monitor the "Supply Chain" of our food, our clothes... If the price is too low and tempting, it means that there is someone at the end of the chain who is paying the bill for us.

*In the United States, the Financial Industry Regulatory Authority, Inc (FINRA) is a private company acting as a Self-Regulatory Organization (SRO). FINRA is the successor to the National Association of Securities Dealers (NASD). It is a non-governmental organization that regulates member brokerage firms and the foreign exchange markets. The Securities and Exchange Commission is the government agency that serves as the ultimate regulator of the securities industry, including FINRA.