Editor’s note: Abdurrahman is currently working for Doing Business Right project at the Asser Institute as an intern. He received his LL.M. International and European Law from Tilburg University and currently he is a Research Master student at the same university.

The collapse of the Rana Plaza attracted public attention from various parts of the world. As a result, the demand to ensure that businesses do not contribute to or commit human rights violations, particularly multinational enterprises (MNEs) which can easily engage in forum shopping between states with lax regulations, started to make itself heard. This increased public interest drove national governments to start addressing this issue in an attempt to prevent MNEs from getting involved in human rights abuses along their supply chains.  In this respect, to deal with the human rights abuses committed by MNEs in the ready-made garment (RMG) sector and beyond, numerous transnational and national initiatives have emerged in different forms since the Rana Plaza disaster. These initiatives include agreements (e.g. the Bangladesh Accord on Fire and Building Safety)  with binding commitments, traditional voluntary CSR-based multi-stakeholder initiatives (e.g. the Alliance for Bangladesh Worker Safety), domestic legal (e.g. the UK Modern Slavery Act and the French law on the duty of vigilance), administrative measures (e.g. the reform of the Department of Inspections for Factories and Establishments in Bangladesh for better factory and labour inspections) or agreements between governmental bodies, businesses and some other stakeholders (e.g. the German Partnership for Sustainable Textiles and the Dutch Agreement on Sustainable Garment and Textile).

These concerted efforts, to ensure responsible business conduct show an extreme variety in terms of their scope, approaches and parties involved.  In particular, the French law on the duty of vigilance and the Dutch agreement on sustainable garment will be the focus on this blog since while the adoption of the former was accelerated by the disaster, the latter was an indirect response to it. It is crucial to scrutinise the implementation of these initiatives and whether or not they positively transform the business-as-usual in the RMG sector. In this blog, after brief explanations of the French and Dutch initiatives, some of the concerns and problems, which may be encountered in their implementation process, will be presented.

The French Duty of Vigilance Law

The French law, also known as ‘the French Duty of Vigilance Law’, entered into force after a lengthy legislative process on 27 March 2017.[1] Although the law was proposed at first during the presidential campaign in 2012, French MPs did not bring the legislative proposal to the table for a while.[2] However, the Rana Plaza disaster turned the tide and gave a decisive push to the legislative procedure, and that is also the reason why the law is unofficially called ‘Rana Plaza Law’.[3] Since the emergence of the first version, the bill encountered a lot of opposition, particularly from business lobby groups, and underwent many changes until it was finally adopted. After the definitive adoption of the law by the National Assembly, some MPs appealed to the Constitutional Council, contesting every paragraph of the law. Finally, the Council, partially, validated the law on 23 March 2017. In doing so, it scrapped the possibility to impose a civil fine to companies, which do not put in place a vigilance plan in line with the law. It censored the payment of a civil fine, which is a criminal sanction in France, because some concepts of the law such as “reasonable vigilance measures” and “adapted risk mitigation actions” were deemed not specific enough to meet the principle of legality of criminal sanctions.^[4]

The final version of the bill is expected to affect around 150-200 companies and covers every business sector. The law is applicable to two different types of companies:

• Companies employing at least five thousand employees in France, or
• Companies employing at least ten thousand employees worldwide

The companies concerned are requested to prepare effective vigilance plans covering their environmental and human rights impacts. The activities of a parent company, its direct or indirect subsidiaries, and the subcontractors, and suppliers with an established business relationship with the companies fall within the scope of the law. Although the burden of proof is on the claimant, NGOs working on human rights and the protection of the environment, trade unions and the victims will be able to bring a case before French courts on the basis of the law. The vigilance plan should include measures aimed at risk identification and prevention of serious human rights violations resulting from the company’s operations, measures to monitor and assess the impacts of the actions implemented and procedures to regularly assess the operations of its subsidiaries, subcontractors or suppliers. Thus, the expected vigilance plan is not an ex-post reporting, rather an ex-ante prevention plan. This is supposed to be in line with the idea of human rights due diligence enshrined in the UN Guiding Principles on Business and Human Rights, stating that a company should initiate its due diligence as early as possible in the development of a business relationship and identify and assess actual or potential adverse human rights impacts of their operations and business ties.^[5] However, the obligation for companies is not to prevent human rights violations but instead to prepare, publish and enforce a vigilance plan. If a company fails to do so, even after a formal notice by a concerned party, a judge may force the company to adopt a complete vigilance plan and impose a daily fine until it complies with this obligation. If the operations of a non-compliant company result in human rights violations, the victims will be able to seek civil redress in French courts.

At first glance, the law might seem an ambitious effort, particularly in terms of its material scope as it is not restricted to a specific economic sector. Similarly, the scope of the rights that companies should observe is broad, namely every human rights, when compared to other national legislations aimed at preventing specific business-related human rights abuses, such as the Modern Slavery Act or the draft Dutch legislation on child labour due diligence. While, these other national legislations focus on a limited range of human rights, the French law expects the companies to exercise due diligence related to an extremely broad range of human rights, namely for “the prevention of severe violations of human rights and fundamental freedoms, serious bodily injury or environmental damage or health risks resulting directly or indirectly from the operations of the company and of the companies it controls.”[6] Yet, there are many open questions related to the content and implementation of the vigilance plan. What should a vigilance plan concretely entail to comply with the French law? Should it include specific local investigations far upstream in the supply chains of the companies? What types of actions are expected from a company when it identifies a specific human rights risk? When is a specific human rights violation sufficiently connected to a failed vigilance plan to trigger civil liability? In practice, the law does not distinguish between different grounds for liability such as causation, contribution or link to the adverse impact.[7] Considering the complexity of the global supply chains and numerous factors that can cause human rights violations independent from a company subject to the French law, it will always be very difficult to attribute a specific violation to a specific company. Lastly, a concern expressed by some academics is that formal requirements divert the attention from substance, and risk turning compliance into a box ticking exercise. This could very well be the case with the due diligence requirements introduced by the French law as companies may try to reduce the financial impact of introducing and implementing a vigilance plan.[8] Bearing all this in mind, it is probably fair to say that the implementation of the French law will raise many issues which will define its final effects/impacts and which could still bitterly disappoint the wave of hope triggered by its initial adoption.

The Dutch Agreement on Sustainable Garments and Textile

For its part, the Dutch Agreement on Sustainable Garment and Textile^[9] (Agreement) was negotiated and agreed under the auspices of the Social and Economic Research Council of the Netherlands (SER). It was one of the first examples of an initiative undertaken at the national level to promote international responsible business conduct in the garment and textile sector following the Rana Plaza collapse. It is one of several sectoral multi-stakeholder Agreements on International Responsible Business Conduct (IRBC Agreements) and, as such, provides for a framework by which companies work with government and other stakeholders to tackle specific problems and achieve improvements on substantial risks within a specified time frame, as well as elaborate shared solutions to problems.^[10] The Agreement was signed in July 2016, by a coalition comprising, the Dutch government, 55 business and their representative organisations (then constituting about 30% of the garment sector in the Netherlands), various non-governmental organisations (NGOs) and two Dutch trade unions.^[11] As of October 2017, 67 companies had signed the agreement;^[12] the Agreement aims to reach 50% of market share by 2018 and 80% by 2020.^[13]

The Agreement, expressly aims to build upon and give effect to the United Nations Guiding Principles on Business and Human Rights (UNGPs), the OECD Guidelines for Multinational Enterprises, as well as implement the sector-specific OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector (OECD Guidance). Various commitments are included in the Agreement with respect to the enterprises' due diligence obligations, such as, creating annual action plans, complying with the Agreement’s dispute settlement mechanisms and authorising the Secretariat of the Agreement to monitor and assess the compliance with the Agreement. The Agreement introduces a dispute resolution system which solves disputes between a company and the Secretariat over the assessment of an action plan and, as such, is limited to the review of actions plans rather than operationalised due diligence processes (with an independent Complaints and Disputes Committee adjudicating whether, in view of its action plan, a company is acting in accordance with the Agreement).  The system also includes a complaint procedure, which contemplates the submission of grievances by any stakeholder, whether a party to the Agreement or not, suffering injury, loss or damage by any company party to the Agreement. The parties are expected to exercise due diligence in a variety of nine themes, ranging from labour rights, such as, discrimination at work, forced labour and child labour to environmental issues like water pollution, use of chemicals and animal welfare.[14] Lastly, compared to the French law, the personal scope of the Agreement is much broader. Whereas the French law covers approximately 150-200 French companies with huge number of employees, since the Agreement was intended to be applied to the entire Dutch garment and textiles sector, small and medium-sized enterprises are also incentivized to become a party to the Dutch agreement by developing an adjusted due diligence guide and providing assistance to enable them to exercise due diligence effectively.[15]

Some characteristics of the Agreement could have a negative impact on its successful implementation. In terms of the commitments of the parties, Duval and Partiti note their broad range (going beyond the scope of the UNGPs with respect to value chain risks) and ostensible alignment with the OECD Guidance in certain respects, while extending beyond it in others, particularly with respect to the form of the "action plans" envisaged under the architecture of the Agreement.^[16] However, the breadth of the commitments under the nine themes may raise some questions concerning the knowledge, capacity, and willingness of companies to exercise due diligence in all these nine themes. It may not be realistic to expect that all the parties to the Agreement, regardless of their sources and size, will conduct due diligence and identify measures to address issues in all of the themes. Thus, Theeuws and Overeem of SOMO are skeptical of the Agreement's ability to benefit garment workers in the supply chain.  With reference to the first annual report of the Agreement in December 2017, theynote that the majority of participating businesses do not know the human rights risks in their supply chains and have no plan of action to address abuses. Another point about the Agreement that might raise questions, is related to the transparency of its operation and effectiveness of its dispute resolution mechanism. Duval and Partiti stress that the Agreement takes an "opaque" approach to information-sharing and action plans are not made public in a disaggregated form.^[17] It also remains unclear to what extent operationalised due diligence processes will actually be the subject of review, and scope for transparency in the review process is limited; the Agreement thus "risks falling short of the UNGPs’ strive for the transparency and public disclosure of the due diligence commitments of companies, as enshrined in Principle 21".^[18] Furthermore, there are some clouds over the accessibility of the Agreement’s complaint mechanism for external stakeholders, which Duval and Partiti further emphasize.[19] Namely, not every stakeholder can use the complaint mechanism, but only those stakeholders, to whom the issue is of material significance. Yet, there is uncertainty as to the meaning of material significance as it is open to different interpretations. Likewise, if there is another equivalent mechanism, that can receive the complaint to which the attacked company is a party, the complaint will be referred to that mechanism. Although elements of equivalence can be found in the Agreement,[20] there is no clarity as to how different stakeholders around the globe will be informed about the existence of an equivalent grievance mechanism.  If the aims of the Agreement are to reduce the adverse human rights impacts of the garment and textile industry and to assist businesses to address them,[21] then the breadth of the commitments, the lack of transparency on some aspects and some legitimate concerns with respect to the accessibility of the dispute settlement mechanism might detrimentally affect the success of its implementation.

Conclusion

The number of national initiatives aimed at addressing the problem of human rights violations   inside transnational supply chains (in the RMG sector in particular) soared dramatically after the Rana Plaza collapse. In that regard, national states can also play an important role. Some enacted legislations and many more became involved in multi-stakeholder initiatives to prevent or discourage enterprises domiciled or headquartered in their jurisdictions from committing human rights violations abroad. Two of these national initiatives are the French Law on Duty of Vigilance and the Dutch Agreement on Sustainable Garments and Textile discussed in my blog. While the French law is a traditional hard law instrument, the Dutch initiative is a voluntary agreement, which contains binding commitments. Unlike the Dutch agreement, which specifically focusses on the garment and textiles, the French law has a wider scope.

As to dealing with the human rights violations in the RMG sector, national initiatives are not irrelevant they can effectively complement (and sometimes supplement) transnational ones. For instance, drafting an international treaty is a lengthy procedure and will be displeased, when asked to rely on the unlikely support of many national government, it’s an uphill battle. This is clearly visible in the difficulties faced by the working group on transnational corporations. Considering that a potential treaty, after its tabling, will have to be ratified by states, it becomes clear that there is still a long way to go. However, national initiatives, be they hard or soft, can be put in place relatively quickly, since the number and diversity of parties involved tends to be lower. Moreover, they can, as is the case of the French law, rely on the support of existing judicial institutions, without the need to engage in challenging institution building, on an international level. However, if they can have some advantages in comparison to international initiatives, they might also have some shortcomings. They do not escape the implementation challenge. Lofty commitments on paper can turn into paper tigers if they are not concretized ex post by strong institutions responsible for their enforcement and interpreting the rules in a strict manner. As to the mandatory French law, for instance, the possibility that the obligation of having a vigilance plan in place be implemented as a box ticking exercise might prove problematic. For its part, the quality of the implementation of the voluntary Dutch agreement is difficult to assess in light of the limited degree of transparency of its operation. Furthermore, the weaknesses with regard to the dispute resolution mechanism are also worrying. This dynamism and the great variety of different initiatives, both transnational and national, do not necessarily translate into the best outcomes, and they might fall short in realizing their, sometimes, ambitious goals.  In the end, the proof of the pudding will be in the eating and the devil will be in the implementation. It is how national mechanisms are implemented, rather than just their formal voluntary/mandatory nature, that will determine their success.

[1] Friends of the Earth France and ActionAid France, End of the Road for Transnational Corporations? Human rights and environment: from a groundbreaking French law to a UN treaty (October 2017), 4-5.

[2] ibid., 6.

[3] Madeleine Cuff, France Duty of Vigilance Law one year on: What's changed for French corporates? (Business Green, 2018).

[4] Sandra Cossart, Jerome Chaplier and Tiphaine Beau de Lomenie, “The French Law on Duty of Care: A Historic Step Towards Making Globalization Work for All” (2017) 2(2) Business and Human Rights Journal 317, 321.

[5] UN Human Rights Council, Protect, respect and remedy: a framework for business and human rights: report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises (7 April 2008), 17-20.

[6] loi n° 2017-399 du 27 mars 2017 relative au devoir de vigilance des sociétés mères et des entreprises donneuses d'ordre (FR) Article 1.

[7] Stéphane Brabant and Elsa Savourey, A Closer Look at the Penalties Faced by Companies (2017) 3.

[8] Cuff (n 3).

[9] Social and Economic Council of the Netherlands, Agreement on Sustainable Garment and Textile (2016).

[10] Social and Economic Council of the Netherlands, Agreements on International Responsible Business Conduct, Advisory Report 14/04 (2014).

[11] Social and Economic Council of the Netherlands, 75 Signatures Endorse Sustainable Garment and Textile Sector agreement (4 July 2016).

[12] See "About this Agreement".

[13] Agreement on Sustainable Garment and Textile (n 9), 6.

[14] ibid., 15.

[15] ibid., 17.

[16] Antoine Duval and Enrico Partiti, "The UN Guiding Principles on Business and Human Rights in (National) Action: The Dutch Agreement on Sustainable Garment and Textile" (forthcoming in Netherlands Yearbook of International Law 2018), T.M.C. Asser Institute for International & European Law, Asser Research Paper Series 2018-02, 13-16.

[17] ibid., 18.

[18] ibid., 24.

[19] ibid., 22-23.

[20] Agreement on Sustainable Garment and Textile (n 9), 12.

[21] ibid.,4.