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.
[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.