Eleven years after the collapse of the Rana Plaza textile factory in Bangladesh, which highlighted the lack of control over working conditions in third countries, MEPs adopted, on Wednesday April 24, a law imposing a “duty of vigilance” to certain companies in the European Union (EU) and third countries, 374 votes for, 235 votes against.
Companies affected by this law will be required to prevent, identify and remedy violations of human and social rights (child labor, forced labor, safety, etc.) and environmental damage (deforestation, pollution, etc.) in their value chains. all over the world, including their suppliers, subcontractors and subsidiaries.
The European Parliament and the member states concluded a political agreement on this unprecedented text in December. After failing twice to find the required majority, the Twenty-Seven finally formally ratified it in mid-Marchat the cost of a clearly limited field of application.
Climate transition plan and compensation for victims
The December agreement provided that the rules would apply to groups with more than 500 employees and with a net global turnover of at least 150 million euros, as well as to companies with 250 employees or more if their sales exceed 40 million euros and half come from risky sectors (textiles, agriculture, minerals, etc.).
But the final text only targets companies with more than 1,000 employees with a turnover of at least 450 million euros. With these modified thresholds, only 5,400 companies would be affected, compared to 16,000 in the initial agreement in December, according to the NGO Global Witness.
The text forces these large companies to develop a climate transition plan. But the obligation initially planned to link the variable remuneration of managers to compliance with carbon emissions objectives has been removed. And financial institutions are not concerned.
If they do not respect their duty of vigilance, companies will be held responsible and must fully compensate their victims. Victims will be able to take companies to court to obtain damages, and dissuasive fines are planned, which could amount to 5% of global turnover.