France strikes again to undermine the European directive on corporate due diligence

Ahead of a crucial vote by EU ambassadors this morning, France is once again attempting to sabotage the adoption of the European Corporate Sustainability Due Diligence Directive (CSDDD). At the last minute, France made an impossible demand of the negotiators, calling into question the compromise agreement reached after several years of hard work by the Member States, the European Parliament, and the Commission.

Although the trialogue negotiations concluded in December, the compromise was scheduled to be voted on by the Council, but the vote was postponed in recent weeks due to Germany withdrawing its support.

Unfortunately, in yet another twist on February 27, France further jeopardised the text’s adoption by demanding that the scope of the directive be changed to exclude more than 80% of the companies concerned, a demand first made by Bruno Le Maire himself during a secret trip to Brussels. On February 20, he requested a one-to-one meeting with the Belgian Minister for Economic Affairs, whose country currently holds the Council Presidency, and made his first request to revise the scope thresholds. According to several sources, this request became France’s official position last night [1].

Inspired by the 2017 French law on the duty of vigilance, this directive would require large companies operating in the European market to prevent human rights violations and environmental pollution in their value chains.

The compromise text would apply to companies with more than 500 employees, but France demanded at the last minute that this threshold be raised to the level of the French law on the duty of vigilance, which is already in force and set at 5,000 employees, thus exempting approximately 14,000 companies operating in Europe. The level of the thresholds in France was nevertheless considered too high by the evaluation of this law commissioned by the French government in 2020, which recommended lowering them, as well as by an information report from the National Assembly’s Foreign Affairs Committee co-authored by a member of the presidential majority [2].

It should also be noted that this French U-turn completely contradicts all of the demands made by civil society, trade unions, associations, countless company representatives and investors, financial authorities, religious authorities, and numerous international bodies.

NGOs working on the file are calling for the maintenance of the threshold that European countries have agreed to, and which France has recently pledged to support politically at a hearing of the Minister of Foreign Affairs, Stéphane Séjourné, at the National Assembly on February 14.

We urge the President of the Republic, Emmanuel Macron, to defend France’s historic position in these negotiations, which are crucial for the protection of human rights and the environment, by assuring his European partners that France will maintain continuous support so that this directive can be adopted.

Notes:

This is not the first time that France has requested substantial concessions on this file. It was France that imposed the exclusion of financial actors from the scope of the directive, going against the recommendations of many investor representatives and even the European Central Bank. These demands were accepted by the negotiators to appease the French government, sometimes at the expense of the cohesion of negotiations between European Union countries.
1. The French law on the duty of vigilance uses a single criterion and particularly high thresholds for personal scope (direct or indirect employment of 5,000 employees for companies established in France and 10,000 employees for foreign companies operating in France). The report on the evaluation of the French law recommends “lowering the employee thresholds above which a company is subject to the duty of vigilance and introducing a new criterion for being subject to the duty of vigilance linked to turnover, as an alternative to the number of employees”.
2. In 2023, MPs Sophia CHIKIROU (France Insoumise) and Mireille CLAPOT (Renaissance) presented an information report to the National Assembly’s European Affairs Committee. The report points out that the thresholds for the French law on the duty of vigilance are too high, and that the European Commission’s proposal for a directive on due diligence, which is intended to apply to companies based or operating in the EU that employ more than 500 people (compared to 1,000 under French law) and have a net annual turnover of €150m, is completely consistent with the recommendation to lower the employee thresholds.