Environmental duty of care

What is the duty of vigilance on the environment ?

The duty of environmental vigilance is a legal principle requiring large companies to take active measures to identify, prevent, and reduce risks to human rights, health, safety and the environment throughout their distribution chain. This concept is vital to ensure corporate social and environmental responsibility, thus protecting the planet and its inhabitants.

This requires companies to design a detailed risk analysis, develop and publish an action plan, deploy preventive measures and assess their effectiveness. In the event of a breach of these responsibilities, the victims or the affected parties may seek compensation by incurring the civil liability of the society concerned, for the damages suffered.

The entrenchment of the duty of environmental vigilance extends to international human rights and environmental law, affirming the right to a healthy environment. It requires companies and states to preserve this right among the products quality standards. This duty is also based on the United Nations guidelines on business and human rights, stressing the obligation of companies to respect human rights and correct possible violations.

Various legislative initiatives, both at national and European level, support the duty of environmental vigilance. The French law of 27 March 2017 stands out as the first in the world to impose these requirements on large companies. At the European level, the proposal for a directive of 23 February 2022 aims to step up the protection of human rights and the environment in the European Union and beyond.

Why implement the duty of vigilance on the environment for your company ?

Adopting environmental due diligence brings your company a range of benefits, covering ethical, legal, economic and strategic aspects. Here’s why you should consider this initiative :

• You comply with international and local standards regarding human rights and environmental protection, while avoiding the risks of sanctions in case of non-compliance. The CSDDD has established penalties of up to 10% of annual turnover, not to mention damages for damages resulting from the activities of the company or its partners.
• You improve your brand image and reputation with customers, investors, employees and other interested parties. The duty of environmental vigilance symbolizes your commitment to sustainable development and social responsibility, distinguishing you from the competition and strengthening the links with your stakeholders.
• You boost your performance and competitiveness. Indeed, this duty pushes you to improve risk management, reduce costs, innovate and capture new market shares. It strengthens your resilience and adaptability to present and future environmental and social challenges.
• You actively participate in the ecological transition and the achievement of the Sustainable Development Goals (SDGs) set by the United Nations. In doing so, you work to reduce your ecological footprint, safeguard natural resources, fight climate change and promote human rights, thus contributing to a more equitable, supportive and sustainable world.

Who is the duty to be vigilant about the environment ?

The duty of vigilance on the environment concerns all companies directly or indirectly influencing the environment and human rights through their own activities, those of their subsidiaries or their business partners. This includes companies in high-risk sectors such as agriculture, mining, energy, textiles, electronics, chemicals and transport.

This duty varies according to different criteria : the size of the company, its sector of activity, the context of the activity, as well as the severity and probability of the identified ecological or social risks.

This obligation is based on the implementation of appropriate means for each company, rather than on the achievement of a specific objective.

In France, the law of 27 March 2017 on the duty of vigilance of parent companies and ordering companies applies to entities employing at least 5,000 employees in France or at least 10,000 employees at the global level, consider direct and indirect affiliations.

At European level, the directive proposed on 23 February 2022 intends to apply to all large companies active in the EU or its internal market, This is without excluding SMEs operating in high-risk sectors or associated with serious human rights violations or environmental harms. EU Member States are also invited to extend this obligation to other categories of companies.

Which organizations propose the duty of vigilance on the environment ?

Several organizations play a role in promoting the duty of care for the environment, varying according to the scope of activity and the level of intervention. Discover some of the key players that can guide you in implementing these measures :

International bodies

Global entities, namely the United Nations, the International Labour Organization, the Organisation for Economic Co-operation and Development and the European Union, establish criteria, guidelines and principles on human rights and environmental protection. These organizations provide frameworks, analytical tools and good practices essential to the achievement of the duty of environmental vigilance. Resources available include :

• The UN Guiding Principles on Business and Human Rights
• OECD Guidelines for Multinational Enterprises
• The proposal for a directive on the sustainability due diligence of companies

National bodies

At national level, bodies such as public authorities, government agencies, courts and parliamentary bodies regulate and monitor compliance with environmental and human rights standards. These entities provide important information on the legal responsibilities, rights and remedies available in case of non-compliance with the duty of environmental vigilance.

For example :

• The law of 27 March 2017 on the duty of vigilance of parent companies and ordering companies
• The National Agency for Food, Environmental and Occupational Safety (ANSES)
• The National Network for Vigilance and Prevention of Occupational and Environmental Pathologies (RNV3PE)

Non-governmental bodies

Associations, trade unions, foundations, civil society organizations and the media play a valuable role in raising awareness, mobilizing, accompanying and supporting companies and stakeholders for the duty of environmental vigilance. They offer advice, training, in-depth analysis as well as powerful experiences and arguments to encourage a strong commitment to sustainable development and social responsibility.

Examples :

• Le CCFD-Terre Solidaire
• Sherpa
• Friends of the Earth

What are the steps to follow to implement the duty of vigilance on the environment ?

Implementing the duty of environmental vigilance requires a methodical and collaborative approach, involving all stakeholders in the company. The steps to follow are :

1. Identify the risks

This initial phase aims to map the environmental, health and safety risks, as well as those related to human rights, that may arise from the operations of the company or those of its partners. It is essential to assess the potential or actual impact on communities and the environment, while taking into account the specific geographical, sectoral and legal framework. It is also important to determine the severity and likelihood of these risks and to identify preventive or mitigating measures already in place.

2. Develop a due diligence plan

The next step is to develop and publish a vigilance plan, including strategies for preventing, monitoring and correcting identified risks. This plan must clearly define the objectives, initiatives, managers, performance indicators, deadlines and resources required for the application of the duty of environmental vigilance. It must be customized according to the specifics and changes of risk specific to the company and approved with input from internal and external stakeholders.

3. Implement the due diligence plan

This includes the activation of the human, financial and technical resources required to implement the plan. It is imperative to implement risk prevention, control and correction actions, working closely with the various stakeholders, including employees, suppliers, subcontractors, customers, local authorities, associations and communities. Constant monitoring and evaluation of the effectiveness of the measures taken is necessary, through the use of adequate indicators and the collection of reliable data.

4. Accountable for duty of care

The last step involves openly communicating the performance of the vigilance actions implemented. Publish an annual report that is transparent and accountable to stakeholders, detailing the risk identification method, the prevention or mitigation efforts applied, the obstacles encountered, the progress made and the improvement objectives. It is also essential to set up an alert system allowing stakeholders to report any human rights violations or environmental damages associated with the company’s or its partners' operations.

How much does it cost to implement the duty of vigilance on the environment ?

The cost of implementing the duty of care on the environment varies according to various factors such as the size of the company, its sector of activity, its specific context and its objectives. There is no fixed amount or standard formula for estimating this cost, but two main categories of expenditure can be identified: direct costs and indirect costs.

Direct costs include all expenses necessary for the implementation of due diligence measures, including the identification of environmental risks, the preparation of a due diligence plan, the implementation of prevention, control and remediation actions, and the monitoring and evaluation of these measures. These also include personnel, training, consulting, auditing, certification, hardware and software acquisition and communication.

These direct costs may vary depending on the ambition, maturity and complexity of the company’s environmental commitment.

As for indirect costs, they relate to the economic, social and environmental consequences resulting from the application or disregard of the duty of care. These costs can result in fluctuations in revenue, market share, competitiveness, reputation, customer and employee engagement, as well as productivity and innovation. Indirect costs also include possible penalties, compensation, legal costs and repair costs. They are often difficult to measure and predict, however, their impact on the financial and operational sustainability of the company can be considerable.

It is essential to see the cost of environmental due diligence not as a burden, but as a strategic investment. Indeed, committing to it can bear fruit in the short, medium and long term, by reducing risks, improving brand image, creating added value, offering a competitive advantage, by complying with current regulations and contributing to sustainable development.

Ultimately, the duty of environmental vigilance is an opportunity for growth and sustainability for the company.

How long does it take to implement the duty of vigilance on the environment ?

The time required to implement the environmental duty of care varies according to various factors, such as the size of the company, its sector of activity, its operational context and its specific objectives. No predefined delay or universal method can accurately predict the time required. However, it is useful to separate the process into two main phases : design and implementation.

The design phase includes the time allocated to identifying environmental risks and preparing the corresponding due diligence plan. This step can be influenced by the level of experience, complexity and environmental ambitions of the company. Factors such as access and reliability of information, stakeholder involvement and consultation, and approval and dissemination of the plan also come into play. Depending on these considerations, the design may take from a few months to several years.

As for the implementation, it concerns the efforts dedicated to the prevention, control and correction of the identified risks, in addition to the evaluation of the results, the communication and the realization of the necessary reports. This phase fluctuates according to the scale, nature and duration of the planned initiatives, as well as the human, financial and technical resources available. The success of this step also depends on collaboration and coordination with trading partners, changes in risk and operational context, and the ability to revise and adjust the due diligence plan.

The implementation process requires a continuous and long-term investment by the company.

It is vital to consider the duty of environmental vigilance not as a burden, but as an opportunity for advancement. This process offers the company the opportunity to position itself strategically for the future, anticipate changes, adapt to new realities, compete, generate added value and contribute to sustainable development.

In short, adopting the duty of environmental vigilance stimulates dynamism, which can propel the growth of the company.

Is there a renewal to be done regarding the duty of vigilance on the environment ?

The duty of environmental vigilance is not a single act but a constant effort that requires regular updating. As the context, risks, actors involved and expectations change, it becomes essential to adapt this duty accordingly. Important considerations for effectively updating this duty include :

The frequency of the update

There is no fixed frequency applicable to all entities to update the duty of environmental vigilance. However, it is advisable to do this annually, or more frequently if major events affect the internal or external environment of the company. This includes changes such as adding new activities, changing trading partners, crises, disputes, alerts or notifications, etc.

The content of the update

This update requires reviewing and updating the various stages of the process, that is to say the identification of risks, the creation of the due diligence plan, the application of precautionary measures and reporting. It is vital to integrate new data, take advantage of feedback, best practices, and feedback, while considering legislative and normative developments. It is also important to assess the effectiveness and adequacy of the actions undertaken and make the necessary adjustments.

The renewal process

This process must involve input and consultation with internal and external actors in the organization, who can offer their expertise and support. The communication of results is equally important, hence the need to publish an updated duty of care report, illustrating the novelties, challenges, progress and areas for improvement.