Supply Chain Compliance – New French Law on Corporate Duty of Vigilance Law Adopted
On 21 February 2017, the French National Assembly adopted a Corporate Duty of Vigilance Law, which creates a novel corporate supply chain liability, defining a duty of vigilance for parent companies and their subcontractors. The law provides that multinational firms carrying out all or part of their activity on French territory will need to adopt mechanisms to prevent human rights violations and environmental damages throughout their supply chain. The law applies to large French companies, and it is estimated that only 150 businesses will be affected by the new rules. Companies that fail to monitor themselves or publish reports can be reported by victims or concerned parties and, in cases of breach of the law, can face possible financial penalties totalling as much as €10 million.