Compliance in France and the United States: A Combination of Corporate and Social Responsibility

22/11/2018 | Kramer Levin

In the past, French law neither mandated nor provided any material incentives for companies to
embrace compliance, corporate and social challenges. But things are dramatically changing in
Europe, and more specifically in France, so that there are growing similarities between French and
American law in this respect.


This fall, the French Parliament inserted a provision into the French Civil Code whereby each
company’s corporate interest takes account of not only the shareholders’ interest but also the
company’s social and environmental responsibility.[1] Based on an EU Directive,[2] French law since
2017 has obliged the country’s largest companies to disclose nonfinancial information (regarding
social, environmental, human rights and anticorruption issues) in their annual reports.[3] Last but
not least, the enactment of two important recent laws has triggered a radical change in the French
compliance landscape.


First, the Sapin II Law,[4] similar to the U.S. Foreign Corrupt Practices Act (FCPA), obliges companies
to implement an “anticorruption program.”[5] This law brings the French legal framework in line
with international standards and expectations in the area, drawing upon the U.S. and UK
anticorruption and sanctions regimes.[6] If anticorruption laws in other EU member states do not
specifically oblige companies to adopt a compliance program, however, these member states
recognize that such programs can be used as an instrument to mitigate or inhibit liability.[7]

Second, the Duty of Vigilance Law[8] provides that the parent and other companies have an
obligation to adopt and publish a “vigilance plan” in order to prevent infringements of human
rights, fundamental freedoms, and harm to health or the environment. It is the first law that
imposes specific due diligence obligations on businesses regarding human rights. The law comes
against a background of disasters like the Rana Plaza collapse, the Bhopal gas tragedy and the
sinking of the Erika. To date, certain existing European[9] and national-level[10] initiatives only
require companies to report on their efforts to preserve human rights risks. Switzerland, however, is
expected to adopt legislation that is similar to French law this winter.[11].....

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