National due diligence laws beginning to find their feet
French and Norwegian laws make progress despite floundering EU rules, and South Korea could become first Asian country with mandatory requirements
After close to a decade of sitting on the statute, France’s due diligence law has finally been invoked against a company.
La Poste failed to overturn a 2023 ruling that its risk mapping breached the requirements of the Duty of Vigilance Law by being too general.
Human rights and due diligence lawyer Camille Oberkampf described the Parisian appeals court’s decision this month as “crucial”, setting legal precedent and signalling to companies that the court “will not hesitate to sanction vigilance plans that are too vague or imprecise”.
France became the first country to turn the UN Guiding Principles on Business and Human Rights and the OECD’s Guidelines for Multinational Enterprises into hard law, back in 2017, but the legislation has been riddled with problems.
“It left a lot of room for interpretation,” explains Paul Mougeolle, a legal advisor at non-profit Notre Affaire à Tous, which used the law to bring a due diligence case against TotalEnergies.
One area of uncertainty was about how detailed risk mapping should be.
“That debate is now resolved,” says Oberkampf, pointing to the appeal court’s belief that such mapping should be based on the potential severity of sustainability impacts, “not just probability or abstract categories”.
“The ruling [also] explicitly rejected the idea that general sector-based or broad descriptions are sufficient,” she adds.
Mougeolle, who estimates there are around 20 outstanding due diligence cases in France, hopes this month’s ruling will put the Duty of Vigilance Law back on companies’ agendas.
“Seeing that the law is taken seriously by the courts and that some enforcement is happening can change the narrative and the perception of it, because it’s starting to become more concrete,” he says.
La Poste has been contacted for comment.
Norway says its Transparency Act has been effective
And, while EU-wide due diligence laws are floundering, Norway has also taken a step forward at national level.
On Thursday, the government published an evaluation of its Transparency Act, which it said will serve as “an important knowledge base for further work on possible regulatory changes”.
The law was introduced in 2022 and requires large companies to conduct due diligence assessments on human rights and working conditions.
The Ministry of Children and Family Affairs said its review showed that the law “has contributed to increased attention to and more systematic work with due diligence assessments”.
“The businesses report better internal anchoring of the work with responsible business, and generally experience the law as clear and feasible,” it said, although it noted the administrative load and a need for more guidance.
South Korea pursues Asia’s first due diligence rules
In Asia, South Korea is taking a second shot at becoming the first country in the region to have mandatory due diligence requirements, by re-tabling the Act on the Protection of Human Rights and the Environment for Sustainable Business Management.
If successful, it would mean local and overseas companies doing significant business in South Korea would have to identify and tackle damage being done directly or through their supply chains.
Originally put forward in 2023, the draft law expired and has had to be rejigged before being resubmitted.
It’s still very early on in the process, and it’s unlikely the current proposal would remain intact through negotiations, but at the moment it would require companies to assess their negative impacts at least once a year, and produce a plan to deal with them.
A dedicated board committee would need to sign off those documents, and there would be a specific person within each firm designated as having oversight.
Potential penalties under the current proposal include everything from corrective orders from South Korea’s Ministry of Strategy and Finance, to fines and jail time.