Sustainability and new business models: HEC Paris and De Gaulle Fleurance launch the latest edition of their Observatory of Societal Transitions
De Gaulle Fleurance Avocats Notaires reveals the 2024 edition of its Observatoire des Transitions Sociétales, in partnership with HEC Paris. For this 5th edition, the focus is on operational aspects and the concrete challenges of implementing sustainability rules.
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Against a backdrop of rapid transformation of business models under the impact of new European regulations (notably the CSRD and CS3D directives), this observatory offers an in-depth analysis of the impact of these developments for companies: deciphering the new ESG reporting obligations, the implications of the reinforced duty of care in France and Europe, and the effects of these regulations on human rights and inequalities on a global scale.
Key figure and results
- Statistically speaking, not a single new action (formal notice or summons) relating to the duty of vigilance was taken in France in 2024. After the marked slowdown we highlighted in 2023 (4 times fewer new actions than in 2022), is this the sign of the end of the French duty of vigilance? Nothing is too certain.
- The “La Poste” decision of December 5, 2023 and the three rulings handed down on June 18, 2024 by the new chamber of the Paris Court of Appeal in charge of emerging litigation mark a turning point in case law concerning duty of care. They represent the first decisions in favour of plaintiffs in this type of litigation. They could herald a resurgence of action in this area.
- On January 15, 2024, the Paris Court of Appeal announced the creation of a chamber dedicated to emerging litigation within its economic division, with responsibility for disputes concerning duty of care and environmental liability.
- The European directive on duty of care, CS3D, adopted in 2024, will apply gradually:
- From 2027, for companies with more than 5,000 employees and worldwide net sales of over €1.5 billion;
- From 2028, for companies with more than 3,000 employees and worldwide net sales of over 900 million euros;
- From 2029, the regulation will apply to European companies employing more than 1,000 people and generating worldwide sales of over €450 million, as well as to franchises under certain conditions. It will also apply to non-European companies, their subsidiaries and franchises, if they reach these sales thresholds in the EU
- On January 1, 2024, the CSRD directive gradually came into force. It provides a framework and harmonizes the non-financial reporting of 50,000 companies (5 times more than today).
- The AFA’s latest activity report reveals that in 88% of its audits, the agency identifies failings relating to the assessment of third parties (i.e. players in a company’s value chain) in the due diligence process.
- The number of climate disputes continues to rise worldwide, with 230 new cases in 2023.
- The Gini coefficient, which measures global income inequality, is now 0.67. This means that the distribution of wealth is as unequal as it was in 1880. However, this level is slightly lower (by 0.05 points) than during the last two major periods of inequality, in 1910 and between 1980 and 2000.
- Forced employment will affect around 27.6 million people in 2022, an increase of 5 million on 2017.
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« 2024 marks an important step forward, with the entry into force or adoption of new regulations that considerably strengthen sustainability requirements. The extension of the duty of care on a European scale with the CS3D directive, and the harmonization and generalization of extra-financial reporting with the CSRD directive, are all signals illustrating the role that public authorities want companies to play in the ecological and social transition. »
« CSRD promotes the development of a culture of risk and impact, valorizing also the interconnections between subjects, and the fact that sustainable development cannot be reduced to a single subject, such as climate change. It can become a genuine tool for managing a pro-active environmental and social strategy, if the indicators selected are aligned with the company’s businesses and strategy. Finally, it can become a powerful lever for mobilizing internal (and external) stakeholders and for transformation. »
« In view of the Paris Court of Appeal’s efforts to simplify the conditions of access to justice for plaintiffs, we can’t exclude the possibility that, in the months to come, duty of care litigation will return after a period in the wilderness. All the more so as the long-awaited European CS3D directive on the subject has been adopted with considerable delay and will therefore take time to be transposed into national legislation and enter full operational mode.”
« In view of the Paris Court of Appeal’s efforts to simplify the conditions of access to justice for plaintiffs, we can’t exclude the possibility that, in the months to come, duty of care litigation will return after a period in the wilderness. All the more so as the long-awaited European CS3D directive on the subject has been adopted with considerable delay and will therefore take time to be transposed into national legislation and enter full operational mode.”
« Au regard des premières jurisprudences, il est essentiel d’apporter une attention toute particulière à l’élaboration du plan de vigilance et particulièrement à la cartographie des risques qui en est le socle. En effet, l’entreprise se reporte ensuite à cette cartographie pour mettre en place des mesures d’évaluation efficaces pour ses filiales, ses sous-traitants et ses fournisseurs. Elle doit également se référer à la cartographie pour instaurer des actions adaptées d’atténuation des risques ou de prévention des atteintes graves. Quant au mécanisme d’alerte et de recueil des signalements, il doit impérativement être établi en concertation avec les organisations syndicales. Enfin, si l’entreprise reçoit une mise en demeure, il est primordial qu’elle y apporte la plus grande attention, qu’elle y réponde et qu’elle reconsidère son plan de vigilance au regard de celle-ci. »
« In the light of initial case law, it is essential to pay particular attention to the preparation of the vigilance plan, and especially to the risk inventory that forms its basis. The company then refers to this map to define effective assessment measures for its subsidiaries, subcontractors and suppliers. It must also refer to the map to introduce appropriate risk mitigation actions or prevent serious harm. The alert and reporting mechanism must be set up in consultation with trade unions. Finally, if the company receives a formal notice, it is vital that it pays the utmost attention to it, responds to it and reconsiders its vigilance plan in light of it. »
