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Vigeo Eiris News - 16/06/2016

Emmanuel Macron supports a screening of the proposition of the “due diligence” law by the french senate (Conférence Vigeo Eiris)

During Vigeo Eiris’ Conference on Supply Chain on Tuesday, June 14th 2016, Emmanuel Macron, the French Minister of Economy, delivered a speech on the French proposed « Due Diligence » law, which remains to be planned at the French Senate agenda while one year separates the current majority to the presidential elections.

Dispatch published with the kind permission of AEF.

During Vigeo Eiris’ Conference on Supply Chain on Tuesday, June 14th 2016, Emmanuel Macron, the French Minister of Economy,  delivered a speech on the French proposed « Due Diligence » law, which remains to be planned at the French Senate agenda while one year separates the current majority to the presidential elections. His Rapporteur, the French Socialist deputy Dominique Potier, and Pascal Canfin, the CEO of WWF France, point out “an economic globalization that the law doesn’t follow”. According to Vigeo Eiris’ Study, supply chains remain « the weak link of the CSR policies”, even if 7 French companies are awarded for their efforts. One of them, Schneider Electric, is opposed to a French application of these measures: “the hemorrhaging of French companies establishing themselves in foreign countries is not going to stop any time soon.”,  warns Emmanuel Babeau.

The issue of supply chains « is a fundamental topic that questions the core of our systems » highlighted Emmanuel Macron this Tuesday, closing Vigeo Eiris’ Conference on the subject. On the one hand, the rise of «societies of risks», « financial, environmental, social and governance, democratic that deeply impact our societies » and in front of which « it is a society of responsibility that we have to implement ». On the other hand, “a crisis in global capitalism », facing « an hyper financialisation”, “cupidity”, and “that does not pursue its goals anymore”. Those of “productive capitalism requiring to think on the long term”.

 

Advocating for “soft law”

“To address this issues, we cannot wait for the next Rana Plaza », says Emmanuel Macron. “CSR is an everyday subject matter ». It has become a game field for global companies that are making it a differentiating factor. “Then what is the expected behavior and what role do Public Authorities have?”, he says. Speaking out against the “French vision” according to which “if it is important, Public Authorities have to manage it”, the French minister highlight the fact that “awards and incentives to good behaviors are not secondary. They are complementary to Public Authorities and it has to be pursued”.

He then makes sure to demonstrate “what the Public Authorities are doing”. Regarding the public order, “rules have been revised. We have integrated a CSR label, in order not to be at the mercy of the lowest-bid”. Regarding the State shareholder, “17 companies included in the French Agency of State participations (APE) portfolio are rated by Vigeo, and very soon, all companies will be”. Regarding corporate law at the national level “first elements are being incorporated into the 173 Article of the French law on Energy Transition. A decree has just been given to the State Council after several discussions (read on AEF). The philosophy that has been chosen was very pragmatic: one objective at the national level, but with delays of adjustment and the goal extend it to the Community law.”

 

“I am convinced that we can do it”

A method that the French Minister wishes to see applied to the French Due Diligence law, aiming at regulating companies’ behaviors towards their subsidiaries and subcontractors.“It is a subject dear to my heart. My own wish is to see the text be planned at the Senate to go further in the debate. I am not in favor of the hypocritical move consisting in saying that it is a wonderful idea, provided that we never apply it during the five-year term”, he says. “I am convinced that we can do it by basing ourselves on the model of the French Energy Transition Law. We have to define a reasonable timeframe to do it, and not to immediately penalize on that subject. At the same time, we have to define a strategy in the adaptation phase of European conviction”.

Sherpa and Amnesty international, NGOs attending the conference, told AEF that they were « disappointed » by this speech in which they mostly understood « less penalties for companies”. Emmanuel Macron reaffirms, as he already said a couple of weeks ago during a session of questions to the government, that he wishes to see the law proposal considered by the Senate but without setting a timeframe. All that remains to be done is to succeed, indicates Sabine Gagnier, in charge of corporate responsibility at Amnesty International.

 

The “Weak link” of CSR policies

According to a Vigeo Eiris study on Supply Chain Responsible management unveiled at this occasion, the integration of social and environmental factors in supply chain average score is respectively of: 33,8/100 and 31,5/100. The review was done on « around 1300 large listed companies in North America, Asia-Pasific and Europe ».

“Behind the average effects, there are always good performers, very good performers »,highlights Fouad Benseddik, director of methods and institutional relations at Vigeo Eiris, who presented the 7 companies recognized for their efforts on the subject.

 

FACTEURS ENVIRONNEMENTAUX

FACTEURS SOCIAUX

FACTEURS RELATIONS DURABLES

 

“Their commitments on these particularly complex topics are not only convincing but also present a potential of leadership in their sectors », he insists.

 

Change the Civil Code on the CEO definition

“To select the right successor, my first criterion was not financial or skills-based – although I know that he has them, but the decisive element has been my conviction that Emmanuel Faber would go further than me in developing these environmental and social aspects”, explains Franck Riboud, President of Danone. Against an excess power of shareholders on the company’s operations, the leader points out: “The civil code must change, and the CEO must be defined as someone managing an equilibrium in an ecosystem”.

“Companies are often seen as pushing out constraints. But when we measure their impact, we find a sense of responsibility”, adds Bruno Lafond, Co-President of LafargeHolcim. Reminding participants of the efforts undertaken by the Group on reducing CO2 emissions, he admits: “supply chain is a topic to which we committed later on, by focusing on security in the workplace”.

Questioned by Vigeo Eiris’ President, Nicole Notat, on the difficulty of companies to convince the CFOs on the benefits of sustainable development, Emmanuel Babeau, Executive Director in charge of Finances and Legal Affairs at Schneider Electric, answers that “there are many pressures coming from shareholders. But the role of every manager is permanently working on the short and long terms. However, it is impossible to work on the long-term without sustainable development : it would be misunderstanding the world in which we live and towards which we are leaning.” Soon enough, Schneider’s representative comes to the topic of due diligence:

“I would have liked having a debate with Dominique Potier. It is a subject in which we invest a lot of money and attention. But if this system

[as introduced by the law proposal] applies only to French companies, the hemorrhaging of French companies establishing themselves in foreign countries is not going to stop any time soon.”

 

“This law proposal is a sign of another globalisation”

Emmanuel Julien, Appointed Deputy Director of the Enterprises Department at the ILO, had mentioned earlier the work done on supply chains during the International Labour Conference that ended on Friday, June 10TH (read on AEF). “The MEDEF is ahead of the curve in terms of management groups. The debate started in a conflictual manner, but differences in opinion did not prevent the creation of an action plan » he explains. “I have more and more doubts regarding the balance to adopt between soft law and hard law ». We can see that the soft law has more and more impact”, specifies Jean-Marie Paugam, President of the French PCN of the OECD.

“This soft law is beginning to be structured at a global level », agrees Pascal Canfin, CEO of WWF France, whilst being more moderate when saying “a gap still remain”. Had we undertaken two processes in parallel, we would have had something more consistent. But the globalization of regulations is very weak compared to the economic globalization of trade, nearly complete”.

“I think that if things began to move forward in terms of climate, it is because companies have moved towards a risk analysis approach for themselves. What motivates us, at WWF, it to write this new grammar”.

Dominique Potier, rapporteur of the due diligence law, warns in turn : “Coming from a peasant origin, I know what being a worldwide champion in the food industry can mean. I also know the dark face of this economy, what it can generate as misery and resentment. Yet economic violence creates a fertile area to terrorism. This law proposal is a sign of another globalization.”

 

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Keywords : Conférence, France