This article explores the critical necessity for multinational corporations to adhere to ESG regulations and the potential risks of failing to protect workers' rights. Through a detailed case study of a lawsuit against a multinational company, we highlight the impacts of the French Corporate Duty of Vigilance Law and the EU Corporate Sustainability Due Diligence Directive (CSDDD) on corporate operations, emphasizing the significance of meeting global responsibilities.
In 2022, a lawsuit filed by two prominent non-governmental organizations, a Turkish union, and 34 former employees against a multinational company (“Case” or “Lawsuit”) highlighted the significant risks faced by global corporations under ESG regulations. This Case demonstrates to the business community the urgency of implementing effective measures to address these risks and ensure compliance.
Recent regulations and lawsuits related to corporate responsibility and ESG demonstrate an increase in obligations and sanctions, not only for environmental protection, but also for safeguarding fundamental human rights. Local regulations, such as the German Supply Chain Due Diligence Act and the French Corporate Duty of Vigilance Law, have significantly impacted corporate accountability by mandating companies to implement measures to protect both the environment and human rights. These responsibilities are expected to expand further with the recent approval of the Corporate Sustainability Due Diligence Directive ("CSDDD") by the European Parliament, which introduces global obligations for companies across Europe to identify and prevent risks related to environmental and human rights violations in their supply chains and cross-border operations.1
On March 23, 2022, two prominent non-governmental organizations (“NGOs”), a Turkish union, and 34 former employees of a Turkish subsidiary ("Subsidiary") of a multinational company ("Company") initiated legal proceedings against the Company. The plaintiffs allege that the Subsidiary violated workers' rights to unionize and other fundamental rights, attributing these violations to the France-based Company's failure to comply with the French Corporate Duty of Vigilance Law ("Law"), enacted in 2017. Furthermore, the plaintiffs claim that the employees faced severe health and safety violations, including gender-based discrimination and mistreatment.2
In early 2018, employees of the Subsidiary, which has been majority-owned by the Company since 2012, demanded the initiation of collective bargaining. They cited issues such as low wages, exposure to hazardous substances, mandatory overtime, and allegations of discrimination against women. The union reported that its membership campaign led to 157 out of 379 factory workers joining the union. However, the Subsidiary denied this claim in a written statement.3
In March 2018, mass layoffs occurred at the Subsidiary, and by September 2018, more than 130 of the 379 factory workers had been dismissed.4 This was followed by nearly 300 days of worker mobilization, which ended with the workers being offered compensation.5
Since March 2022, with the addition of 47 more plaintiffs6, the Lawsuit now involves 81 plaintiffs and is currently at the pre-trial stage due to the Company's objections to inadmissibility. These objections are expected to be resolved before a decision is made on the merits of the Case.
French Corporate Duty of Vigilance Law
The French Corporate Duty of Vigilance Law, which the Company is alleged to have violated, came into effect in March 2017. This Law requires companies with more than 5,000 direct or indirect employees in France, or more than 10,000 employees globally through their subsidiaries, to prevent and remedy human rights violations and environmental damage arising from their own activities, as well as those of their subsidiaries, subcontractors, and suppliers.7
In this context, companies subject to the Law are obligated to identify risks specific to their activities that could adversely impact the environment and human rights. They must also publish a due diligence plan outlining measures to be adopted to mitigate these risks and establish a monitoring and alerting system to assess the effectiveness of the implemented measures.
If these obligations are not met, the Law provides mechanism allowing "any person with a legitimate interest," including NGOs, stakeholders, and unions, to issue formal notices to the relevant companies. If these notices do not lead to a satisfactory outcome, the affected parties may then seek legal recourse through the French courts to enforce compliance or require improvements to inadequate due diligence plans. Furthermore, individuals who suffer harm due to the company's failure to fulfill its obligations can pursue compensation claims under French tort law. (France's Duty of Vigilance Law, n.d.)8
Claims
The plaintiffs' primary demands are for the Company to acknowledge its failure to meet its obligations under the Law, identify risks to fundamental workers' rights arising from the Subsidiary's operations, implement appropriate measures, and establish an effective monitoring plan. Additionally, the plaintiffs seek compensation for damages suffered by the workers and the union due to the alleged negligence regarding these obligations.9
Conclusion
The Case, one of the thirteen lawsuits filed under the French Corporate Duty of Vigilance Law to date, is significant in highlighting the risks multinational companies may face in their cross-border operations. It also serves as an early warning regarding the legal consequences these regulations could have for subsidiaries of multinational companies operating in Türkiye. With the recent adoption of the CSDDD by the European Parliament, similar due diligence obligations are expected to be increasingly enforced across Europe, making it even more crucial for companies to address potential environmental and human rights violations throughout their supply chains. Therefore, this Case represents a critical reminder to the business world, about the growing importance of social responsibility, business ethics, and workers' rights. Companies are advised to promptly integrate compliance programs at a global level to minimize risks and manage potential disputes that may arise through third parties.
References
Europe: New EU due diligence law governing big business is a landmark advance for human rights. (2024, May 24). Retrieved from Amnesty International: https://www.amnesty.org/en/latest/news/2024/05/europe-new-eu-due-diligence-law-governing-big-business-is-a-landmark-advance-for-human-rights/
Flormar 120 işçiyi çıkardı, iddia: Sendikalı oldukları için (Only in Turkish). (2018, May 30). Retrieved from CNN Türk: https://www.cnnturk.com/ekonomi/flormar-120-isciyi-cikardi-iddia-sendikali-olduklari-icin
France's Duty of Vigilance Law. (n.d.). Retrieved from Business & Human Rights Association: https://www.business-humanrights.org/en/big-issues/corporate-legal-accountability/frances-duty-of-vigilance-law/
French Corporate Duty of Vigilance Law - Frequently Asked Questions. (2017). Retrieved from European Coalition for Corporate Justice: https://respect.international/wp-content/uploads/2017/10/french-corporate-duty-of-vigilance-law-faq.pdf
Turkey: 47 former employees join lawsuit against Yves Rocher over alleged violations of French duty of vigilance law. (2023, November 15). Retrieved from Business & Human Rights Resource Centre: https://www.business-humanrights.org/en/latest-news/turkey-47-former-employees-join-lawsuit-against-yves-rocher-over-alleged-violations-of-french-duty-of-vigilance-law/
Turkey: Yves Rocher, the French cosmetics company, facing court proceedings for failure to ensure workers' rights and trade union rights. (2022, March 24). Retrieved from Business & Human Rights Association: https://www.business-humanrights.org/en/latest-news/turkey-yves-rocher-the-french-cosmetics-company-facing-court-proceedings-for-failure-to-ensure-workers-rights-and-trade-union-rights/
Yves Rocher Group lawsuit (re workers' rights and union busting in Turkey, filed in France). (2023, March 23). Retrieved from Business & Human Rights Association: https://www.business-humanrights.org/en/latest-news/yves-rocher-group-lawsuit-re-workers-rights-and-union-busting-in-turkey-filed-in-france/
Yves Rocher Grubu Türkiye'de sendikal hakları tanımadığı için Fransa'da yargılanacak (Only in Turkish). (2022, June 29). Retrieved from Fransa Postası: https://www.fransapostasi.fr/fransa/yves-rocher-grubu-turkiyede-sendikal-haklari-tanimadigi-icin-fransada-yargilanacak/
Footnotes
1. (Europe: New EU due diligence law governing big business is a landmark advance for human rights, 2024)
2. (Turkey: 47 former employees join lawsuit against Yves Rocher over alleged violations of French duty of vigilance law, 2023)
3. (Flormar 120 işçiyi çıkardı, iddia: Sendikalı oldukları için (Only in Turkish), 2018)
4. (Yves Rocher Group lawsuit (re workers' rights and union busting in Turkey, filed in France), 2023)
5. (Yves Rocher Grubu Türkiye'de sendikal hakları tanımadığı için Fransa'da yargılanacak (Only in Turkish), 2022)
6. (Turkey: 47 former employees join lawsuit against Yves Rocher over alleged violations of French duty of vigilance law, 2023)
7. (French Corporate Duty of Vigilance Law - Frequently Asked Questions, 2017)
8. (France's Duty of Vigilance Law, n.d.)
9. (Turkey: Yves Rocher, the French cosmetics company, facing court proceedings for failure to ensure workers' rights and trade union rights, 2022)
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