This contribution is the second in a series of studies conducted by Diane de Saint-Affrique on the position of companies with regard to the 2017 Due Diligence Law. The first part focused on the scope and purpose of the 2017 Due Diligence Law. The upcoming studies will focus on the actions taken by companies to comply with the law, as well as the impact of the law on governance and management. The study will conclude with a reflection on how companies could work hand in hand with NGOs for the common good.
Introduction
The Corporate Sustainability Due Diligence Directive (CS3D) was adopted by the European Parliament on 24 April 2024 and formally approved by the European Council on 24 May 2024. However, its scope was significantly reduced following a new vote in the European Parliament on Thursday 13 November 2025. It is worth noting that this narrowing of the Directive’s scope took place before it had been transposed into national law in most EU Member States. MEPs voted 382 in favour and 249 against reducing the Directive’s requirements, by limiting the number of businesses concerned and removing some of their obligations.
As a reminder, the Directive adopted in April 2024 required companies with more than 1,000 employees to prevent and remedy human rights violations and environmental damage throughout their value chains, or face sanctions. This obligation applied regardless of the geographical location of the relevant suppliers or subcontractors. However, on 13 November 2025, the European Parliament adopted a revised version of the text that drastically reduced the number of companies concerned. The new thresholds apply only to firms with at least 5,000 employees and an annual turnover of more than €1.5 billion, whereas the original text applied to companies with 1,000 employees and a turnover of €450 million. In addition, MEPs proposed scrapping the European civil liability regime, which was intended to harmonise corporate obligations and ensure accountability before the courts in cases of non-compliance, further diluting the Directive. Finally, companies are no longer required to present, for the first time, a climate transition plan aligned with the 1.5 °C target set under the Paris Agreement. The official aim of the European Commission, given intensifying global competition, is to simplify procedures and reduce the administrative burden on EU businesses.
While most European countries have never enacted legislation on due diligence and, due to the delays surrounding the Omnibus Simplification Package, remain under no such obligation, France and Germany already have stringent domestic laws in place. This leaves them at a disadvantage in the face of fierce international competition. In an increasingly fragmented global economy, not everyone is competing on a level playing field.
This second part of the 2017 report on due diligence obligations follows the first, which examined the scope and purpose of the French Loi Devoir de Vigilance (Due Diligence Law, also known in English as the Duty of Vigilance Law and occasionally the Duty of Care Law) of 2017. In this second part, the secretaries general, compliance directors and chief executives of 20 companies were asked to assess the extent to which the 2017 Law aligns with the realities of the economic environment in which they operate.
Compatibility of the 2017 Due Diligence Law with the realities of the business world
While all the companies interviewed consider the Law to be positive in many respects and acknowledge its significant contributions, they find that it is not sufficiently adapted to the diversity of business realities, making its implementation extremely complex.
For companies, the Law offers several types of added value
It drives a process of continuous improvement and value alignment
In a number of companies, such as Total, L’Oréal, Groupama, SNCF, Danone and the Avril Group, due diligence is not seen negatively as a mere legal constraint, but rather as an incentive to structure and strengthen their Corporate Social Responsibility (CSR) strategies. These companies emphasise that this legislative development fits within an already established culture of responsibility and enables them to align their pre-existing internal values with regulatory requirements.
They feel that when the Law is integrated into a company’s broader sense of responsibility, where internal frameworks are clearly defined, supported by governance bodies and widely disseminated through employee training, it generates a positive dynamic. This, in turn, helps teams to feel engaged with due diligence-related issues and fosters a stronger collective commitment to progress.
As the Vice-President for Legal Affairs at Clasquin points out, the Law should be understood by stakeholders as an incentive to establish ‘a process of continuous improvement’ within each sector. The goal, she argues, is to create a positive cycle through concrete actions, however modest. Only a proactive and forward-looking approach, she adds, can ease the integration of legal requirements and prevent a purely reactive or bureaucratic mindset.
However, as the former Head of CSR Compliance at Groupama observes, while employees’ values can usefully serve the regulation, the reverse is not desirable. If teams see the Due Diligence Law as a constraint, it risks becoming a barrier.
Thus, the Law is seen as a lever for structuring and strengthening CSR initiatives by encouraging risk mapping and the implementation of action plans tailored to each company’s specific challenges.
The Law allows flexibility of approach and contextualisation
SNCF’s Ethics and Compliance Director believes that the flexibility and general nature of the French law are assets enabling companies to address real risks rather than engaging in a purely administrative or superficial exercise. The absence of an implementing decree, often criticised for creating a dangerous ambiguity, is in his view an advantage, as it leaves room for interpretation and for the sector-specific adjustments required. This approach is positive in that it allows for a sharper understanding of risks, provided that risk mapping is carried out honestly and transparently. Moreover, in the absence of a decree, the expectations of the different stakeholders, including competitors, extra-financial auditors, non-governmental organisations (NGOs) and investors, encourage companies to continually improve their due diligence plans.
In addition, the Compliance Director at Avril notes that the Law imposes a best-efforts obligation, meaning that companies are not expected to achieve immediate results. This allows them time to establish a sound methodology gradually. The progressive nature of the requirement is viewed as a major advantage, as it enables companies to build robust due diligence and continuous improvement processes step by step, without the pressure of having to deliver instant results.
As the Compliance Director at Bouygues points out, companies are not amoral organisations but human communities that care about ethical issues, particularly those relating to child labour and to working conditions in general. Their aim is to implement a process of continuous improvement in the at-risk sectors specific to each company, and this can only be achieved gradually.
The Law has a positive impact on the value chain
The value of listed companies is now assessed not only on economic criteria but also on extra-financial indicators of social and environmental responsibility, which encourages them to keep a close eye on the quality of their value chains. Companies not directly concerned by the Law but wishing to work with those subject to it are also affected as a knock-on effect. As a result, the entire chain of suppliers should be drawn into a process of compliance. According to Danone’s Secretary General and the Compliance Director of a defence group, the adoption of the CS3D and the extension of due diligence obligations to smaller companies should reinforce this trend, with large groups no longer seen as the only standard-setters.
Furthermore, as Veolia’s Compliance Director points out, due diligence requirements could become a competitive advantage for European companies, which are generally more engaged and more advanced on these issues than their counterparts abroad. The Law could be used as an instrument of competition, by excluding non-compliant companies from the European market while encouraging the reshoring of certain activities so that they meet due diligence requirements.
A number of major players therefore believe that due diligence can become a strategic lever for Europe, provided it is implemented in a consistent, non-bureaucratic manner, with conviction and rigour.
The Law enhances credibility and compliance
The Law gives greater weight to compliance processes and to human rights and environmental protection, while also introducing mechanisms for imposing sanctions in cases of non-compliance. For example, Mobivia’s Public Affairs and Sustainable Development Director has implemented a series of measures to meet legal requirements. Annual social and environmental audits are carried out in collaboration with specialised consultancies, particularly in so-called ‘at-risk’ areas. EcoVadis certifications now cover at least 80% of total procurement volumes, and sourcing charters and supplier codes of conduct have been adopted to guide supplier practices. A profound shift can be observed across most major French companies, which now have a range of measures in place to raise due diligence standards throughout their value chains.
The Law also exerts reputational and peer pressure. As L’Oréal’s Human Rights Director and Avril’s Compliance Director note, public image concerns have prompted companies to improve their practices in response to reputational and peer pressure. Benchmarking among peers, as well as pressure from auditors, investors and NGOs, with whom dialogue can sometimes be challenging or even heated, are seen as essential for fostering continuous improvement and refining risk mapping. That said, the companies concerned indicate that even with such measures in place, it remains difficult to guarantee full traceability across the entire value chain, particularly when dealing with suppliers based in distant regions such as Asia or Africa. A residual risk always remains.
While the Due Diligence Law is generally seen as positive in its intentions and is widely praised for its ambition and structuring effect, as well as for its ability to drive or accelerate progress, raise collective standards and align values, companies stress that it nonetheless faces many obstacles that make its implementation extremely complex.
Limitations and challenges of the Law: barriers to economic compatibility
The Law generates administrative complexity and regulatory inflation
Although driven by ethical goals, the implementation of the Law in day-to-day operations poses major challenges for companies. According to Auchan’s Compliance Department, the legislative text sometimes conflicts with operational realities, economic constraints and the technical capacities of suppliers. The legal obligations, which are at times disconnected from companies’ core activities, carry complex management requirements and demand significant resources.
Companies are now expected to take on responsibilities that were once the prerogative of the government, raising the question of an implicit delegation of public duties to the private sector. The legal departments of the Auchan and Fnac Darty groups point out that companies are not primarily intended to take the place of legislators or become verification bodies.
Moreover, several major French companies, including Veolia, Bouygues and L’Oréal, warn of the growing administrative complexity associated with new sustainability regulations. This situation is forcing them to expand their legal teams and mobilise dedicated resources to ensure compliance. For instance, Fnac Darty has set up a 15-person quality team dedicated to monitoring sellers on its marketplaces.
According to the Secretary General of the Danone Group, European companies’ overheads are already higher than those of their American, Chinese or Russian competitors. He fears that the Law could widen this gap, diverting attention away from economic priorities towards regulatory compliance.
This development raises the question of how to strike a balance between regulatory requirements and the competitiveness of European businesses. The Deputy CEO and Chief Financial Officer of the Bouygues Group notes that while the proliferation of standards may be justified, it nevertheless generates an almost insurmountable reporting burden for SME suppliers and subcontractors. Although the Law aligns with the strategic objectives of the companies surveyed, it nonetheless presents significant challenges in terms of resources, competitiveness and clarity of procedures. Despite its long-term benefits, its complexity and the additional costs it carries could divert attention away from economic priorities and affect competitiveness.
As a result, a significant gap remains between the Law’s stated objectives and its practical implementation, particularly due to the economic constraints and limited operational capacities of smaller entities within large groups.
The Law is complex to apply across global supply chains
Some companies depend on distant sources of supply for specific technical capacities or expertise, such as Japan for boat engines (e.g. Beneteau), or Bangladesh, India and Pakistan for textiles, but also for electronic components. These resources are not always available in Europe.
Many French companies therefore operate global value chains and, well before the Law was adopted, had already introduced regular audits and unannounced inspections in countries identified as ‘at-risk’, as illustrated by the approach taken by Fnac Darty’s Compliance Department. However, for a company such as Nature et Découvertes, which works with more than 500 suppliers in Asia, auditing every supplier is economically unrealistic. As a result, the Due Diligence Law is seen as somewhat disconnected from business reality: in complex value chains, tracing materials back through the supply chain is often difficult, if not impossible, particularly due to a lack of local cooperation. The Compliance Director of the Avril Group notes that in certain sectors, such as palm oil, complete traceability (down to levels 4, 5 or even 6) is virtually unattainable. Companies must then either accept a residual risk or refocus their activities on areas that are easier to control, which leads to additional costs.
Finally, the Law has a considerable impact on suppliers. To comply with legal requirements, companies are being pushed into a forced rationalisation of their commercial relationships, favouring larger suppliers at the expense of smaller ones. This dynamic creates a form of economic inequity, as it results in the gradual exclusion of smaller suppliers unable to meet reporting requirements.
The Law creates competitive risks and international distortions
The requirements of the Law create an imbalance in the competitive landscape that disadvantages French companies, as they are subject to stricter due diligence obligations than their international counterparts. While these obligations are positive in intent, French companies have limited scope for action compared with global players. The compliance departments of companies such as Beneteau, Clasquin, Danone and Avril stress the need to harmonise rules internationally, so that the responsibility for transforming global trade does not fall solely on French businesses.
In addition, some foreign suppliers — particularly in sectors such as information technology — on which French companies are dependent impose their own standards and contractual conditions. If legal requirements become too restrictive, these partners could terminate their collaboration, exposing the companies in question to significant economic risks, as noted by Electro Dépôt, Beneteau and TotalEnergies. French businesses also fear a loss of competitiveness compared with non-EU competitors that are not subject to the same obligations. This could prompt some of them to relocate their headquarters. This regulatory asymmetry creates international discrimination and a lack of understanding among foreign suppliers, particularly those in Asia and the Middle East.
Companies also face reluctance from certain suppliers to disclose the names of their own subcontractors, for fear of undermining their margins or strategic positions. Excessive transparency could prompt contractors to bypass them, running counter to the principle of commercial confidentiality and increasing their economic risk.
Finally, in some sectors such as leisure boating, combustion engines remain preferred for their reliability, while electric engines are still considered insufficiently safe or powerful. A cultural shift and awareness-raising effort are needed to encourage the adoption of more sustainable technologies.
The Law lacks clarity and support to help companies develop effective risk mapping
According to the compliance teams at Bouygues and L’Oréal, the absence of an implementing decree, practical guidance and consultation with businesses complicates the interpretation and application of the Law, particularly for companies without departments specialising in human rights.
Many companies, including Veolia and the Avril Group, also regret that the Law does not sufficiently distinguish between risks by sector or by nature, resulting in risk maps that are sometimes too general or superficial. Even though risk mapping is a central element of the Law, the expected level of detail is not clearly defined, making it difficult to deal with complex situations. One example is the lack of clarity over the stance companies should take on Russia during the current conflict.
This lack of precision is a major source of tension between NGOs and companies, with the latter often criticised for producing documents deemed incomplete or overly generic. Some companies also criticise the approach of NGOs that prioritise legal action over proposing alternative solutions. While groups such as L’Oréal and SNCF acknowledge the importance of effective risk mapping, they underscore the difficulty of achieving it without the necessary tools and expertise. Veolia points out that the goal is to obtain measurable results. However, the absence of clear indicators limits the Law’s effectiveness, as without them it is difficult to present measurable results. On a human level, Beneteau’s Compliance Director notes that, particularly in so-called ‘polluting’ sectors, the Law can generate feelings of shame, demotivation and stress, as well as major recruitment challenges.
According to the executives interviewed, the forthcoming CS3D could further complicate the development of effective risk maps. They highlight the rigid and bureaucratic nature of the text, whose annexes impose numerous tick-box requirements often out of step with companies’ business realities. This formalism could dilute the analysis of real risks by encouraging companies to comply with generic wording of limited relevance. Furthermore, the heterogeneity of risk presentations will make comparisons difficult, and some of the Directive’s obligations could prove unworkable for certain small and medium-sized enterprises.
Conclusion
Although the Due Diligence Law aligns with the strategic objectives put forward by the companies concerned, it presents major difficulties in practical implementation. Mobilising the necessary resources, preserving competitiveness and ensuring clarity in regulatory frameworks are all significant challenges for businesses. For the Law to be implemented effectively, a pragmatic approach is required, based on segmenting risks by sector and by nature, together with gradual adaptation to the specific resources and constraints of each economic sector.
While the Law encourages progress, its implementation continues to be hindered by administrative complexity, costs, limits to traceability, competitive distortions and a lack of regulatory clarity. Its success will largely depend on the ability to adapt and differentiate requirements, to provide adequate support for companies and to guarantee fair competition at the international level. Ultimately, the goal is to build a sense of responsibility which, while imperfect, could over time become a genuine driver of transformation for the economic landscape.
