American Company Named in Formal Notice Under French Duty of Vigilance Law

American Company Named in Formal Notice Under French Duty of Vigilance Law

On October 1, 2019, XPO Logistics Europe, the European subsidiary of American transportation giant XPO Logistics Inc., received a formal notice to comply with the French Corporate Duty of Vigilance Law. The notice — brought by the International Transport Workers’ Federation (ITF), European Transport Workers’ Federation (ETF) and an alliance of other unions — alleges the company’s human rights protection plans are insufficient to comply with the law. XPO has three months to challenge the notice or develop new plans that satisfy the unions.

The French Corporate Duty of Vigilance Law

Established in 2017, the Duty of Vigilance Law requires companies to establish, publish and implement a “vigilance plan” that includes appropriate actions to identify and prevent human rights violations in the supply chain. XPO does publish a vigilance plan as part of its annual Corporate Social Responsibility Report, but the formal notice alleges the actions depicted within the report do not meet the standards outlined in the law.

While mainly targeting French companies, the Duty of Vigilance Law is relevant to many businesses with headquarters outside of France. In-scope companies include those:

  • Headquartered in France and employing over 5,000 people.
  • Operating on French territory or abroad and employing over 10,000 people.

XPO Logistics Europe is headquartered in Lyon, France, while the parent company, XPO Logistics Inc., is headquartered in the U.S. In the formal notice, the ITF and ETF note that XPO Logistics Inc., while American, holds a majority interest in the European subsidiary and may also have obligations under the law.

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Preventing Human Rights Violations in the Supply Chain

The law establishes clear requirements for corporate vigilance plans that address human rights violations in the supply chain, such as:

  • Risk mapping for clear identification, analysis and ranking of risks.
  • Procedures to regularly assess risks with subsidiaries, subcontractors or suppliers.
  • Actions to mitigate risks and prevent violations.
  • A mechanism to alert the company to potential or realized risks developed in partnership with relevant trade unions.
  • A monitoring scheme to review any of the above measures to assess their efficacy.

If the allegations in the formal notice are found to be true, a judge may compel XPO to implement a plan to sufficiently satisfy the Duty of Vigilance law. Additionally, if harm has occurred due to human rights violations in the supply chain, XPO may be subject to liability if a court agrees they failed to implement a proper plan. In October 2018, the French oil company Total received the first formal notice to comply under the law. A revised plan failed to satisfy the relevant parties, and in early 2020 the matter will be taken to court.

Several countries have developed legislation to curtail human trafficking and slavery within corporate supply chains, notably the U.S. (California Transparency in Supply Chains Act), UK (UK Modern Slavery Act) and Australia (Australia Modern Slavery Act). These laws establish requirements for companies to disclose their due diligence activities in relation identifying human trafficking, but stop short of the robust measures found in the French Duty of Vigilance law.

How Assent Can Help

As global awareness of human trafficking increases, companies are facing growing pressure to develop practices to deter, identify and remedy human rights violations or unfair labor practices in their supply chains. Assent Compliance, the global leader in supply chain data management, supports risk identification by automating supplier engagement and data collection. Supplier surveys can provide valuable data to assist and support due diligence activities. To learn more, contact us at