France

I. The State Obligation to Protect Human Rights

Proposal for Action No.4

Actions Underway

• The State is committed to ensuring that businesses in which it holds shares respect human rights and the environment.

13. The Role of Public Agencies [pages 27-30]

In a 2013 opinion, the CNCDH recommended that the State adopt “measures designed to enable COFACE and its clients to introduce a due diligence process with regards to human rights”. It emphasized that “COFACE’s policies and procedures regarding due diligence should be disclosed, along with the projects they insure” and that “it would also be desirable for the information and assessment process adopted with regard to the impact on human rights of operations insured by COFACE to also fall within the jurisdiction of the Ministry of Foreign Affairs and/or the Ministry of the Economy and Finance, the departments of which are able to provide an analysis for each country with regards to respecting human rights, based notably on the ‘information for travellers’ that they produce.” Finally, it stated that “the annual report on the activities of COFACE submitted by France to the European Commission (in accordance with Regulation (EU) 1233/2011) should be discussed at the National Assembly and/or at the Senate and should be the subject of consultations with civil society.”

In addition, the CNCDH recommended that “representatives of civil society and users of those services that are likely to be the subject of public-private partnerships (PPPs) be given a more central role as part of an approach designed to protect and promote the most vulnerable of populations. Indeed, in order for PPPs to be useful for development purposes, it is essential that all stakeholders, including the State, community representatives and users, be kept informed and consulted at all stages of the PPP creation process.” It added that, “in accordance with Guiding Principles nos. 4 and 6, the French State should, by means of its development aid network (the AFD, PROPARCO, the Ministry of the Economy and Finance, the ADETEF, etc.), fulfil its obligation to protect by imposing a series of specifications that include exhaustive impact studies regarding human rights.”

Meanwhile, the National CSR Platform, in its report on the implications of corporate responsibility on businesses’ supply chains (November 2014), recommended that the due diligence measures used by the AFD and COFACE be reinforced, and that these agencies be encouraged to set up mechanisms to deal with complaints from financial beneficiaries in the event of fundamental rights abuses.

– Compagnie française d’assurance pour le commerce extérieur (COFACE)

The French export credit agency COFACE, which provides guarantees on behalf of the State, systematically applies the Recommendations of the OECD Council on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (the “Common Approaches”), most recently negotiated in 2012 by the OECD Export Credits Group. These recommendations cover all types of credit insurance transactions with a repayment term of more than two years, and require reasonable due diligence to be undertaken to ensure that each project complies with host country regulations and the international standards of the World Bank and International Finance Corporation (IFC). The Common Approaches establish strict common standards for OECD countries, and are more ambitious than the UN Guiding Principles as they require detailed due diligence determining project impacts on human rights. They also provide for the quarterly publication of a list of projects guaranteed for more than €10 million, and the publication of data on highimpact projects on the websites of credit agencies one month prior to transactions taking place. Discussions with civil society are held regularly at the OECD. Detailed impact assessments must be completed before COFACE awards government guarantees to projects likely to have major impacts on CSR (pollution, population movements, etc.), especially human rights. The inter-ministerial guarantee commission based at the Ministry of the Economy and Finance, which authorizes COFACE to allocate public funding on behalf of the State, also examines these requirements. Impact assessments are published on COFACE’s government guarantees website, and COFACE may request to visit industrial sites while carrying out due diligence or during the guarantee period. These analyses generally result in the inclusion of specific suspensive conditions (financial covenants) and detailed action plans to manage human rights impacts during the credit period. The OECD

Common Approaches only apply to credit insurance transactions of more than two years.

Businesses that request government guarantees from COFACE are systematically given information on the OECD Guidelines. When applying for credit insurance, businesses must confirm they have read and understood the OECD Guidelines.

A group of technical experts from export credit agencies has been mandated by the OECD Export Credits Group to work on the implementation of the Common Approaches, particularly in the field of human rights.

The Agence Française de Développement (AFD)

As mentioned above, pursuant to Article 8 of the French Act of 7 July 2014 France’s strategy for development and international solidarity, the development and international solidarity policy must take into account the social and environmental responsibility of public and private actors. Furthermore, companies must implement risk management procedures to identify, prevent or mitigate social, health and environmental damage and human rights abuses that may arise as a result of their activities in partner countries.

Also pursuant to Article 8, the AFD must incorporate social responsibility into its governance system and operations. It must implement measures to evaluate and control the environmental and social risks of the operations it finances, and to promote the financial transparency of businesses involved in these operations, country by country. Its annual report must mention the ways in which it addresses social responsibility requirements.

The AFD considers human rights when selecting the projects it finances. Every year, it produces a corporate social responsibility report which mentions human rights in accordance with the ISO 26000 standard. It also has an exclusion list which prevents it from financing projects that involve forced labour, child labour, serious environmental damage, the destruction of cultural heritage, the broadcasting of discriminatory or anti-democratic statements, and diamond mining activities outside of the Kimberley Process. Financing agreements with partners and beneficiaries contain binding due diligence clauses, which must mention the duty to respect ILO’s fundamental conventions. From the social perspective, all risks connected with respecting fundamental human rights, as established in recognized international standards, texts and agreements, are considered.

To reinforce this policy, the AFD adopted a 2014-2016 CSR action plan developed with internal and external stakeholders. The goals of this action plan are to increase transparency by consulting with relevant parties and by publishing information on AFD-funded projects and final reports. Other information is available upon request, including social and environmental impact assessments. Since 2015, the AFD has published project data on AFD-funded projects on an open data platform, 17 designed using the International Aid Transparency Initiative (IATI) accountability framework. Since January 2016, the AFD has published information on all sovereign financing.

The owners of projects with the highest social and environmental risks are asked toimplement grievance management mechanisms to deal with alerts, questions, recommendations and requests from all interested parties at any time. In parallel, the AFD and PROPARCO define the structure and organization of specific grievance management mechanisms in the environmental and social fields. These mechanisms will enable third parties affected by AFD- or PROPARCO-funded projects to lodge complaints for environmental and/or social reasons (pollution, destruction of natural resources, human rights, land grabbing, forced displacement, etc.). These initiatives took effect in 2016.

In addition, the AFD is in the process of reinforcing CSR requirements in public works contracts, with the goal of awarding these contracts to qualified companies with experience in managing projects with significant social and environmental impacts. This initiative to include more stringent social and environmental clauses in contractual documents for projects with high social and environmental risks affected 22 contracts in 2015, exceeding the target of 16 set by the Agency’s 2014-2016 targets and resources contract.

The AFD has a set of robust rules and procedures to assess social and environmental risks and impacts for each of the projects for which it receives funding proposals. Recently, these procedures were amended and their scope widened to include an explicit reference to the

World Bank’s Safeguard Policies (PROPARCO continues to apply the IFC standards). Currently, the AFD does not apply Article 5 of Chapter III of the Act on France’s strategy for development and international solidarity, in particular the requirement to implement measures promoting the financial transparency of businesses involved in operations, country by country. Instead, the financial operators and private sector actors with which the AFD Group and PROPARCO work are encouraged to disclose information on their turnover, profits, employee numbers and taxes paid in each country they are based in. This measure, called “country-by-country reporting”, is already compulsory for European banks.

Proposal for Actions No.5

Actions Underway

COFACE

• COFACE Government Guarantees and the Ministry of the Economy and Finance are currently examining whether to implement an IT module widening the scope of checks, to highlight at-risk industries or countries in the short, medium and long term. This would make it possible to check compliance with the UN Guiding Principles by reviewing all credit insurance operations and assessing human rights risks. – COFACE is continuing efforts to make information on reasonable due diligence in the social and environmental fields (which include human rights) visible and accessible on its website.

THE AFD

• When evaluating extractive industry projects, the AFD ensures that funding recipients comply with the Extractive Industries Transparency Initiative (EITI), without excluding those who respect EITI standards but are not based in EITI countries.
• The AFD supports the implementation of universal social protection and the promotion of initiatives to develop decent work (the creation of decent jobs, skills upgrading, training and the transition towards sustainable employment) in accordance with the AFD’s partnership with the International Labour Office and the priority areas in the ILO-France partnership agreement.
• The AFD has implemented a grievance management mechanism to deal with environmental and social complaints.
•  The AFD is reinforcing CSR and human rights criteria in 80% of pending public works contracts with high social and environmental impacts.
• The AFD is working to reduce gender inequality in AFD-funded operations The AFD is reinforcing the human rights focus of social clauses. – The AFD seeks to ensure that this policy regarding “non-cooperative jurisdictions” is respected.

Actions to be implemented

• Allocate the resources necessary to raise business awareness of the OECD Guidelines in AFD- and COFACE-funded operations.
• Make AFD funding for businesses conditional on implementing or undertaking to implement non-financial reporting and a CSR due diligence plan for projects, or on the enforcement of host country or international standards.