Is your company subject to the Law Sapin 2?

  • Radia Guira

The law SAPIN 2 refers to the law of 9 December 2016 relating to transparency, the fight against corruption and the modernization of economic life. In particular, it creates the French Anti-Corruption Agency and the law establishes protection for whistleblowers. Under pain of sanctions, it asks companies employing at least 500 employees, or belonging to a group whose parent company has its registered office in France with a turnover of more than 100 million euros, to take the measures to prevent and detect the commission, in France or abroad, of acts of corruption or influence peddling.
These measures are diverse: code of good conduct, internal alert system, risk mapping, assessment of customers and suppliers, accounting control procedures, training of exposed personnel, disciplinary system specific to sanctioning employees in the event of violation of the code of conduct, internal control and evaluation system of the measures implemented. To organize themselves internally, companies, in particular their purchasing department, can rely on the voluntary standard ISO 37001.
The possible answers are:
– Yes
– No
If the answer is ‘Yes’, please attach your risk mapping.

This question aims to determine whether your company falls under the governance of the Sapin II Law. The Law Sapin 2, named after French politician Michel Sapin, is a French anti-corruption law that provides a comprehensive framework to facilitate the disclosure of corruption and influence peddling, thereby improving the transparency of economic life in France. The question is crucial as it allows to understand your company’s obligation to comply with certain standards concerning transparency, integrity, and corporate governance measures.

Details for better understanding:

1. « Is your company subject to the Law Sapin 2? » refers to whether your company falls under the jurisdiction of this French law. If you are operating in France and your organization is large enough (having at least 500 employees and a turnover of more than 100 million euros), you might be required to comply with this law.
2. The Sapin II Law requires organizations to establish an anti-corruption compliance program, provide training for employees, conduct risk assessments, implement whistle-blowing procedures, etc. So, answering this question will indicate the degree of your company’s integrity and transparency, which can impact the ESG score.

Example of response to the question: (Example : Yes, our company is subject to the Law Sapin 2 as we are based in France and meet the requisite criteria defined in the law in terms of our size and turnover.)

As businesses expand their global footprint, understanding regulatory requirements becomes increasingly important. One such regulation that companies operating in France or with significant connections to France need to be aware of is the Law Sapin 2. This law, an anti-corruption measure, has far-reaching implications for corporate governance and ethical standards. In this article, we’ll delve into whether your company is subject to the Law Sapin 2 and what it means for your ESG (Environmental, Social, and Governance) score.

Understanding Law Sapin 2: Scope and Implications

The Law Sapin 2, passed in France in 2016, aims to combat corruption and foster transparency within corporate entities. It applies to both French companies and international firms with activities in France. If your company falls under the following categories, it likely needs to comply with this law:

  • Companies with at least 500 employees and whose parent company is headquartered in France;
  • Groups with at least 500 employees, with the parent company headquartered either in France or abroad, and a consolidated turnover exceeding €100 million.

Compliance with Law Sapin 2 involves establishing internal procedures to prevent and detect corruption, including the implementation of a code of conduct, a whistleblower protection system, risk mapping, third-party evaluation procedures, accounting controls, and training programs for employees.

Key Requirements of Law Sapin 2

Let’s break down the key requirements of Law Sapin 2 to help your company assess whether it’s subject to this legislation and understand what is expected:

  1. Internal Code of Conduct: Companies must create a code that defines and illustrates prohibited corrupt practices.
  2. Whistleblower Protection: A secure, confidential, and potentially anonymous system must be in place to allow employees to report breaches.
  3. Risk Assessment: Regularly updated risk mapping must be developed to identify, analyze, and rank the risks of corruption in all business activities.
  4. Due Diligence on Customers, First-tier Suppliers, and Intermediaries: Evaluations must be conducted to prevent any risks associated with dealings with external entities.
  5. Accounting Control Procedures: These should be capable of ensuring that the company’s books are not used to cover up acts of corruption or influence peddling.
  6. Training Programs: Training for managers and staff exposed to corruption risks is required.
  7. Disciplinary Procedures: These must be in place to punish employees violating the company’s code of conduct.
  8. Internal Monitoring and Evaluation System: To ensure the anti-corruption measures are effective, companies must implement continuous monitoring.

Failure to comply with these requirements can result in hefty fines and damage to your company’s reputation. Thus, integrating these practices is not only about legal compliance but also about strengthening your company’s overall ESG profile.

Impact of Sapin 2 on Your ESG Score

Now, let’s explore the relation between Law Sapin 2 and your ESG score. ESG criteria have become a critical element in assessing the sustainability and ethical impact of a company. Law Sapin 2, particularly, influences the ‘G’ for Governance in your ESG score, as it directly relates to corporate governance practices aimed at preventing corruption and promoting transparency.

By adhering to the stipulations of Law Sapin 2, your company demonstrates a commitment to maintaining robust governance mechanisms. This compliance can enhance investor confidence and your public image, leading to potential benefits such as better investment rates and more business opportunities.

In conclusion, the Law Sapin 2 is a significant piece of legislation that affects a wide range of companies operating within or in connection with France. It is imperative to understand its requirements and ensure that your organization complies to both avoid legal repercussions and improve your ESG score. Remember, good governance is not just a legal mandate—it’s a cornerstone of a reputable and sustainable business.