FRANCE Law and Practice Contributed by: Jean-Christophe Devouge and Kaïs Boussadia, Aurès
board is legally bound to take social and environmen - tal issues into account. Corporate governance codes have increased their recommendations towards better consideration of cli - mate and environment protection-related issues, with the recommendations to create an ESG committee in charge of investigating ESG matters, the enhanced training of directors or the increase of ESG perfor - mance criteria as part of executives’ compensation schemes. Pressure to increase climate strategy reporting to shareholders is also in constant evolution. Progressive Entry Into Force of the Rixain Act Since March 2022, companies with at least 1,000 employees for three consecutive fiscal years have been required to publish data on gender inequalities among executive managers and governing bodies (such as an executive committee). As of March 2026, these companies must ensure at least 30% represen - tation of each gender among executive managers and governing bodies, increasing to 40% by March 2029. A two-year grace period will be granted for compli - ance, after which financial penalties may apply. Corporate Duty of Care Since 2017, the largest French companies, as well as large foreign companies operating in France, including through subsidiaries, have been subject to due dili - gence obligations to identify any risks and prevent any violations of human rights and fundamental freedoms, or severe abuses of human health and safety and of the environment, resulting from their activities as well as those of their subsidiaries, suppliers and subcon - tractors. These companies must establish a vigilance plan and a report on its effective implementation, to be included in the annual report. The EU Corporate Sustainability Due Diligence Direc - tive (CSDDD), as substantially revised by Directive (EU) 2026/470 (the Omnibus Content Directive) of 24 February 2026, now applies to EU companies with more than 5,000 employees and EUR1.5 billion in net worldwide turnover, with application postponed to 26 July 2029 (transposition deadline: 26 July 2028). The revised framework adopts a simplified, risk-based
approach based on a scoping exercise followed by targeted in-depth assessments, replacing exhaus - tive value chain mapping. Monitoring obligations are reduced to a five-year cycle, and information requests to business partners must be limited to what is neces - sary and reasonably available. Continuing a relation - ship with a high-risk partner does not in itself trigger sanctions where reasonable prospects of improve - ment exist. Administrative fines are capped at 3% of global turnover. Also, a harmonised EU civil liability regime has been abandoned, with liability now gov - erned by national law. The notion of stakeholders has been narrowed to workers, their representatives, and individuals or communities directly affected by the company’s activities. Extra-Financial Reporting and Corporate Sustainability Reporting Directive French listed companies and other large companies are subject to extra-financial reporting obligations (in the form of a non-financial performance declaration), significantly extended by the Corporate Sustainabil - ity Reporting Directive (CSRD) of 14 December 2022, which introduces a comprehensive sustainability report based on a double materiality principle (cover - ing both the impact of sustainability matters on the company and the company’s own impact on sustain - ability matters). The sustainability report, to be included in the annual management report, must be certified by authorised auditors or independent third-party organisations, and shareholders holding at least 5% of the capital or vot - ing rights may request the appointment of a separate certifier to draft a separate report on some or all of the sustainability information. Following the “Stop the Clock” Directive of April 2025, the CSRD timetable has been adjusted, with reporting obligations applying in three successive waves: • large listed companies with more than 500 employ - ees (2025 financial year, published in 2026); • other large companies and parent companies of large groups (2027 financial year, published in 2028); and • listed SMEs excluding micro-enterprises (2028 financial year, published in 2029).
238 CHAMBERS.COM
Powered by FlippingBook