FRANCE Trends and Developments Contributed by: Laetitia Tombarello and Audrey Demourgues, Bredin Prat
More specifically, companies required to prepare a management report must consult their works coun - cil on the sustainability information contained in the report. The situation is less clear for companies required to consult their works council on sustain - ability but exempt from including such information in their management report. Legal commentary suggests that the consultation should focus on the parent com - pany’s report, with particular attention to the impact on the relevant subsidiary, notably on the grounds that the works council’s prerogatives primarily con - cern information that directly concerns and interests the company. Also, the broad language of the new provisions does not specify what constitutes sufficient information regarding “the means for obtaining and verifying sus - tainability information”. Some legal scholars suggest that this may refer to the processes established by the company to collect sustainability data from various stakeholders, as well as verification measures imple - mented by the company, for example, in the context of the certification report issued by statutory auditors and/or independent third parties’ reports. Seeking further clarification on these points will be a top priority for companies in the coming years to ensure compliance with the new consultation pro - cess. Notably, failure to comply with works council consultation requirements could constitute a crimi - nal offence ( délit d’entrave ), punishable by a fine of up to EUR7,500 for company representatives (and EUR37,500 for the company itself). In the interim, companies already subject to these new consultation requirements are strongly encouraged to take three steps, as follows. • Identify the most appropriate recurring consultation for addressing sustainability issues with the works council. To date, legal commentators consider the consultation on the company’s economic and financial situation to be the most suitable, as the management report (including sustainability information) and the corresponding auditors’ report are provided to the works council in advance of this meeting. This would also allow the company to take into account in the report for the following
financial year potential observations from employee representatives, which would ensure the effective - ness of the work council’s consultation. • Prepare, ahead of the relevant consultation, an informative document for employee representa - tives, detailing relevant data, collection methods and verification mechanisms. Where a consoli - dated management report is involved, company- specific data should be highlighted, particularly regarding activities, products or geographic areas concerned, in line with the works council’s scope of competence. • Where feasible, consider negotiating a collective agreement with representative trade unions to define the modalities of this new consultation. These legislative developments mark a significant evolution in French employment law, underscoring the growing importance of collective rights and sus - tainability in corporate governance. Nevertheless, in the current political and global context, uncertainty remains regarding the future of measures such as the CSRD regulations. With the “Omnibus I” legislative proposal of February 2025, the European Commission expressed its intention to alleviate the regulatory and administrative burdens faced by European companies, particularly those involved in the ecological transition, by streamlining sustainability, due diligence, and tax - onomy reporting requirements. This initiative forms part of a broader strategy to strengthen the EU’s competi - tiveness, particularly in response to recent reports high - lighting a decline in the productivity of European indus - try compared to China and the US. French President Macron has signalled his alignment with this approach and pushed even further in May 2025 by calling for the repeal of the EU Directive on the duty of vigilance (the so-called “CS3D”), a position that has also been endorsed by the German Chancellor. In light of these factors, further changes will likely emerge in the coming months and years, potentially introducing greater flexibility to sustainability regu - lations in France and across the EU, including for companies already subject to the CSRD. Against this backdrop, it is not impossible that the rules could be relaxed somewhat or even switched back to a previ - ous state, making it all the more essential to monitor this evolving landscape.
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