FRANCE Law and Practice Contributed by: Jean-Christophe Devouge and Kaïs Boussadia, Aurès
In other words, management bodies will need to be increasingly involved in cyber risk manage - ment. They will also be held accountable if they
(CSDDD), published on 5 July 2024, providing for similar due diligence obligations applicable to EU limited liability companies of substantial size and economic power or with business in defined high-impact sectors. Following the adoption of the “Stop the Clock” Directive in April 2025, the transposition deadline for the CSDDD has been postponed. The CSDDD will now enter into force in two phases, with the first wave starting on 26 July 2028 for the largest companies, and the second on 26 July 2029 for a broader range of businesses, including certain non-EU compa - nies. Raison d’être and Mission-Driven Companies In 2019, the Pacte Act introduced two optional tools into French corporate law designed for companies intending to redirect their focus on their role in society, beyond their economic per - formance: the concept of raison d’être (core pur - pose), as well as the status of mission-driven company. The raison d’être determines the orientation of a company’s business and defines its identity and vocation, beyond its commercial purpose. Therefore, a company adopting a raison d’être makes the choice to define the ethical stand - ards according to which its activities will be con - ducted. Companies adopting a raison d’être are free to define it more or less precisely. One can observe that there is a great deal of variation in the level of precision and relevance of the cho - sen raison d’être , which has an impact on the effectiveness of this tool in terms of creating new ethical standards: the more generic the raison d’être , the less likely it is to clarify the standards binding the company. The Pacte Act also allows French companies complying with stricter requirements to be labelled as mission-driven companies. This sta -
fail to meet their obligations. 2.2 ESG Considerations ESG and Strategy
The board of directors is entrusted with the definition of the strategy of the company. In doing so, the board is legally bound to take into account social and environmental issues. Year after year, corporate governance codes increase their recommendations towards a bet - ter consideration of climate and environment protection-related issues, with the recommen - dations to create an ESG committee, in charge of investigating ESG matters or the enhanced training of directors or the increase of ESG per - formance criteria as part of executives’ compen - sation schemes. Also, pressure to increase climate strategy reporting to shareholders is in constant evolu - tion (please refer to 2.1 Hot Topics in Corporate Governance ). Corporate Duty of Care Since 2017, the largest French companies have been subject to due diligence 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 activi - ties as well as those of their subsidiaries, sup - pliers and subcontractors. These companies must establish a vigilance plan and a report on its effective implementation, to be included in the annual report. The European Union has recently adopted the Corporate Sustainability Due Diligence Directive
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