ESG Global Vision

Social policy

In force

All companies

The PACTE Law was the result of a two-phase consultation process – one phase conducted by six working groups made up of members of the French Parliament and business managers, and the other opened to all citizens and stakeholders. It intends to give corporations the possibility to go beyond the objective of being profitable. Companies are then encouraged to incorporate social and environmental objectives to their corporate purpose and interests.

Non-financial reporting

• Entry into force: 5 December 2014.
• Application: 2018 (covering financial year 2017). 

Financial and non-financial entities that qualify as large public interest entities with more than 500 employees (scope being re-considered).

The NFRD imposes requirements on large public interest entities to include a non-financial statement in their annual report. The non-financial statement should cover, as a minimum, environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters.

The EC is conducting a review of the NFRD with a view to making the disclosure guidelines mandatory, extending the scope of NFRD to a broader range of companies and organisations, requiring some form of assurance for climate disclosures and developing an EU-wide ESG reporting standard in the absence of a globally recognised one. A draft legislative proposal has been adopted by the Commission on 21 April 2021 (Proposal for a Corporate  Sustainability Reporting Directive (CSRD)). 

Corporate governance policy

Entry into force: 9 June 2017

Companies that have their registered office in the EU and their shares listed on a regulated market in the EU.

SRD II enhances the SRD regime by introducing rules that aim to counter an excessive focus on short-term profits and risk-taking in favour of a longer term, more sustainable model of corporate governance that considers the wider interests of shareholders and stakeholders.

Financial reporting

Entry into force: 29 December 2019. Application:

• Level 1 (high level and principles based requirements) apply from 10 March 2021.
• Level 2 (regulatory technical standards) expected to apply from Q1 2022.

Financial advisers and financial market participants

The Disclosure Regulation sets out a number of entity and product level disclosures required to be made by financial advisers and financial market participants from 10 March 2021.

Financial reporting

Published by the EC on 21 April 2021.

Application: rules expected to start applying from around October 2022.

Firms within the scope of MiFID, AIFMD and UCITS.

The proposed amendments set out obligations on investment funds, mutual funds, alternative investment funds (AIFs), investment firms, insurance firms and brokers, and reinsurance companies to provide clients with clear advice on ESG risks and opportunities attached to their investments.

Find out more:

MiFID Delegated Regulation

Delegated Directive

AIFMD Delegated Regulation

UCITS Implementing Directive

Corporate governance policy

Entry into force: 2 August 2022

Management companies and credit institutions

The Delegated Regulation concerns integration of sustainability factors, risks and preferences into certain organisational requirements and operating conditions for investment firms.

Corporate governance policy

Entry into force: 2 August 2022

Any alternative investment fund.

The Delegated Regulation concerns sustainability risks and sustainability factors to be taken into account by alternative investment fund managers.

Corporate governance policy

Entry into force: 2 August 2022

Any insurance and reinsurance undertaking.

The Delegated Regulation concerns the integration of sustainability risks into the governance of insurance and reinsurance undertakings.

The Delegated Regulation provides for the integration of sustainability risks in the prudent person principle. In particular, when dealing with risks arising from investments, insurance and reinsurance undertakings shall take into account sustainability risks. More precisely they shall take into account the potential long-term impact of their investment strategy and decisions on sustainability factors and, where relevant, that strategy and those decisions of an insurance undertaking shall reflect the sustainability preferences of its customers taken into account in the product approval process referred to in Article 4 of Commission Delegated Regulation (EU) 2017/2358 (product oversight and governance requirements for insurance undertakings and insurance distributors).

Corporate governance policy

Entry into force: 2 August 2022

Any insurance undertaking and distributor of insurance products.

The Delegated Regulation concerns the integration of sustainability factors, sustainability risks, and sustainability preferences into product control and product governance requirements for insurance companies and distributors of insurance products and into conduct of business rules and investment advice for insurance investment products.

Corporate governance and financial policy

Entry into force: Member States shall implement the Directive by 22 November 2022.

Any Member State

The Delegated Directive concerns the integration of sustainability factors into product governance obligations (safeguarding of financial instruments and funds belonging to clients, product governance obligations and the rules applicable to the provision or reception of fees, commissions or any monetary or non-monetary benefits).

Corporate governance and financial policy

Entry into force: Member States shall implement the Directive by 2 August 2022

Any Member State

The Delegated Directive concerns sustainability risks and sustainability factors to be taken into account for undertakings for collective investment in transferable securities (UCITS).

In particular, management companies should, when identifying the types of conflicts of interest the existence of which may damage the interests of a UCITS, include conflicts of interest that may arise as a result of the integration of sustainability risks in their processes, systems and internal controls. Those conflicts may include conflicts arising from remuneration or personal transactions of relevant staff, conflicts of interest that could give rise to greenwashing, mis-selling or misrepresentation of investment strategies and conflicts of interests between different UCITS managed by the same management company.

Social policy

Entered into force on 1 June 2017

Companies employing at least 500 employees and companies belonging to a group with at least 500 employees and turnover exceeding of €100 million.

According to article 17 of the Law, relevant companies must implement:

• a code of conduct defining and illustrating the different types of behaviour to be avoided as likely to constitute corruption or trading in influence;
• an internal whistleblowing system designed to enable the collection of reports from employees concerning the existence of conduct or situations contrary to the code of conduct of the legal entity; and
• risk mapping in the form of regularly updated documentation designed to identify, analyze and prioritize the risks of exposure of the legal entity to external solicitations for the purposes of corruption.

Social policy

Entered into force on 1 September 2022

Companies employing at least 50 employees

The Law broadens the scope of beneficiaries of the whistle-blower's protective status, simplifies the procedures for whistleblowing and improves the protection afforded to whistle-blowers. In addition, according to the French Labour Code, the relevant companies’ internal regulations must include a whistle-blower protection scheme.

Social policy

Entered into force on 5 October 2022

Private entities employing at least 50 employees and certain public entities employing at least 50 employees

The decree specifies the procedures for collecting and processing whistle-blower alerts and sets out the list of external authorities established by Law 2022-401 of 21 March 2022 aimed at improving the protection of whistle-blowers. The concerned entities must establish a procedure for collecting and processing internal alerts.

Various provisions are included, notably relating to: (i) the calculation of the threshold of 50 employees, (ii) the legal instrument to establish the procedure for collecting and processing internal reports, after consulting the relevant employment bodies, (iii) the determination of the channels to receive alerts (phone, videoconference, face-to-face meeting, etc.), (iv) the publicity and dissemination measures of the alert procedure to the employees, (v) the designation of the persons and services authorised to collect and process alerts, (vi) measures to process internal alerts (analysis of the admissibility, request for additional information, etc.), and (vii) measures to ensure the confidentiality and integrity of the information collected.

Find out more:

Decree no 2022-1284 of 3 October 2022, implementing the 

Law on improving whistle-blower protection

Social policy

Entry into force: 8 December 2020

Consolidated version adopted on 22 March 2021.

EU persons, companies incorporated or constituted under the law of an EU Member State, non-EU companies in respect of any business done in whole or in part within the EU.

In December 2020, the Council adopted the EU’s first global human rights sanctions regime. This new regime allows the EU to impose travel bans and financial sanctions on individuals, entities and bodies (including state and non-state actors) responsible for, involved in or associated with serious human rights violations and abuses worldwide, irrespective of where they occurred.

Social policy

Directive entered into force on 6 June 2023 and Member States must implement within three years, by 7 June 2026

Employers in the public and private sectors

This Directive aims to improve equal pay between men and women through greater pay transparency and better access to justice in the event of unequal pay.

The Directive provides for a reporting obligation for employers with 100 or more employees on the gender pay gap between female and male workers in their organisation. Companies with more than 250 employees will be required to report annually to the relevant national authority (to be determined). For smaller organisations (initially those with over 150 employees), the reporting obligation should take place every three years.

The Directive also provides for better access to information for job applicants, workers and their representatives, a shift of the burden of proof (of equal pay) to the employer in pay discrimination cases, and an obligation for Member States to introduce effective and appropriate sanctions for non-compliance, including fines.

Social policy

Entered into force on 27 December 2021

Companies employing at least 50 employees

According to article 13 of the Law, companies with at least 50 employees must publish the professional equality index regarding all indicators relating to the pay gap between women and men, which is made public on the website of the Ministry of Labour, as well as any corrective measures and progress on achieving the targets adopted.

According to article 14 of the Law, companies with at least 1,000 employees must publish any differences in gender representation among their senior executives and members of their management bodies, and must ensure a balanced gender distribution among these same people.

Non-financial reporting

A draft legislative proposal has been adopted by the Commission on 21 April 2021.

The CSRD has been adopted by EU Parliament on 10 November 2022 and Council should adopt on 28 November 2022. Publication in EUOJ should follow and CSRD should enter into force 20 days after the publication.

The rules will start applying between 2024 and 2028:

• From 1 January 2024 for large public-interest companies (with over 500 employees) already subject to the non-financial reporting directive, with reports due in 2025;
• From 1 January 2025 for large companies that are not presently subject to the non-financial reporting directive (with more than 250 employees and/or €40 million in turnover and/or €20 million in total assets), with reports due in 2026;
• From 1 January 2026 for listed SMEs and other undertakings (small and non-complex credit institutions and captive insurance undertakings), with reports due in 2027. SMEs can opt-out until 2028.

Listed companies, with the exception of listed micro-enterprises.

The CSRD Directive addresses shortcomings in existing legislation on the disclosure of non-financial information (NFRD), perceived as largely insufficient and unreliable. The CSRD introduces more detailed reporting requirements on companies’ impact on the environment, human rights and social standards, based on common criteria in line with EU’s climate goals. The Commission will adopt the first set of standards by June 2023.

To ensure companies are providing reliable information, they will be subject to independent auditing and certification. Financial and sustainability reporting will be on an equal footing and investors will have comparable and reliable data. Digital access to sustainability information will also have to be guaranteed.

Social policy

EC’s legislative proposal adopted on 23 February 2022.

The proposal will be presented to the European Parliament and the Council for approval. Once adopted, Member States will have two years to transpose the Directive into national law.

EU companies:

• Group 1: all EU limited liability companies of substantial size and economic power (with 500+ employees and EUR 150 million+ in net turnover worldwide).
• Group 2: Other limited liability companies operating in defined high impact sectors, which do not meet both Group 1 thresholds, but have more than 250 employees and a net turnover of EUR 40 million worldwide and more. For these companies, rules will start to apply 2 years later than for group 1.

Non-EU companies active in the EU with turnover threshold aligned with Group 1 and 2, generated in the EU.

The Draft Directive sets out duties for companies in scope to undertake due diligence for actual or potential adverse human rights and environmental impacts in their own operations, those of their subsidiaries and in their value chains (direct and indirect established business relationships).

In addition, group 1 companies need to have a plan to ensure that their business strategy is compatible with limiting global warming to 1.5 °C in line with the Paris Agreement.

The proposal also includes provisions in relation to voluntary model contractual clauses, public support by Member States, and directors' duties.

National administrative authorities appointed by Member States will be responsible for supervising these new rules and may impose fines in case of non-compliance. In addition, victims will have the opportunity to take legal action for damages that could have been avoided with appropriate due diligence measures.

Social Policy

In force (Member States are required to implement the Directive)

Any member State

Under the new rules, workers are, inter alia, entitled to greater predictability regarding assignments and working hours. They will also be entitled to receive timely and more complete information about essential aspects of their work, such as their place of work and pay. The new rules will particularly benefit some 2-3 million workers with precarious forms of employment.

Environmental policy

In force

All companies

Adopted on 8 November  2019, the energy-climate law sets ambitious goals for French climate and energy policy. Comprising 69 articles, the text includes the objective of carbon neutrality in 2050 to respond to the climate emergency and the Paris Agreement. Among the important measures, France will allocate a budget of 71 billion euros for investment in renewable energy by 2028. Article 40 introduces the concept of a renewable energy community. It is a legal entity controlled by shareholders or members located in the vicinity of the renewable energy projects it has subscribed to and developed. The law also allows low-income housing organizations to become the legal entity organizing a collective self-consumption operation, which will allow tenants to reduce their energy bills. Finally, the law creates the High Council for the Climate, an independent advisory body that will evaluate France's climate strategy and the effectiveness of the policies implemented to achieve its ambitions.

Environmental policy

In force

Companies employing at least 50 employees

Articles 40 and 41 of the Law include a number of provisions designed to involve trade union organisations and the Social and Economic Committee (CSE) more closely in the fight against environmental matters.

Article 40 introduces the obligation to take account of the challenges of the ecological transition in branch and company negotiations on management of jobs and skills (GPEC) and includes the subject of the ecological transition in the consultative remit of the CSE.

Article 41 renames the economic and social database (BDES), which becomes the economic, social and environmental database (BDESE) and enriches its content, extends the training of elected representatives, broadens the remit of the CSE's accountant to include the environmental consequences of companies' activities and, finally, renames economic, social and trade union training leave, which becomes economic, social, environmental and trade union training leave.

Environmental policy

In force; some measures will come into force on 1st January 2023

Companies (some provisions concern only companies meeting specific thresholds which are determined for some and yet to be determined for others). For more information, please contact our team.

The Climate and Resilience law, which was enacted on 22 August 2021 creates new transparency obligations for companies with respect to environmental issues. The targeted companies are required to include an analysis of the consequences of their activities on climate change in their management report. Their "vigilance plan" is now required to include an analysis of the deforestation risks associated with the production and transport to France of imported goods and services. Advertising in favour of fossil fuels is already banned and those on the most polluting cars will be banned in 2028. Codes of conduct must be signed by companies so that they commit to changing their advertising to take into account climate issues. Companies are notably required to provide summary information on the environmental impact of goods and services. Following a public consultation that started in January 2022, environmental clauses in public contracts will also be tightened. In terms of social dialogue, the ecological transition is included in the general remit of social and economic committees (CSE). Each topic subject to an information and consultation procedure of the CSE has to take into account the environmental consequences of the company's activities.

Environmental policy

In force on 1^st January 2023

All companies

The decree defines the terms and conditions of communication by advertisers on the carbon neutrality of their products or services. It also provides for counterparts to these claims, in order to ensure transparency vis-à-vis the public and to prevent any risk of "greenwashing".

In addition, any company claiming to be carbon neutral is required to produce a greenhouse gas emissions report for the product or service concerned in accordance with the NF EN ISO 14067 standard. 

Environmental policy

In force on 28 April 2022

Any actor carrying out mandatory or voluntary offsetting, aircraft operators who are required to offset the greenhouse gas emissions of their flights within the national territory.

The decree specifies the terms and conditions for applying the principles of carbon offsetting set out in Article 147 of the Climate and Resilience Law, being measurability, verifiability, permanence, additionality and transparency

The decree also sets the terms and conditions for applying the obligation to offset greenhouse gas emissions from domestic flights by aircraft operators introduced by Article 147 of the Climate and Resilience Law.

This decree only applies to aircraft operators generating more than 1,000 tons of CO2 per year on the national territory [of France].

For the year 2022, such aircraft operators must offset 50% of their emissions. This figure will rise to 70% in 2023 and 100%from 2024.

In addition, they will be required to send to the competent Ministry, by 31 March each year at the latest, a declaration on the previous year's emissions as well as, before 1 June, a compensation report justifying the reductions and sequestrations of these declared emissions.

In the event of non-compliance with the compensation, the amount of the fine is €100 per ton of greenhouse gases not compensated by the operator. The fine also applies in the event of failure to submit the compensation report.

The decree also clarifies the methodology for calculating the data, the validation process by the competent authorities, but also the eligibility criteria for offset projects and the process for purchasing and cancelling carbon credits. 

Environmental policy

In force on 1^st July 2023 

Digital platforms connecting self-employed workers employing more than 50 workers

The decree provides the obligation for platforms delivering goods on motorised two- or three-wheeled vehicles to which a minimum number of workers are attached to have a minimum rate of cycles, including pedal-assisted cycles, or very low emission vehicles among the vehicles used. 

It further requires publication of the monitoring of the greening objectives of the vehicles affiliated to the platforms mentioned above. The decree determines the rates of cycles, including pedal-assisted cycles, and two- or three-wheeled motorised vehicles with very low emissions to be met. On 31 December of each year from 2023 until 31 December 2024, the minimum share of "green" cycles used in the context of the introduction of new vehicles shall be 20% during the previous year. Thereafter, this share must change :

• on 31 December of each year from 2025 until 31 December 2026, this minimum annual share shall be 50%;
• on 31 December of each year from 2027 until 31 December 2029, this minimum annual share shall be 80%;
• on 31 December of each year from 2030 onwards, this minimum annual share shall be 100%.

In addition, it is required that, for each service provided by one of the workers that these platforms put in contact, information on the type of vehicle used be provided to the beneficiary at the same time as the order is made.

Finally, the decree defines the data required to establish this monitoring as well as the methods of their publication and provides details on the reporting and publication of data for short-term rental companies.

Environmental policy 

On 1st January 2023

ll goods and services companies.

From 1 January 2023 producers and importers with a turnover of more than 50 million euros for the products referred to in Article R. 541-221 of the French Environmental Code, and placing more than 25,000 units of all its products concerned on the market.

From 1 January 2024 producers and importers with a turnover of more than 20 million euros for the products referred to in Article R. 541-221 of the French Environmental Code, and placing more than 10,000 units of all its products concerned on the market.

From 1 January 2025 producers and importers with a turnover of more than 10 million euros for the products referred to in Article R. 541-221 of the French Environmental Code, and placing more than 10,000 units of all its products concerned on the market. 

This decree concerns consumer information on the environmental qualities and characteristics of waste generating products.

The persons concerned must make available to the consumer at the time of purchase and in a digitized format accessible free of charge, the information relating in particular to:

• compostability, incorporation of recycled material, reusability, recyclability, presence of precious metals and rare earths, presence of hazardous substances, geographical traceability and presence of plastic microfibers;
• the premiums or penalties paid for each product for its environmental performance.

Environmental policy

In force

All companies and public entities.

Entered into force on 16 November 2021, the Digital Impact Reduction Law aims to reduce the environmental footprint of digitization. It is based on four priorities: making users aware of the environmental impact of digitization; limiting the renewal of digital terminals; promote virtuous digital uses; and having an environmental regulation emerge to prevent increased energy consumption and polluting emissions in networks and data centres. Some implementing measures are yet to be published in 2022.

Environmental policy

In force

The electronic communications, terminals and data centre sector.

Entered into force on 24 December 2021, this law gives the power to collect data on the environmental impact of digital technology to the ARCEP, the French regulatory authority for electronic communications, posts and press distribution.

Environmental policy

In force

All companies. Focus on SMEs for project financing.

The law on the energy transition for green growth (LTECV), as well as the accompanying action plans (Decree no. 2020-456 of 21 April 2020 and Decree no. 2020-457 of 21 April 2020), aims to enable France to contribute more effectively to the fight against climate disruption and the preservation of the environment, as well as to strengthen its energy independence while offering its companies and citizens access to energy at a competitive cost. The law introduces a Financing Fund for the Energy Transition which will support projects elaborated by corporations of all sizes. The law also establishes the possibility of using participatory financing mechanisms for renewable energy production projects.

Environmental policy

In force; some measures will come into force on 1 January 2024.

All goods and services companies.

The AGEC Law intends to accelerate the change of production and consumption model in order to limit waste and preserve natural resources, biodiversity and climate. In particular, the law harmonizes consumer information on the environmental characteristics of products offered for sale (incorporation of recycled material, durability...). It also institutes a voluntary environmental or social display system for all goods and services companies.  In order to act against planned obsolescence, certain electrical and electronic equipment must include, from 2021, a reparability index (a score out of 10). A durability index (reliability, robustness of the product...) will also be introduced in 2024. The strategy for the reduction, reuse, re-employment and recycling of single-use plastic packaging was adopted (Decree no. 2022-549 of 14 April 2022).

Financial reporting

Entry into force: 10 December 2019

Benchmark administrators

The Benchmark Regulations require benchmark administrators to disclose ESG factors, and include disclosure in their benchmark statement on how their methodology aligns with the target of carbon emissions reduction or attains the objectives of the Paris Agreement.

Taxonomy, financial reporting and non-financial reporting

Applies from 1 January 2022.

The following delegated acts were approved by the Commission for scrutiny by the co-legislators:

Delegated Act on sustainable activities for climate change adaptation and mitigation objectives

Delegated act supplementing Article 8

• Financial market participants who offer financial products and market these as environmentally sustainable
• Organisations covered by the NFRD and SFDR

The Taxonomy Regulation sets out an EU-wide framework and classification system according to which investors and businesses can assess whether certain economic activities are environmentally sustainable.

The Taxonomy Regulation introduces amendments to disclosure requirements under SFDR and NFRD.

Financial reporting

In force

EU Institutions and national governments.

The European Climate Law writes into law the goal set out in the European Green Deal – for Europe’s economy and society to become climate-neutral by 2050.

Taxonomy, financial reporting and non-financial reporting

Entry into force: 29 December 2021.

Application from 1 January 2022.

1. Financial market participants who offer financial products and market these as environmentally sustainable
2. Organisations covered by the NFRD and SFDR

The Net Zero Investment Framework provides recommended methodologies and actions which asset owners and asset managers should utilise to assess and undertake alignment of their portfolios towards net zero, in order to maximise their contribution to the decarbonisation of the real economy. The Framework puts forward metrics to assess investments and measure alignment, and requires investors to set concrete targets at portfolio and asset level.

The key recommendations revolve around governance and strategy, portfolio reference targets, strategic asset allocation, asset class alignment, policy advocacy, and stakeholder and market engagement.

Investors are encouraged to publish information annually on how they consider their targets to be aligned to a pathway to achieve global net zero emissions by 2050, and the strategy and actions they have implemented across all asset classes, and performance against the objectives and targets over time.

Financial reporting

Entry into force: 23 December 2020

Benchmark administrators

The three Delegated Acts required by the Low Carbon Benchmarks Regulation and adopted by the EC, set out (i) the environmental, social, and governance (ESG) disclosure requirements for benchmarks provided in accordance with the EU Benchmarks Regulation (Regulation (EU) 2016/1011), and (ii) sustainability criteria in order for a benchmark to qualify as an EU Climate Transition Benchmark or EU Paris-aligned Benchmark. Those are:

Commission Delegated Regulation (EU) 2020/1816

Commission Delegated Regulation (EU) 2020/1817

Commission Delegated Regulation (EU) 2020/1818

Environmental policy

Entry into force : Member States shall bring into force the provisions of the Directive by 10 March 2020

Any EU Member State

This Directive presents some amendments to Directives 2010/31 and 2012/27 to better address and ensure that sustainability requirements are met in building construction activities, new building characteristics and building energy performance aspects.

Social policy, due diligence obligation

Entry into force: 8 June 2017.

New consolidated version adopted on 19 November 2020.

Application: 1 January 2021

EU-based importers of tin, tantalum, tungsten and gold

The regulation requires EU importers of the four minerals – tin, tantalum, tungsten and gold – to ensure they use only responsible and conflict-free sources.

They need to comply with, and report on, supply chain due diligence obligations if the minerals originate (even potentially) from conflict-affected and high-risk areas.

Companies from outside the EU are also impacted as EU-companies will need to make sure they source from responsible smelters and refiners.

Environmental policy

In force; some measures will come into force on January 1st, 2022.

All goods and services companies.

The AGEC Law intends to accelerate the change of production and consumption model in order to limit waste and preserve natural resources, biodiversity and climate. In particular, the law harmonizes consumer information on the environmental characteristics of products offered for sale (incorporation of recycled material, durability...). It also institutes a voluntary environmental or social display system for all goods and services companies.  In order to act against planned obsolescence, certain electrical and electronic equipment must include, from 2021, a reparability index (a score out of 10). A durability index (reliability, robustness of the product...) will also be introduced in 2024.

Non-financial reporting, environmental policy, social policy

In force

French joint stock companies employing at least 5,000 employees in France or 10,000 worldwide, directly or through their subsidiaries.

The French corporate duty of vigilance law establishes a legally binding obligation for large parent companies to identify and mitigate human rights and environment risks resulting from their own activities and the activities of the companies they control, subcontractors and suppliers.

Non-financial reporting, environmental policy, social policy

In force

French joint stock companies employing at least 5,000 employees in France or 10,000 worldwide, directly or through their subsidiaries.

Article 56 of this law, entered into force on 24 December 2021 and implemented in Article L. 211-21 of the French Code of Judicial Organization, sets new jurisdiction rules for Duty of Vigilance disputes in France. It confers jurisdiction to the Paris Civil Court to hear disputes relating to vigilance plans.

Environmental and social policy

In force

All companies. Focus on SMEs.

To face the epidemic of the Coronavirus Covid-19, the Government has put in place from the beginning of the crisis unprecedented measures to support businesses and employees. In order to quickly and sustainably recover French economy, the Government has deployed a €100 billion recovery plan based on three main components: ecology, competitiveness and cohesion. €30 billion are to be allocated to energy transition. One year after the launch, €47.4 billion has already been committed, including €10 billion for ecology; the Government's objective was to deploy €70 billion by the end of 2021.

Environment, Stakeholder relations and social licence to operate

In force

Large listed companies with a balance sheet of more than €20 million or a turnover of more than €40 million and 500 employees / non listed companies with more than €100 million in balance sheet or turnover and 500 employees

Decree no. 2017-1265 of 9 August 2017 and Order no. 2017-1180 of 19 July 2017 implemented the EU Non-Financial Reporting Directive (Directive 2014/95/EU), by introducing Articles L. 225-102-1; R. 225-104, R. 225-105 to R. 225-105-2, L. 22-10-36 and R. 22-10-29 in the French Commercial Code.

Under these provisions, since 2017, companies have to include information about their performance or impact on the  environment, human resources, social aspects, human rights and prevention of bribery and extortion in their annual report

Prudential measures

Entry into force: 30 December 2019

Institutions subject to supervision by the EBA, EIOPA and ESMA

The Omnibus Regulation establishes ESG-related factors as part of the EBA, EIOPA and ESMA’s "scope of action" and assigns each with the task of monitoring and assessing ESG-related developments in their areas of competence.

The Omnibus Regulation also modifies Article 23 (1) of each regulation, requiring each authority to develop criteria for the identification and measurement of systemic risk, including environmental risks, and Article 29 (1) of each regulation, requiring each authority to put in place a monitoring system to assess material ESG-related risks, taking into account the Paris Agreement.

Prudential measures

In progress

Report on Environmental, Social and Governance (ESG) risks management and supervision published on 23 June 2021

Credit institutions and investment firms

Article 98(8) of Directive 2013/36/EU (“CRD IV”) and Article 35 of Directive (EU) 2019/2034 (“IFD”) requires the EBA to develop a report providing uniform definitions of ESG risks, and appropriate qualitative and quantitative criteria for the assessment of the impact of ESG risks on the financial stability of institutions in the short, medium and long term. They also mandate the EBA to assess whether to include ESG risks in its annual prudential supervisory review and evaluation process undertaken by Member State prudential regulators (“SREP”).

Prudential measures

In progress

Report on Environmental, Social and Governance (ESG) risks management and supervision published on 24 October 2022

Credit institutions and investment firms

In June 2021, the EBA published a Report on the management and supervision of ESG risks for credit institutions and investment firms in accordance with Article 98(8) of Directive 2013/36/EU (Capital Requirements Directive - CRD) and Article 35 Directive (EU) 2019/2034 (Investment Firms Directive - IFD).

Following the publication of the EBA Guidelines on SREP for investment firms, the Report published on 24 Oct 2022 fulfils the mandate under point (d) of Article 35 of the IFD and complements the Report on the management and supervision of ESG risks for credit institutions and investment firms, published in June 2021.

Point (d) of Article 35 of IFD mandates the EBA to develop a report providing the criteria, parameters and metrics by means of which supervisors and investment firms can assess the impact of short, medium and long-term ESG risks for the purposes of the supervisory review and evaluation process. The Report has been transmitted to the EU Parliament, the Council and the European Commission.

Non-financial reporting

A draft legislative proposal has been adopted by the Commission on 21 April 2021.

The CSRD has been adopted by EU Parliament on 10 November 2022 and Council should adopt on 28 November 2022. Publication in EUOJ should follow and CSRD should enter into force 20 days after the publication.

The rules will start applying between 2024 and 2028:

• From 1 January 2024 for large public-interest companies (with over 500 employees) already subject to the non-financial reporting directive, with reports due in 2025;
• From 1 January 2025 for large companies that are not presently subject to the non-financial reporting directive (with more than 250 employees and/or €40 million in turnover and/or €20 million in total assets), with reports due in 2026;
• From 1 January 2026 for listed SMEs and other undertakings (small and non-complex credit institutions and captive insurance undertakings), with reports due in 2027. SMEs can opt-out until 2028.

Listed companies, with the exception of listed micro-enterprises.

The CSRD Directive addresses shortcomings in existing legislation on the disclosure of non-financial information (NFRD), perceived as largely insufficient and unreliable. The CSRD introduces more detailed reporting requirements on companies’ impact on the environment, human rights and social standards, based on common criteria in line with EU’s climate goals. The Commission will adopt the first set of standards by June 2023.

To ensure companies are providing reliable information, they will be subject to independent auditing and certification. Financial and sustainability reporting will be on an equal footing and investors will have comparable and reliable data. Digital access to sustainability information will also have to be guaranteed.

Corporate governance policy and financial and non-financial disclosures

In force since 2013

New consolidated version adopted on 30 September 2021.

Large institutions with securities traded on a regulated market of any EU Member State

Regulation (EU) 2019/876 amending Capital Requirements Regulation includes under article 449a the requirement to disclose prudential information on environmental, social and governance risks, including transition and physical risk, addressed to large institutions with securities traded on a regulated market of any Member State. These disclosure requirements are applicable from June 2022 on an annual basis during the first year and biannually thereinafter. 

Non-financial reporting

Voluntary standards

Financial institutions such as pension funds and asset managers

The Net Zero Investment Framework provides recommended methodologies and actions which asset owners and asset managers should utilise to assess and undertake alignment of their portfolios towards net zero, in order to maximise their contribution to the decarbonisation of the real economy. The Framework puts forward metrics to assess investments and measure alignment, and requires investors to set concrete targets at portfolio and asset level.

The key recommendations revolve around governance and strategy, portfolio reference targets, strategic asset allocation, asset class alignment, policy advocacy, and stakeholder and market engagement.

Investors are encouraged to publish information annually on how they consider their targets to be aligned to a pathway to achieve global net zero emissions by 2050, and the strategy and actions they have implemented across all asset classes, and performance against the objectives and targets over time.

Financial and non-financial reporting

Voluntary standards

Asset managers

The code focuses on socially responsible investment (SRI) funds distributed publicly in Europe and has been designed to cover a range of assets classes, such as equity and fixed income.

The principle driving the Code is that asset manager signatories should be open and honest, and disclose accurate, adequate and timely information to enable stakeholders, in particular retail investors, to understand the policies and practices of a given SRI fund.

Signatories need to make several commitments such as respecting the order and exact wording of the questions of the code, updating responses at least on an annual basis, and making the responses to the code easily accessible from the fund’s and/or fund manager’s website.

Sustainability standards

Voluntary standards

All companies

The Commission adopted on March 2022 draft revised Guidelines on the assessment of Horizontal Agreements. Such guidelines will enter into force on 1 January 2023. Chapter 9 of the guidelines concerns “sustainability agreements”. According to chapter 9, agreements which meet certain standards of sustainability can outbalance negative effects under a competition standpoint and can thus be exempted from the application of competition rules.

Corporate Governance

In force

EU financial services firms

The EU has introduced amendments to various Delegated Acts (see link) which will integrate sustainability issues into a number of key financial services Directives.

Entities will be:

• Required to integrate sustainability factors into their assessment of client suitability for certain financial products and when undertaking product approval of instruments.
• Subject to new obligations to integrate sustainability risks into risk management and conflict procedures
• Subject to new fiduciary duties, making sure that they encompass sustainability risks such as the impact of climate change.
   

Support of SMEs and organisations projects

Entry into force: 26 March 2021.

Application: 1 January 2021

EU SMEs and organisations with difficulties when accessing finance because of their perceived high risk (in particular after COVID-19 crisis).

This Regulation establishes the InvestEU Fund, which shall provide for an EU guarantee to support financing and investment operations carried out by the implementing partners that contribute to objectives of the Union’s internal policies. The Regulation also establishes an advisory support mechanism to provide support for the development of investable projects and access to financing and to provide related capacity building assistance.