France proposes national corporate sustainability requirement  

July 29th, 2023

The French national assembly has adopted a “Say on Climate” amendment to its Green Industry Bill, requiring all companies to establish climate and sustainability strategies.

The amendment requires the board of directors of every company to establish a climate and sustainability strategy, which would then be put to a non-binding shareholder vote every three years.

The company would also be required to produce an annual report on implementing that climate and sustainability strategy, which would then be submitted for approval by shareholders.

The proposal will be debated again in October by a joint committee of both Houses (commission mixte paritaire) when the Senate and the national assembly disagree on a bill. The committee will comprise seven deputies from the national assembly and seven senators from the Senate.

The amendment incorporates the recommendations made by the Climate and Sustainable Finance Commission (CCFD) of the French financial regulator, AMF.

The national assembly’s summary statement on the amendment said: “In line with France's pioneering approach, which makes it possible to attract investment and direct it towards the most virtuous companies, it is proposed to introduce an innovative and non-legally binding mechanism in order to facilitate a constructed dialogue between responsible investors and businesses.”

The French Council of State will set out how the climate and sustainability strategy should be published.

On July 18, the French Forum for Responsible Investment (FIR) sent an open letter to President Macron and the minister for industry Roland Lescure, urging them to support the amendment.

It said: “The European Corporate Sustainability Reporting Directive (CSRD), alone, does not encourage debate at the general meeting on the climate strategies and trajectories of listed companies. In view of the climate emergency, investors are anxious to evolve in a sustainable and inclusive economy and wish to express themselves systematically on climate and sustainability that transcend business and affect ecosystems and all of humanity.”

The move comes after the ICGN criticized the European Sustainability Reporting Standards regarding proposed disclosure requirements for companies and investors.