Introduction

Scope of application

Compliance program

Protection of whistleblowers

Audit and sanctions

Rules arising from the Sapin II Law

EU law

French law

Rules derived from competition law

Sapin II Law/Competition

Scope ratione personae

Scope ratione materiae

Scope

Development of plan

Measures included in plan

Inclusion in management report

Vigilance plan

Injunctions

Civil liability

Sanctions

Duty of vigilance (devoir de vigilance)

CSR programs

Reporting

Communication

Reporting and communication

Judicial sanctions

Risk to reputation, strategy and stability

Corporate Social Responsability (CSR)

Middlenext Code

IFA Corpus

AFEP - MEDEF Code

Types

Principles of governance

Principles incorporating CSR values

Principles

Comply or explain

Binding force

Private codes of conduct

Compliance

Introducing a corporate social responsibility (CSR) policy is important for all types of undertaking and all sectors of activity, from SMEs to multinationals, although it is more commonly imposed on large undertakings. Among the legislation governing CSR and requiring companies to implement CSR procedures, some apply to all undertakings, regardless of their form or purpose, while others apply only …

A variety of stakeholders and various legal sources and other guidelines

Introducing a corporate social responsibility (CSR) policy is important for all types of undertaking and all sectors of activity, from SMEs to multinationals, although it is more commonly imposed on large undertakings. Among the legislation governing CSR and requiring companies to implement CSR procedures, some apply to all undertakings, regardless of their form or purpose, while others apply only to certain types of undertaking.

1) Provisions applicable to all undertakings

Since the entry into force of the Pacte Law of 2019 , all types of companies have been required to address the social and environmental implications of their business activities, and can include a “raison d'être” in their articles of association (Civil Code, Art. 1833 and 1835) . Articles L. 225-35 and L. 225-64 of the Commercial Code stipulate that the company's management and administrative bodies, such as the Board of Directors or the Supervisory Board, must respect these principles when determining the direction of the company's activities. According to the Council of State, the aim of taking social and environmental issues into account is to encourage businesses to examine the social and environmental impact of their operations when fulfilling their corporate purpose and to enable them, where appropriate, to balance this against the other interests for which they are responsible. Accordingly, when implementing the provisions of Article 1833 of the Civil Code, the effects of which relate to the decision-making process, account must be taken of the nature of the activity, size, legal form and purpose of the undertakings concerned . The Council of State also found that, while the decision to impose the obligation to manage in accordance with the company's interests, on the one hand, and to take social and environmental issues into account, on the other, on all civil and commercial undertakings, could penalize small structures with little capacity for expertise, whereas large undertakings are better placed to tackle compliance risks, particularly in environmental matters, no constitutional principle obliges the legislator to treat undertakings in different situations differently . Law No 2021-1018 , which seeks to promote prevention in matters of occupational health and applies to all undertakings located in France, whatever their size or sector of activity, has introduced a number of important provisions relating to corporate social responsibility. In particular, it encourages undertakings to integrate CSR principles into their practices, taking into account the social, environmental and economic impacts of their activities, and encourages them to strengthen social dialogue to involve employees more closely in judgments affecting their health and safety at work.

Alongside national regulations are a number of international standards and instruments that can be applied to all forms of undertaking in France. For example, the professional standard ISO 26000 (NF ISO 26000, Nov. 2010) , drawn up by the International Organization for Standardization, provides guidelines for the social responsibility of undertakings and organizations. Under the terms of this standard, the organization must take responsibility for the impacts of its judgments and activities, behave ethically and respect human rights. Although these recommendations are not binding, they are often enshrined in positive law, and failure to comply with them engages the liability of undertakings that fail to do so .

The provisions adopted by international institutions that lay down the founding principles of CSR also apply to all undertakings and organizations, regardless of their form. These include the UN  Sustainable Development Goals, which set 17 targets for eradicating poverty, protecting the planet and ensuring prosperity for all by 2030, and the Global Compact launched by the United Nations in 2000 , adopted to encourage undertakings and organizations worldwide to adopt sustainable and socially responsible practices, which is based on ten universal principles in the fields of human rights, labor standards, the environment and anti-corruption, or the International Integrated Reporting Council (IIRC) . Created in 2010, the International Integrated Reporting Council (IIRC) brings together regulators, investors, undertakings, standard-setters, accounting professionals and NGOs to develop and promote an integrated reporting framework. Its “International Integrated Reporting Framework” encourages undertakings to present a complete and coherent picture of their strategy, governance, performance and prospects, with an emphasis on long-term value creation. Finally, the Global Reporting Initiative  guidelines, first published in 2000, provide a common international frame of reference for sustainability reporting. They were last revised in 2013.

2) Provisions applicable only to certain undertakings

Some regulations are aimed at specific types of undertaking. For example, Taxonomy Regulation 2020 , which classifies corporate activities according to their sustainability and plays a key role in implementing the European Green Deal, applies to financial market players who make financial products available and to undertakings subject to the obligation to publish a non-financial statement or a consolidated non-financial statement, in accordance with Article 19a or Article 29a of Directive No 2013/34 . The Guidelines of the Organisation for Economic Co-operation and Development (OECD)  are aimed at multinational undertakings to which recommendations are addressed to encourage the adoption of more responsible behavior.

Since the NRE law of 2001 , listed undertakings have been required to draw up a declaration of their extra-financial performance in favor of sustainable development. The  Grenelle II Law  subsequently extended the obligation of extra-financial transparency to listed undertakings and those with over five hundred employees and sales of EUR 100 million or more.

The Non-Financial Reporting Directive (NFRD) , transposed into national law by Ordinance 2017-1180 of 19 July 2017 on the publication of non-financial information by certain undertakings and groups, followed by its implementing decree , had set the rules for non-financial performance reporting by certain undertakings, and applied to listed companies and large public-interest enterprises with more than five hundred employees. However, deemed insufficient, it was replaced by the Corporate Sustainability Reporting Directive (CSRD) . The latter applies from 1 January 2024, not only to undertakings registered within the EU, but also to those registered in non-EU countries. The directive was transposed by Ordinance 2023-1142 of December 6, 2023. From now on, French undertakings must include sustainability information in a separate section of their management report. This obligation applies to large undertakings (Art. L. 232-6-3, I, para. 1, Commercial Code) , to companies whose securities are listed on a regulated market (excluding micro-enterprises) and which are small or medium-sized enterprises (Art. L. 22-10-36 Commercial Code), and to any consolidating company of a large group (Art. L. 233-28-4 Commercial Code). The following are exempt from this obligation: the company and, where applicable, the companies it controls, included in the consolidated sustainability information drawn up by the company which controls it (Art. L. 232-6-3, See, para. 2, Commercial Code) and the group included in the consolidated sustainability information of another consolidating company which exercises control, within the meaning of II or III of Article L. 233-16, over the undertakings in this group (Art. L. 233-28-4 Commercial Code) .

Undertakings with a workforce of at least five hundred employees, or belonging to a group of companies whose parent company has its head office in France, with a workforce of the same size, and whose sales, or consolidated sales, exceed EUR 100 million are also required to comply with the provisions of the 2016 law on transparency, action against corruption and the modernization of economic life, known as the Sapin II Law . Lastly, limited companies (sociétés anonymes), partnerships limited by shares (sociétés en commandite par actions), simplified joint-stock companies (sociétés par action simplifiée) and European companies (sociétés européennes) employing, at the close of two consecutive financial years, at least five thousand employees within their company and in its direct or indirect subsidiaries whose registered office is located on French territory, or at least ten thousand employees within their company and in its direct or indirect subsidiaries whose registered office is located on French territory or abroad are subject to the rules set out in Articles L. 225-102-4 and L. 225-102-5 of the Commercial Code, which govern the duty of vigilance.

Law No 2019-486 of 22 May 2019 relating to the growth and transformation of undertakings, JORF 0119 of 23 May 2019.

CE, 14 June 2018, LawLex202400003218JBJ, which states that neither the constitutional objective of intelligibility of the law nor any constitutional principle in themselves prevent the Pacte bill from providing a simple option for undertakings wishing to do so to include a raison d'être in their articles of association.

https://www.globalreporting.org/how-to-use-the-gri-standards

Regulation No 2020/852 of 18 June 2020 on the establishment of a framework to facilitate  sustainable investment, and amending Regulation No 2019/2088 on sustainability‐related disclosures in the financial services sector.

This concerns large undertakings that are public-interest entities exceeding, at their balance sheet date, the criterion of an average number of 500 employees, and public-interest entities that are parent undertakings of a large group exceeding, at their balance sheet date, on a consolidated basis, the criterion of an average number of 500 employees over the financial year.

https://mneguidelines.oecd.org/mneguidelines/

Law No 2001-420 of 15 May 2001 on new economic regulations, JORF 113 of 16 May 2001.

Law No 2010-788 of 12 July 2010 on national commitment to the environment, JORF No 0160 du 13 July 2010.

Directive No 2014/95 of 22 October 2014 amending Directive No 2013/34/EU as regards the publication of non-financial and diversity-related information by certain large undertakings and certain groups.

Decree No 2017-1265 of 9 August 2017 to implement Ordinance No 2017-1180 of 19 July 2017 on the publication of non-financial information by certain large undertakings and certain groups of undertakings, JORF 0187 of 11 August 2017.

Directive No 2022/2464 of 14 December 2022 amending Regulation No 537/2014 and Directives No 2004/109/EC, 2006/43/EC and 2013/34/EU as regards corporate sustainability reporting.

According to Article L. 230-1, a large company is one which, at the closing date of the financial year, exceeds the thresholds for at least two of the following three criteria: balance sheet total, net sales and average number of employees during the financial year. Article D. 230-1 specifies these thresholds:

- either direct or indirect ownership of the majority of voting rights in another company;

- the appointment, for two successive years, of a majority of the members of the administrative, management or supervisory bodies of another undertaking. The consolidating undertaking is presumed to have made such an appointment when, during this period, it directly or indirectly held more than 40% of the voting rights, and no other partner or shareholder directly or indirectly held more than its own;

2) joint control, which is the sharing of control over an undertaking operated jointly by a limited number of partners or shareholders, so that decisions result from their agreement.

Law No 2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernization of economic life, JORF No 0287 of 10 December 2016.

Law No 2021-1018 of 2 August 2021 to reinforce prevention in occupational healthcare, JORF No 0178 of 3 August 2021.

https://www.omh-convergence.org/userfiles/files/ISO%2026000%20V2010.pdf.

This applies notably to rules on working hours, barriers and discrimination, and undeclared work.

Adopted by the United Nations in 2015 and available at https://www.undp.org/sustainable-development-goals

Available athttps://unglobalcompact.org/what-is-gc/mission/principles

http://integratedreporting.org/resource/international-ir-framework/

Compliance

127. A variety of stakeholders and various legal sources and other guidelines

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127. A variety of stakeholders and various legal sources and other guidelines

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