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

For an undertaking, extra-financial reporting consists in communicating the social, environmental and societal implications of its activities, as well as its mode of governance. It is an important cornerstone of a company's corporate social responsibility policy vis-à-vis its stakeholders, the general public and the State . For a long time, corporate reporting was confined to financial data. Howev …

From extra-financial reporting to sustainability reporting

For an undertaking, extra-financial reporting consists in communicating the social, environmental and societal implications of its activities, as well as its mode of governance. It is an important cornerstone of a company's corporate social responsibility policy vis-à-vis its stakeholders, the general public and the State . For a long time, corporate reporting was confined to financial data. However, since undertakings have not only financial, but also social and environmental consequences, it has become useful and even essential, for reasons of ethics and transparency, to require their publication.

Since CSR programs involve dialogue with stakeholders, extra-financial reporting helps to raise employee awareness of the importance of the undertaking's social and environmental challenges. Non-financial reporting is also aimed at investors, who can then evaluate the quality of their investment and ensure its sustainability, since socially responsible undertakings are better able to anticipate the risks associated with social and environmental crises. It also concerns the various advisors to investors (lawyers, bankers, auditors, etc.), as well as financial analysts, and beyond that all stakeholders, from customers to service providers, and consumers.

In France, the duty to publish extra- or non financial information stems from several instruments: the NRE Law of 15 May 2001, the Grenelle II Law of 12 July 2010, which extended this obligation, and finally Ordinance 2017-1180 of 19 July 2017, which transposed the Non-Financial Reporting Directive. The provisions applicable to reporting were completely overhauled by Ordinance No 2023-1142 of 6 December 2023 on the publication and certification of sustainability information and the environmental, social and corporate governance obligations of commercial undertakings  and its implementing decree . The text repeals many of the provisions introduced by the 2017 ordinance and evolves the sustainability transparency obligations of undertakings so that investors, employees and customers have easier access to detailed, standardized and comparable information at European level. Previously, undertakings subject to reporting obligations had to insert a non-financial performance statement in the management report presented to the general meeting by the board of directors or the management board. The declaration had to contain information on how the undertaking takes into account the social and environmental consequences of its activity, and could refer, where appropriate, to the information mentioned in the vigilance plan.

As of 1 January 2025, pursuant to Article L. 232-6-3 of the Commercial Code, in order to understand the impact of the company's activity on sustainability issues, and the ways in which these issues influence the development of its business, results and situation, any undertaking that is a large company as defined in Article L. 230-1 , includes sustainability information in a separate section of its management report. This obligation also applies to companies whose securities are publicly traded on a regulated market and which are small or medium-sized enterprises (Art. L. 22-10-36 Commercial Code)  and to any consolidating company of a large group, within the meaning of Article L. 230-2, except where the group is 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). When the undertaking is not subject to the provisions of Articles L. 232-6-3 or L. 22-10-36, provided it is not a small enterprise, the management report must contain, to the extent necessary for an understanding of the development of its business, results or situation, indicators of a non-financial nature relating to the specific activity of the undertaking, in particular information relating to environmental and staff issues.

Sustainability issues include environmental, social and corporate governance issues. Sustainability information should describe:

- the company's business model and strategy ;

- the company's sustainability objectives, with deadlines, and the progress made in implementing those objectives;

- the role of management, administrative or supervisory bodies with regard to sustainability issues, as well as the skills and expertise of the members of these bodies or the opportunities available to them to acquire them;

- the undertaking's policies regarding sustainability issues;

- incentives linked to sustainability issues granted by the undertaking to members of its management, administrative or supervisory bodies;
- the procedures implemented to ensure reasonable due diligence with regard to sustainability issues and any adverse impacts identified in this context, where applicable in application of EU law;

- the main potential or actual negative impacts, the measures taken to identify, monitor, prevent, eliminate or mitigate them, and the results achieved;

- the principal risks to the undertaking in relation to sustainability issues, including its main dependencies, and how it manages those risks.

Where applicable, information on the undertaking's activities and value chain, including its products and services, commercial relationships and supply chain.

For SMEs covered by Article L. 22-10-36, sustainability information may be limited to a description of:

- the undertaking's business model and strategy;

- the company's policies on sustainability issues; 

- the main actual or potential negative impacts of the undertaking on sustainability issues, and the measures taken to identify, monitor, prevent, mitigate or remedy them;

- the principal risks to the undertaking in relation to sustainability issues, and how it manages them.

The sustainability report must also specify, as appropriate, whether the information relates to short-, medium- or long-term timeframes. The information also contains a statement as to whether the objectives relating to environmental issues are based on sound scientific data. Where applicable, the same information refers to and provides additional explanations for the other information contained in the management report referred to in Article L. 232-1 and the amounts shown in the annual financial statements. Information concerning imminent developments or matters under negotiation may be omitted in exceptional cases when, in the duly reasoned opinion of the Board of Directors, the Executive Board or the Managing Director, its publication would be seriously detrimental to the group's commercial position, provided that such omission does not hinder a fair and balanced understanding of the development of the group's business, its results, its situation and the impact of its activities.

This information is presented in accordance with the sustainability reporting standards adopted by the Commission pursuant to Article 29b of Directive No 2013/34. The annual report must be drawn up in the electronic reporting format specified in Article 3 of Regulation No 2019/815 and tag the sustainability information and the information required by Article 8 of Regulation 2020/852 in accordance with the same format.

Sustainability information must be certified by a statutory auditor registered on the list referred to in II of Article L. 821-13, or by an independent third-party organization registered on the list referred to in I of Article L. 822-3. The independent third-party may not accept an assignment to certify sustainability information from a public-interest entity if, during the financial year preceding that in respect of which the assignment is performed, the independent third-party or any member of the network to which it belongs has provided, directly or indirectly, to the public-interest entity, or to the persons or entities which control it or which are controlled by it in the EU , within the meaning of I and II of Article L. 233-3, the services mentioned in e) of paragraph 1 of Article 5 of Regulation No. 537/2014 of 16 April 2014. The independent third-party body may also not accept or continue an assignment to certify sustainability information from a person or entity that is not a public interest entity where there is a risk that this assignment will lead it to assess a service that it would itself have provided to this person or entity, or where its independence is compromised and appropriate safeguards cannot be put in place. In giving its opinion on the explanations for the absence of certain information, the independent third-party body takes into account, where appropriate, good business practices that may be formalized in an industry standard. When an undertaking voluntarily adheres to Regulation No 1221/2009 of 25 November 2009 on the voluntary participation by organizations in a Community eco-management and audit scheme (EMAS), the declaration marked by the environmental verifier in accordance with the provisions of Articles 8 and 9 of Article 25 of said regulation, and appended to the management report, constitutes the opinion of the independent third-party body on the environmental information. Information that has not been verified by the environmental verifier remains subject to verification by the independent third-party body. This verification gives rise to an opinion which is sent to shareholders at the same time as the management report.

Any person who has been unable to obtain the production, communication or transmission of the documents or information contained in the sustainability report may apply to the presiding judge of the court ruling in interim proceedings either to enjoin the person or body responsible for the production, communication or transmission of the documents or information to communicate them, subject to a fine, or to appoint an agent to ensure that they are communicated.

In European law, reporting is mainly governed by two texts. On 18 June 2020, the EU adopted Regulation No 2020/852 (the Taxonomy Regulation) on the establishment of a framework to promote sustainable investment. This regulation establishes reporting obligations for non-financial and financial undertakings based on a classification that makes it possible to define environmentally sustainable economic activities . Article 9 lists six environmental objectives:

- the sustainable use and protection of water and marine resources;

the protection and restoration of biodiversity and ecosystems.

In addition, on 1 January 2024, the Corporate Sustainability Reporting Directive (CSRD) repealed and replaced the NFRD. The scope of application of Directive 2022/2464 has been broadened: a significantly larger number of undertakings are covered by reporting obligations, and in particular all undertakings (except micro-enterprises) listed on European regulated markets. It strengthens and standardizes reporting obligations. In effect, based on harmonized European standards, undertakings will have to publish detailed information on their material risks, opportunities and impacts in relation to social, environmental and governance issues, according to a principle of dual materiality  which should enable the undertaking to identify the main themes for which the external environment or its activities represent sustainability impacts, risks or opportunities. These reporting standards will be adopted via delegated acts. These texts have been incorporated into French law.

https://www.ecologie.gouv.fr/politiques-publiques/rapportage-extra-financier-entreprises (in French)

The ordinance was issued in application of the Law of 9 March 2023 containing various provisions adapting economic and financial matters to EU law (known as the DDADUE law).

Art. L. 230-1, 4°: A large undertaking is an undertaking which, at the year-end, exceeds the thresholds for at least two of the following three criteria: balance sheet total, net sales and average number of employees during the year.

Article D. 230-1 sets the balance sheet total at EUR 25,000,000, the net sales figure at EUR 50,000,000, and the average number of employees during the year at 250. L The balance sheet total is equal to the sum of net assets.

A small undertaking is an undertaking with a balance sheet total of EUR 7,500,000, net sales of EUR 15,000,000 and an average number of employees of 50. Medium-sized undertakings, like large ones, are those with a balance sheet total of EUR 25,000,000, net sales of EUR 50,000,000 and an average number of employees of 250.

II. Exclusive control by an undertaking results from:

1.  Either direct or indirect ownership of the majority of voting rights in another undertaking;

2. Or 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 if, during this period, it held, directly or indirectly, more than 40% of the voting rights, and no other partner or shareholder held, directly or indirectly, a larger fraction than its own;

3. Or the right to exercise a dominant influence over an undertaking by virtue of a contract or terms of the company's articles of association, where this is permitted under the applicable law.

III. - Joint control is the sharing of control of a jointly-operated undertaking by a limited number of partners or shareholders, which results in decisions being taken by mutual agreement.

a) The degree of resilience of the undertaking's business model and strategy with regard to the risks associated with sustainability issues;

b) The opportunities presented to the undertaking by the challenges of sustainability;

c) The undertaking's plans, including actions taken or envisaged and related financial and investment plans, to ensure the compatibility of its business model and strategy with the transition to a sustainable economy, the limitation of global warming to 1. 5° (degree) C in accordance with the Paris Agreement adopted under the United Nations Framework Convention on Climate Change and the objective of climate neutrality by 2050 as set out in Regulation No 2021/1119 of the European Parliament and of the Council, and, where applicable, the undertaking's exposure to coal, oil and gas activities;

d) How the undertaking's business model and strategy take into account the interests of stakeholders and the impact of its activity on sustainability issues;

e) How the undertaking's strategy is implemented with regard to sustainability issues.

Regulation No 2020/852 of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation No 2019/2088, OLL198, 22.06.2020.

- financial materiality: taking into account the positive and negative impacts of sustainability issues on the company's financial performance.

- impact materiality: taking into account the company's positive and negative impacts on its economic, social and natural environment.

Compliance

135. From extra-financial reporting to sustainability reporting

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Les notions juridiques connexes

135. From extra-financial reporting to sustainability reporting

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les notions juridiques connexes

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise