Transposition of the CSRD directive: definition of obligations to publish and certify sustainability information

Order No. 2023-1142 of 6 December 2023 transposes into French law Directive (EU) 2022/2464 of 14 December 2022 known as the CSRD (corporate sustainability reporting directive) regarding corporate sustainability reporting. This directive has extended the scope of sustainability reporting requirements to listed companies, and specified what information these companies must disclose. The order features the content and objectives of the CSRD directive and reorganises various provisions of the French Commercial Code. You will find details of these provisions below. The order will gradually come into force from 1 January 2024.

A report to the President of France is attached to the order of 6 December 2023, explaining its purpose and the content of its articles. Both the report and the order were published in the Journal officiel de la République française (Official Journal of the French Republic) on 7 December 2023. EU member states are required to transpose the CSRD by 6 July 2024, and France is the first country to do so.

Corporate sustainability reporting
As a reminder, listed companies and large corporations must publish a statement of non-financial performance as part of their annual management report. This obligation is set out in Articles L225-102-1 and L22-10-36 of the French Commercial Code and stems from the transposition of Directive 2014/95/EU of 22 October 2014, known as the “NFRD” (non-financial reporting directive). The order respectively repeals and replaces these articles.
The order of 6 December 2023 repeals the statement of non-financial performance and now imposes a sustainability reporting obligation. Article 8 of the order specifies that the companies concerned will be required to publish sustainability information on:

• the impact of the company’s activities on environmental, social and corporate governance issues, collectively known as “sustainability matters”;
• the impact of these sustainability issues on the company’s business and performance.

The information must be published in a separate section of the company’s management report. This sustainability information is now defined in heading I of Article L232-6-3 of the French Commercial Code (in force since 1 January 2024).

Information certification
According to Article L232-6-3 III of the French Commercial Code, the sustainability information provided must be certified by an authorised auditor or an authorised independent third-party body (Article 8). Certifying bodies shall be supervised by the Haute autorité de l’audit (H2A), which replaces the Haut conseil du commissariat aux comptes (H3C). This new H2A will have the power and means to carry out its new role, in particular (Article 14):

• The list of professionals authorised to carry out sustainability audits;
• The ability to control said professionals, in conjunction with Cofrac in the case of independent third-party bodies;
• The power to issue penalties to said professionals;
• Standardisation of the sustainability audit activity.

Scope of the obligation
The scope of the obligation is not yet definitive, as a decree must be published to set the thresholds required to define the organisations subject to it. The definitions of micro, small, medium-sized and large companies are now laid out in Article L230-1 of the French Commercial Code. The following criteria thresholds shall be set by decree in the coming weeks:

• Balance sheet;
• Net revenue;
• Average number of employees during the financial year.

Entry into force of the obligation
Corporate sustainability reporting shall be mandatory in management reports relating to accounting periods (Article 33):

• starting on 1 January 2024 for companies currently subject to the statement of non-financial performance (for a first publication in 2025);
• starting on 1 January 2025 for other large companies (for a first publication in 2026);
• starting on 1 January 2026 for listed SMEs (for a first publication in 2027);
• starting on 1 January 2028 for foreign companies exceeding the European turnover threshold (for a first publication in 2029) (this threshold will also be set by decree).

Other regulatory impacts
Articles 20 to 30 of the order of 6 December 2023 amend the provisions of various codes, in particular:

• The French Labour Code: it is now stipulated that consultations of the company’s social and economic committee (ESC) must cover sustainability information as well as the means of gathering and verifying it (Article 26);
• The French Environmental Code: these amendments are intended to align obligations relating to a balance sheet and a plan to measure and reduce greenhouse gas emissions as well as measures to combat food waste with the CSRD directive (Article 25).

As a reminder, Directive (EU) 2022/2464 of 14 December 2022 also amended Directive 2013/34/EU of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings. Article 19 of Directive 2013/34/EU now states that large undertakings as well as small and medium-sized enterprises (with the exception of micro-enterprises), which are public interest entities, must include in their annual report all information necessary to understand the impacts of the company on sustainability issues as well as the required data to understand how sustainability issues impact the undertaking’s development, performance and position.