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Sylvie Gallage-Alwis and Gaëtan de Robillard co-author the French Chapter of ICLG’s Environmental, Social, & Governance Law 2024

By Sylvie Gallage-Alwis & Gaëtan de Robillard

Partner Sylvie Gallage-Alwis and Associate Gaëtan de Robillard discuss two major pieces of legislation that have reshaped the environmental aspect of ESG regulation, and highlight that environmental protection and climate change are at the core of public concerns within French society

The article was published in the French Chapter of ICLG’s Environmental, Social, & Governance Law 2024, on 17 January 2024 and the full chapter can be accessed here.

Environmental, social and governance (“ESG”) is a broad and fast-moving area that encompasses diverse and fragmented sources under French law.

Environment

Environmental protection and climate change are at the core of public concerns within French society.  This is reflected by the enactment of two major pieces of legislation over the past three years, which have reshaped the environmental aspect of ESG regulations.  This trend started with the Anti-Waste Law (2020) and its aim to develop a circular economy, which enhanced the requirement for transparency towards end consumers by imposing the labelling of waste-generating products, thereby informing consumers of the environmental and sustainable qualities of the product.  It is also worth mentioning the Climate and Resilience Law (2021), the provisions of which are in part the result of the so-called citizens’ climate convention, which proposed 149 measures to achieve at least a 40% reduction in greenhouse gas emissions by 2030 (compared to 1990 levels), in the spirit of social justice.

Governance/supply chain control

Corporate social responsibility in the private sector has been encouraged since the New Economic Regulations Law (2001).  This law invited listed companies to be more transparent in order to enable shareholders and other stakeholders to better assess the overall performance of companies.  More recently, the Action Plan for Business Growth and Transformation (the “PACTE Law”, 2019) has modified Article 1833 of the French Civil Code, which now provides that “the company is managed in its corporate interest, taking into consideration the social and environmental issues of its activity”.  The PACTE Law also provides for the possible adoption of a raison d’être in the bylaws, which is made of “the principles with which the company equips itself and for the respect of which it intends to allocate means in carrying out its activity”.

When it comes to supply chain control, it is fair to say that France was the pioneer in terms of due diligence/duty of care with its Duty of Vigilance Law (devoir de vigilance, 2017).  This law is applicable to certain types of companies with at least 5,000 employees in France or at least 10,000 employees worldwide (directly or indirectly through subsidiaries), and whose registered offices are in France.  Companies meeting this threshold are required to establish a vigilance plan to prevent and detect violations – in France or abroad, by its subsidiaries and subcontractors – of human rights and the environment, and to preserve the health and safety of the employees involved.

Another important law on governance issues in France is the Sapin II Law (2020) on Transparency and the Fight against Corruption and the Modernisation of Economic Life, which is known to have introduced within the French system a sort of Deferred Prosecution Agreement to enhance the prosecution of corrupt practices.

Social

France has undergone many social laws on various topics, the last of which being Law 2021–1774 (“Rixain” Law, 2021), which improves the requirement of a balanced representation of women and men in boards of directors and supervisory boards, as well as professional equality more broadly.

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