France Implements EU's Corporate Sustainability Reporting Directive

France Leads EU in Adopting Corporate Sustainability Reporting Directive
France has become the first European Union member to integrate the Corporate Sustainability Reporting Directive (CSRD) into national law. This directive supersedes the previous Non-Financial Reporting Directive (NFRD), expanding the range of companies required to conduct sustainability reporting and increasing transparency obligations.

Key Changes and Implementation

1. Expanded Scope of Reporting:

• Previously, non-financial reporting was mandatory only for large companies with over 500 employees and meeting specific balance sheet and revenue criteria.

• The CSRD lowers these thresholds to include companies with more than 250 employees, thereby expanding the scope of mandatory sustainability reporting.

• The transposition also incorporates new CSRD definitions such as “micro-undertaking”, “small undertaking”, “medium-sized undertaking”, and “large undertaking”. However, specific thresholds are yet to be defined.

2. Inclusion of Additional Business Forms:

• The directive now extends to limited liability companies (SARL) and simplified joint stock companies (SASs), which were previously exempt.

• Large European groups and foreign groups with significant EU presence are also subject to these reporting obligations.

3. Phased Implementation:

• The directive will be implemented gradually, with different timelines for various company categories:

• Large companies currently subject to the DPEF will start reporting in 2025, based on FY 2024 data.

• Other large companies will report in 2026, reflecting FY 2025.

• Listed SMEs, excluding micro-undertakings, will begin reporting in 2027, using FY 2026 data.

• Foreign groups are required to report starting in 2029, based on FY 2028 data.

Read also about other EU Directive in article: Impending Enforcement of the Corporate Sustainability Due Diligence Directive in the EU

Requirements of the Sustainability Report

• Content and Format: Companies must include the sustainability report in a distinct section of the management report. The report should adhere to the principle of double materiality and follow the European Sustainability Reporting Standards (ESRS).

• Future Decrees: Additional specifications regarding report elements, required information, and presentation standards will be outlined in forthcoming decrees.

Audit of Sustainability Information

• Certification Requirement: Companies must have their sustainability report certified by an auditor specializing in sustainability issues. This can be a statutory auditor or an independent third-party body, like an authorized accountant or lawyer.

• Penalties for Non-Compliance: Company directors failing to certify the report or obstructing the certification process may face criminal penalties, including up to five years of imprisonment and a fine of up to EUR 75,000.

• Auditor Obligations: While maintaining professional secrecy, auditors must report any criminal activities they discover, mirroring existing obligations for financial reporting auditors.

Implications for Statutory Auditors
The CSRD’s transposition into French law not only alters the statutory auditors’ practice regime to include sustainability information audit but also introduces specific provisions for “sustainability information auditors”.

Given these significant changes, it's crucial for companies, especially within the expanded scope, to understand and prepare for these new reporting and auditing requirements.





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