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French companies told they must report on social issues

December 2001

The French parliament has approved legislation that will require listed companies to report on social and environmental issues.

The New Economic Regulations Bill, which will take effect from 1 January 2002, states that listed companies should include information in their annual reports ‘on the way in which they take into account the social and environmental consequences of their activity’.

The legislation also includes measures to increase corporate transparency in takeover bids and improve corporate governance.

Arese, the French social and environmental ratings agency, said the legislation was ‘a breakthrough that is bound to play an important role in pushing French listed companies to begin to report systematically and comprehensively on stakeholder issues’.

Non-financial reporting in France, either in annual reports or in standalone social and environmental reports, is uncommon, but other European countries are considering whether to make this a formal requirement.

The UK government, for instance, is currently considering recommendations from the company law review that would require listed companies to produce ‘operating and financial reviews’ covering social and environmental issues in their annual reports.

The move by France follows its recent introduction of regulations requiring fund managers of employee savings plans to state their policy on socially responsible investment. French government ministers are also deciding whether SRI principles should apply to the planned state-run pension reserve fund, which is expected to invest £150billion ($130bn) over the next 20 years.

The Belgian parliament is considering a pensions disclosure regulation that would require fund managers to state their policy on SRI. The regulation put forward by social affairs minister Franck Vandenbroucke would oblige pension fund managers to state ‘how social, ethical and environmental aspects are being taken into account’ when they make investment decisions.




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