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Comprehensive reporting law adopted by France

September 2012

Companies either headquartered in France and which operate there will be required to comply with a CSR reporting mandate.
 
Article 225 of the Grenelle II Act is one of the most comprehensive reporting laws yet written. It updates France’s 2002 New Economic Regulation, which required reporting on 32 ESG indicators, ranging from employment data, waste management and anti-corruption practices.
 
The previous regulation only applied to companies listed on French stock exchanges, but Article 225 applies to both listed and unlisted companies with a physical presence in France, affecting both domestic and foreign businesses.
 
Article 225 will be applied to three types of business. These are: listed companies on French stock exchanges, including subsidiaries of foreign companies listed in France; unlisted corporations, including subsidiaries of foreign corporations located in France; and unlisted publicly-traded partnerships, including subsidiaries of foreign partnerships located in France. Unlisted organisations are liable only if they have total assets and liabilities worth at least €100m and an average of 500 permanent staff employed during the fiscal year.
 
Unlisted subsidiaries may fall outside of the scope of Article 225 if they fulfil two conditions: where their parent company presents consolidated group data and breaks indicators down into details for each subsidiary, and the subsidiary clearly tells stakeholders where to find this information.
 
All listed companies, regardless of revenue, will be subject to Article 225 with immediate effect, but the law will be rolled out over three years to cover unlisted companies who meet certain thresholds of revenue and employment.
 
Companies must seek independent third-party verification for their reports, as well as an opinion about the sincerity of information provided. 
 
This applies to listed companies from the fiscal year beginning 31 December 2011, and unlisted companies have until the year ending 31 December 2016.
 
Article 225 requires reporting on environmental indicators: general environmental policy; pollution and waste management; sustainable use of resources; climate change; and protection of biodiversity.
 
Also required is reporting on the following social indicators: a company’s territorial impact and social activity; external relations with individuals or organisations interested in the company’s activities; subcontracting and suppliers; loyalty practices; and human rights. 
 
The last two only apply to companies listed on French stock exchanges.
Companies will also need to report on their governance activity indicators: employment; work organisation; social relations; health and safety; training; equality. Companies listed on French stock exchanges must also report on their promotion and enforcement of the International Labour Organisation’s basic conventions. 



International Labour Organisation | Europe | Reporting

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