Preliminary Notes

In the evolving landscape of corporate sustainability, the postponement of the Corporate Sustainability Due Diligence Directive (“CS3D”) vote in the European Union this month might seem like a temporary reprieve for businesses. However, this delay should not be misconstrued as a halt in the momentum toward stricter environmental and social governance (“ESG”) requirements. This HHR Alert delves into the implications of the Corporate Sustainability Reporting Directive (“CSRD”) for businesses, highlighting its significance in fostering transparency and accountability in corporate operations.

Notably, France has already taken a proactive stance by incorporating the CSRD into its national legislation as of December through the publication of an ordinance (the “Ordinance”), showcasing its extraterritorial reach. A décret (the “Decree”) and two arrêtés were also published, and already amended, clarifying some elements described in the Ordinance (together with the Ordinance, the “Transposition”). This Transposition was itself soon accompanied by interpretation standards published by the French Accounting Standards Authority (Autorité des normes comptables) in the last part of December; and a website, the CSR Portal (Portail RSE), launched by the French Ministry of Economy and Finance for companies operating in France to assess what compliance obligations they have to meet, depending on their SIREN number, sales and balance sheet, which may streamline a company’s CSR obligations under an upcoming “tell us once” principle.

This move underscores the directive's broad implications, extending beyond EU borders and emphasizing the global nature of sustainability efforts. For businesses, this means that compliance with the CSRD is not just a matter of local concern but a global mandate.

To effectively navigate the complexities of the CSRD, Chief Financial Officers (CFOs) will need to forge strong collaborations with their legal and compliance departments. This partnership is critical for ensuring that financial planning and reporting align with the stringent requirements of the CSRD, integrating sustainability into the core of business operations.

Moreover, there is a valuable lesson to be learned from French businesses and experts who have been adhering to France's pioneering Duty of Care law since 2017. Their experience and expertise offer a blueprint for compliance, suggesting that businesses need not start from scratch. Instead, they can leverage existing frameworks and practices to meet the CSRD's demands, benefiting from the insights gained by those who have already embarked on this compliance journey.

In essence, the path toward sustainability and corporate responsibility is a collective endeavor, and the CSRD, alongside the anticipated CS3D, represents a crucial step in this direction. By drawing on the experiences of pioneers in the field and fostering collaboration across departments, businesses can navigate the challenges of compliance, turning obligations into opportunities for sustainable growth and innovation.

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