ESG: CSRD, sustainability reporting and audit requirements in France

PrintMailRate-it

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​published on 5 November 2024 | reading time approx. 4 minutes

 
Enforced in France since 1 January 2024, the European directive CSRD (Corporate Sustainability Reporting Directive) defines new standards and requirements for non-financial reporting. The non-financial reporting focuses on ESG (Environmental, Social, Governance) data, and must contain detailed information on the significant impacts, risks and opportunities of the company on its environment, and of the environment on the company.​

Application of the CSRD is progressive. For entities reaching first thresholds, the ESG reports will have to be established in 2025, covering 2024 data.
  
To confirm if your company needs to comply with those standards, please read the article below.
  
Good to know please keep in mind that even if your company does not reach the compliance thresholds for compulsory non-financial reporting, as a member of stakeholders’ value chain (eg. suppliers, clients, banks, etc), you may be required to communicate the sustainability data of your company. Thus, it is essential to organize your data collection as early as possible. 
  
Our Rödl & Partner experts can assist you at every stage of this obligation: 
  • raising the awareness among your managers and staff, 
  • identifying the significant ESG topics in relation to your business, 
  • digitalizing data collection, 
  • preparing sustainability report, 
  • supporting in implementing and following-up compliance processes, 
  • etc.

​Reminder on regulatory amendments​

The importance of complying with environmental, social and governance practices has become a priority for all stakeholders. The adoption of sustainable and transparent practices is part of a process that is not new in Europe. Indeed, sustainability reporting regulations are constantly evolving, as reflected in the transition from the “Déclaration de Performance Extra-Financière” (DPEF) to the new European directive on corporate sustainability reporting, known as CSRD.
  
The “CSRD” directive, transposed by the Ordinance no. 2023-1142 of 6 December 2023, is an essential part of the European Green Deal, which aims to achieve climate neutrality by 2050.
   
The standards and scopes of application were explained by the EFRAG (European Financial Reporting Advisory Group) via the publication of guides on the following topics:
  • Scope and methodology for data collection
  • Double materiality
  • Integration of value chain impacts in the sustainability reporting
  • Compliance of the information with Datapoints
  • Mandatory verification of data by a Legal Auditor or by an Independent assurance services provider
  • Report format and digitalization
 

​ESRS Standards 

Enforced on 1 January 2024, the CSRD directive will apply to a larger number of companies over the next four years. The European Sustainability Reporting Standards (ESRS) are now the reference framework for implementing the CSRD. One of the main new aspects of this directive is the introduction of “double materiality”:
  • The financial materiality (“outside-in”) is the identification and quantification of the positive and negative impacts arising from the economic, social and environment, ie from outside your company, that affect the company's development, performance and results.
  • The impact materiality (“inside-out​”) is the identification and quantification of the impacts the company has on economic, social and environment issues.
  
This double materiality analysis is aimed at enabling companies to assess their overall impact by meeting the stakeholders’ expectations and prioritizing the challenges they face. 
  
Globally, ESRS is organized into four types of standards: cross-cutting (ESRS 1 and ESRS 2), environmental (ESRS E1 to E5), social (ESRS S1 to S4) and governance (ESRS G1).

​Audit requirements​​

Another key aspect is that with the introduction of the CSRD, the auditing of sustainability information becomes mandatory, above certain thresholds (see below).
  
The company must therefore designate an auditor, who may be the same as the statutory auditor, if registered on the list of auditors authorized by H2A (High Authority of Audit), or by an Independent assurance services provider, accredited by the COFRAC.
  
To enable certification of sustainability information, the “audit” directive establishing European rules for statutory auditors has been amended by the CSRD to adapt the requirements regarding training, accreditation, quality assurance system, professional ethics, independence, objectivity, investigating and sanctioning national supervisors, organization of work and reporting of irregularities.
  
In line with European standards, sustainability audit mandates should meet the same requirements and guarantees as those governing the certification of financial statements. This sustainability audit mission aims at providing a “certification” of sustainability information.

​Thresholds and progressive implementation​

The directive will be applied gradually.

​​
* PIE: Public Interest Entities.

These thresholds are considered to have been reached on the closing date of two consecutive financial years on the basis of the last financial statements approved.

Please note that the new thresholds in Decree no. 2024-152 of 28 Februar​​​​y 2024, transposing Commission Delegated Directive (EU) 2023/2775 of 17 October 2023, are mentioned in the table. These thresholds apply to financial statements and reports for financial years beginning from 1 January 2024.

​Sanctions​

Article L. 821-5 (formerly L. 820-3-1) provides for the nullity of deliberations in the event of failure to duly nominate a statutory auditor to certify sustainability information. 
  
Article L. 821-6 (formerly L. 820-4) is completed by a 2nd offence punishable by two years’ imprisonment and a fine of 30,000 euros for a legal person of company or entity required​​​ to have its sustainability information certified, who fails to arrange for the designation of a statutory auditor or an Independent assurance services provider. 
  ​
Article L. 821-47 (formerly L. 823-4) provides for the possibility of court-ordered designation of a statutory auditor.​
Skip Ribbon Commands
Skip to main content
Deutschland Weltweit Search Menu