Not complying with sustainability disclosure rules means jail time in France!
France stands out as the first EU member state to integrate the directive into its domestic legislation, enforcing penalties for non-compliance. The year 2024 signifies the commencement of data collection, with initial reports expected in 2025. Thus, it is advisable to invest time in comprehending the consequences of non-compliance.
France has taken a leading role in implementing the CSRD, becoming the first member state to fully transpose the directive into national law on December 6, 2023. This swift action has set a high bar for other member states and sent a clear message about the importance of sustainability reporting.
In general, the European Union’s (EU) Corporate Sustainability Reporting Directive (CSRD) officially took effect on January 1, 2024, introducing a robust framework for businesses to disclose their sustainability performance. While the directive sets minimum requirements, individual EU member states have the authority to impose stricter regulations and penalties.
How to avoid penalties
The primary emphasis of the French legislation revolves around the necessity for external assurance of CSRD reports, as outlined in its penalty clauses. According to the law, corporate directors may be compelled to pay fines of up to €75,000 and face imprisonment for up to five years if they fail to provide essential information for external auditors to validate their CSRD-compliant reports or if they obstruct the auditors’ work. Conversely, not having their CSRD report audited by an accredited entity could lead to a two-year jail term and fines of up to €30,000.
In addition to the CSRD requirements, the European Financial Reporting Advisory Group (EFRAG), has developed the European Sustainability Reporting Standards (ESRS), in order to provide the companies with a comprehensive guidebook for their compliance with the new regulations. Thus, the CSRD and associated ESRS have and will become a critical component of the EU’s efforts to standardize sustainability reporting, and it is widely expected that member states impose their own specific requirements in their local transposition — which has certainly proved true in France.
Embrace Sustainability as a Business Advantage
The CSRD is anticipated to affect a vast number of companies, encompassing over 50,000 entities, including a substantial proportion of non-EU organizations.
To effectively implement the CSRD and ESRS, companies need to invest in training and upskilling their sustainability reporting professionals. Hence, this includes acquiring the necessary knowledge and skills to gather, analyze, and communicate sustainability data in accordance with the new standards.
CSE is proud to be leading the Sustainability Transformation of companies and organizations in Europe. The number of trained sustainability (ESG) practitioners certified with our Sustainability ESG designation is a testament of that.
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