EU: France Transposes the EU Corporate Sustainability Reporting Directive into National Law
On January 1, 2024, French Ordinance No. 2023-11425, which transposes the Corporate Sustainability Reporting Directive (“CSRD”) into national law, entered into force. With this Ordinance, France became the first EU country to transpose the CSRD into national law.
The CSRD entered into force on January 5, 2023. The CSRD requires in-scope companies to report on a number of ESG topics where material (based upon the so called “double materiality” principle), including climate change, pollution, biodiversity, ecosystems, the circular economy, and social disclosures concerning its own workforce. For more information on the CSRD, see our Debevoise In Depth here.
In addition to the Ordinance, a French transposing Decree, in force as of December 30, 2023, specifies that CSRD reporting obligations will be implemented gradually for companies subject to certain thresholds. As of 2025, companies listed in France and European companies with (i) more than 500 employees, and (ii) more than €40 million in sales or more than €20 million in net balance sheet, must produce their first report. Between 2026 and 2029, this reporting obligation will extend to other large companies, SMEs listed on a European regulated market (except for micro-undertakings), and large foreign groups that have a subsidiary or a branch in the EU.
Furthermore, the Ordinance extends the powers of the High Council of Statutory Auditors (Haute Autorité de l’Audit renamed by the Ordinance as Haut conseil du commissariat aux comptes) to sustainability disclosures in order to ensure uniformity. It also requires sustainability disclosures to be certified by an auditor or accredited independent third party.
Ordinance No. 2023-11425
Government Press Release (See Publication et certification d’informations en matière de durabilité et obligations environnementales, sociales et de gouvernement d’entreprise des sociétés commerciales)
EU: Lawmakers Approve Proposal to Delay Sector Specific ESG Reporting Requirements until 2026
On January 24, 2024, the Legal Affairs Committee of the European Parliament approved a proposal to delay the adoption of sector‐specific standards under the Corporate Sustainability Reporting Directive (“CSRD”) until June 2026. This two-year delay will apply to eight sector standards: oil and gas, mining, road transport, food, cars, agriculture, energy production, and textiles. Two reasons were cited for the delay: (i) to give the European Financial Reporting Advisory Group (“EFRAG”) additional time to develop the new standards; and (ii) to ease the regulatory burdens on companies.
The delay follows from a request by the European Commissioner for Financial Stability, Financial Services, and the Capital Markets Union in March 2023 that EFRAG – which is responsible for drafting standards under the CSRD – focus on the first set of generally applicable standards instead of the sector standards. On December 22, 2023, EFRAG published three implementation guidance drafts (see our ESG Weekly Update on this development here).
EU member states will need to approve the delay before it takes effect.
EU: European Banking Authority Publishes Draft Guidelines on ESG Risk Management
On January 18, 2023, the European Banking Authority (“EBA”) launched a public consultation on draft guidelines on the management of ESG risks (the “Draft Guidelines”). The Draft Guidelines, which forms part of the European Commission’s Renewed Sustainable Finance Strategy and EU banking package, is intended to help institutions set minimum standards and reference methodologies for the identification, measurement, management, and monitoring of ESG risks.
The Draft Guidelines propose that institutions integrate ESG risks in their existing risk management frameworks, including by embedding those risks in their risk appetite, key risk indicators, internal controls, and Internal Capital Adequacy Assessment Process. The Draft Guidelines also propose that institutions adopt an approach to managing and mitigating ESG risks over the short (less than three years), medium (three to five years) and long term (at least ten years).
Comments on this consultation are due by April 18, 2024. The EBA plans to issue final guidance by the end of the year.
EU: Friends of the Earth Netherlands Announces Climate Lawsuit against ING Bank
On January 19, 2024, Friends of the Earth Netherlands (Milieudefensie) announced its intent to hold ING liable for the bank’s climate impacts. In a letter to ING’s chairman of the board, Milieudefensie argued that the bank breached its duty of care under Dutch law by “contributing to dangerous climate change,” and must now revise its climate policy to align with the Paris Agreement’s 1.5°C target.
The climate advocacy organization is demanding that ING: (i) nearly halve its emissions by 2030 as compared to 2019; and (ii) use its leverage to reduce the climate impacts of large corporate clients. This involves requiring corporate clients to provide adequate climate plans, ceasing to provide financing to clients that do not provide such plans within a year, and terminating financing for fossil fuel clients that continue fossil fuel expansion activities or fail to provide phase-out plans. Milieudefensie intends to initiate legal proceedings within the next two months if ING does not agree to these measures.
ING publicly responded to Milieudefensie’s letter, noting that sustainability is part of the bank’s overall strategic direction but that their financing reflects the global economy as fossil fuels are currently the source for 80% of global energy.
Friends of the Earth Netherlands’ Notice of Liability Letter to ING
ING Press Release
U.S.: ExxonMobil Files Suit in Texas against Climate Activist Shareholders
On January 21, 2024, ExxonMobil filed a complaint in the U.S. District Court for the Northern District of Texas against U.S.- and Netherlands-based activist shareholders Arjuna Capital and FollowThis. The lawsuit is an attempt by ExxonMobil to prevent Arjuna Capital and FollowThis from submitting shareholder climate proposals at the company’s annual shareholder meeting on May 29, 2024. ExxonMobil is requesting relief from including such proposals in its proxy statement, which is due on April 11, 2024.
The lawsuit is a reaction to efforts by Arjuna Capital and FollowThis to pressure ExxonMobil to commit to Scope 3 greenhouse gas emissions reduction targets. Scope 3 emissions result from an organization’s value chain and do not include emissions arising from activities of assets owned or controlled by the organization.
Although ExxonMobil has committed to net zero Scope 1 and Scope 2 emissions by 2050 – that is, direct emissions from assets controlled by the organization and indirect emissions associated with the organization’s purchase of electricity, steam, heat, or cooling – it has not set any Scope 3 emissions reduction targets.
Follow This Press Release