France adopts mandatory Say on Climate law

Investors are split on the amendment, which will be discussed again as part of the wider green industry bill in September.

National Assembly in Paris.

The French national assembly has adopted a Say on Climate amendment as part of a green industry bill after a majority of French MPs voted in favour on Friday.

The amendment will be further discussed in the context of the wider green industry bill in September, before being debated for a final time in October by the French joint committee, which is made up of seven deputies and seven senators.

France is the first country to propose a national requirement for listed companies to disclose their climate plans for shareholders to vote on.

The new law – which incorporates the recommendations made by French financial regulator AMF’s climate and sustainable finance commission – would require all listed companies to submit their climate strategies for shareholder approval every three years via an advisory vote, with an annual vote each year on the implementation of the strategy.

Terms for publishing the annual report will be set by the French council of state, the government’s advisory on the preparation of bills, ordinances and certain decrees.

The regulation, led by Caisse des Dépôts chair and MP Alexandre Holroyd, was put together with the French SIF, which has been pushing for improvements to shareholder dialogue since 2021.

The bill was initially rejected by the commission this month, but was put to the vote a second time at parliament’s public debate last week.

The second submission of the amendment saw it endorsed by an additional five political parties following the commission’s rejection. It was only supported by Holroyd’s party Renaissance at the first vote.

Minister delegate for industry Roland Lescure and rapporteur Damien Adam maintained their opposition to the amendment, having previously argued that it was not in France’s interest to pass such a law.

Speaking at the first vote earlier this month, Adam said: “It is not for France to define a law which mandates Say on Climate, but rather for shareholders to ask for climate topics to be discussed at AGMs.

“No country today mandates Say on Climate. We would be the most restrictive country on this, and I do not think that it is necessarily wise at this stage.”

Lescure went further, saying: “What you are proposing paradoxically is giving the power to international shareholders. The Corporate Reporting Sustainability Directive (CSRD) is much more effective, so I would advise you to vote against the amendments and let the CSRD requirements come into effect – and leave BlackRock out of it.”

Holroyd addressed these arguments in Friday’s debate, contending that the bill is not a duplication of the CSRD nor of the French duty of vigilance law.

He added that shareholder rights are “much more powerful” in other jurisdictions compared with France, and that the aim of the amendment is to give French investors and funds an opportunity to have a dialogue on climate plans with companies at AGMs.

Lescure remained unconvinced, voting against the proposal. He reiterated his view that the CSRD is sufficient and the better way forward, since it is aligned with the Paris Agreement and will be enforced across Europe, rather than just in France.

Drumming up support

Last week, the French SIF wrote to French president Emmanuel Macron and Lescure to urge them to support the Say on Climate bill.

It argued that the CSRD “alone, does not encourage debate at AGMs on climate strategies”.

The SIF was backed by several investors, including Mirova, Sycomore Asset Management and Préfon. Several leading managers – including Amundi, AXA Investment Managers and BNP Paribas Asset Management – did not sign the letter.

While Amundi and AXA IM declined to comment, BNP Paribas Asset Management told Responsible Investor that it did not support the bill, arguing that a triannual Say on Climate vote would be more appropriate, particularly once CSRD comes into force.

A spokesperson for the French manager said: “We already take climate strategies into account on our voting process. The proposed generalisation could be useful for major companies, but we are not convinced this is the way forward for all sectors on an annual basis.”

Earlier this year, the French financial regulator AMF called on issuers to “enhance their shareholder dialogue” on their climate strategy at their AGMs, as well as present their climate plans to shareholders at each annual meeting.

The regulator added that such dialogue is “undoubtedly advisable” in cases where shareholders are submitting a climate resolution.