France proposes mandatory Say on Climate resolutions for companies

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

French MPs have tabled a proposal that would make it mandatory for listed companies to disclose their climate plans for shareholders to vote on.

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

It was tabled late last week and the committee is due to discuss the proposals on 7 July. If it doesn’t choose to adopt the amendments, they will be considered again in 10 days in a plenary session and then subject to a vote in the French Parliament.

The amendment would require 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 that strategy.  

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

The French SIF this year proposed for climate plans to include absolute scopes 1, 2 and 3, medium- and long-term, and details of the actions to achieve the targets, including clarifying the allocation of capital expenditure, owing to the “inadequate” climate strategies it has seen from companies.

Holroyd told Responsible Investor that he thinks it “unthinkable” that a large cap company would not have a climate plan in 2023, adding that it should be a core part of its disclosure requirements and that shareholders should be able to take a view on this.

“Large companies have a key role to play in the energy transition, so they should be required to outline their climate plans,” he said. “It’s a rapidly evolving space, so it’s necessary to have a slightly faster review, with the main goal being to check that the climate strategy is being actioned and delivered.”

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. It declined to comment on the tabled amendments on Say on Climate.

French SIF executive director Grégoire Cousté told RI that he wants to ensure a dialogue between shareholders and companies.

“At the moment, non-binding resolutions don’t exist in French regulation, which is why we’ve tried to innovate through these amendments,” he said.

“While the Ministry of Finance and Ministry of Sustainability were interested in the topic, it didn’t make it into green industry regulation, so we needed to come up with our own proposals.”

More than 40 asset owners, asset managers and stakeholders supported the French SIF’s call this year for companies in the most polluting sectors to systematically put climate change resolutions on their agendas at shareholder meetings.

This year also saw the number of Say on Climate proposals filed at companies drop by more than half, according to French SIF research, with 23 proposals being filed this year in comparison to 48 in 2022. However, while the volume of resolutions was down this year, the average approval rate remained high at 89.2 percent.