The French government has requested a significant delay in the implementation and substantial revisions to several key European sustainability reporting and environmental due diligence regulations introduced in recent years. This move aims to ease bureaucratic burdens and simplify compliance obligations for businesses, particularly small and medium-sized enterprises (SMEs).

In a submission to the European Commission this week, France advocated for a “massive regulatory pause” on critical pieces of legislation, including the EU’s Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD). The French government pointed to the negative impact of excessive regulatory complexity on GDP potential, along with the challenges posed by the evolving competitive landscape and the “uncooperative policies of our main competitors.”

This submission follows similar calls by the German government for a delay and relaxation of the EU’s green reporting rules and comes as the European Commission explores new omnibus legislation aimed at regulatory simplification. Such legislation could lead to amendments to established rules like the CSRD, CSDDD, and EU Taxonomy. However, major businesses have warned the EU against weakening the existing legislation, stressing that changes at this stage could create policy uncertainty and undermine the substantial investments companies have already made to comply with the new rules.

One of France’s key proposals is to indefinitely postpone the implementation of the CSDDD, which the European Commission initially proposed in February 2022. The CSDDD outlines company obligations to identify, assess, prevent, and address human rights and environmental impacts throughout their supply chains and certain downstream activities. The legislation was adopted in May 2024 after extensive revisions, which reduced the number of companies affected and extended the implementation timeline.

A significant obstacle to the passage of the CSDDD legislation was France’s last-minute effort to limit its scope, proposing that it only apply to companies with more than 5,000 employees, as opposed to the original 500-employee threshold. This change effectively removed around 80% of businesses from its obligations.

France’s new submission again calls for the threshold to be set at companies with more than 5,000 employees and revenues exceeding €1.5 billion, along with other amendments to simplify and ease compliance requirements.

The submission also proposes substantial changes to the CSRD, including a delay in reporting requirements for smaller companies scheduled to begin reporting next year, and a pause on sector-specific reporting. Additionally, France suggests reducing reporting obligations for medium-sized businesses by applying less stringent rules intended for listed SMEs.

France further calls for a significant reduction in the CSRD’s reporting obligations by cutting the number of indicators and focusing them primarily on climate objectives. The government also seeks clarification from the Commission on the CSRD’s transition plan requirements, arguing that these plans should not be required to align with the Paris Agreement. Instead, France suggests that companies’ plans should only need to compare their targets to the objectives of the Paris Agreement.

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