France at the Forefront of ESG Regulation: How Companies Are Adapting to the EU's CSRD

France is taking a leading role in implementing the European Union’s Corporate Sustainability Reporting Directive (CSRD), a regulation aimed at improving and standardizing Environmental, Social, and Governance (ESG) reporting across member states. As the directive takes effect, French companies are actively aligning their reporting processes to comply with the new rules, which significantly expand the scope and detail of ESG disclosures required from businesses operating in the EU.

The CSRD, which came into force in January 2023, replaces the Non-Financial Reporting Directive (NFRD) and applies to a broader range of companies. Under the new regulation, approximately 50,000 companies across the EU, including many in France, must provide detailed ESG disclosures based on the European Sustainability Reporting Standards (ESRS). This includes both listed and large private companies meeting certain criteria related to turnover, staff numbers, or balance sheet totals.

French regulators and companies have been proactive in preparing for this transition. The Autorité des Marchés Financiers (AMF), France’s financial markets regulator, has issued guidance to support companies in implementing the CSRD framework. Large French corporations, including those in the energy, manufacturing, and financial sectors, have already started revising internal systems, enhancing data collection methods, and conducting double materiality assessments—a key requirement under the CSRD.

Unlike previous sustainability reporting initiatives, the CSRD mandates greater transparency and third-party assurance. Companies must report on sustainability risks that affect their business, as well as their own impact on society and the environment. The ESRS also require companies to disclose climate-related targets, governance structures around ESG issues, human rights policies, and supply chain risks.

French firms are finding the double materiality assessment particularly challenging, as it involves evaluating both the financial materiality (how sustainability issues affect the company) and the environmental and social materiality (how the company affects the world). This dual lens demands more granular and verified data, prompting investments in digital ESG tools and analytics platforms.

Several large companies in France have begun pilot testing CSRD-aligned reporting to identify potential gaps before the rules are fully enforced. Others are engaging with consultants and legal advisors to interpret the ESRS and align them with existing international frameworks like the Global Reporting Initiative (GRI) or the Task Force on Climate-related Financial Disclosures (TCFD).

Small and medium-sized enterprises (SMEs), although not immediately subject to CSRD, are also feeling the pressure to adapt. Many SMEs supply goods and services to larger firms that are required to report on their value chain impacts. This has led to increased ESG data requests and expectations around transparency, pushing SMEs to begin developing their own sustainability reporting capacity.

The French government and business associations have responded by offering training programs, digital tools, and funding to support companies in the transition. The goal is not only compliance but also to maintain competitiveness in an evolving global market that increasingly values ESG performance.

Conclusion

As one of the first countries in the EU to actively implement the CSRD, France is setting a precedent in corporate sustainability reporting. The shift marks a significant change in how companies disclose and manage ESG risks and performance. While challenges remain—especially in adapting internal processes and managing supply chain data—French companies are taking critical steps to align with the new EU directive. The CSRD is reshaping the corporate ESG landscape, and France’s response underscores its commitment to sustainable business practices and regulatory leadership in the European Union.