French SRI: European and French CSR Regulations
European (and French) CSR regulation:
The French have been particularly interested in following the United Nations Principles for Responsible Investment (UNPRI) http://www.unpri.org/. Since it was released five years ago, the number of signatories have increased to 800, representing 48 countries managing total assets of $25 trillion.
During the fall of 2001, amidst the aftermath of September 11, the European Commission ("EC") shed a more peaceful light with its publishing of a green paper, entitled Promoting a European Framework for CSR ("Corporate Social Responsibility"). The paper's purpose was to act as a launchpad for CSR debate throughout the member states.
The EC also published a paper entitled "Implementing the Partnership for Growth and Jobs: Making Europe a pole of excellence on CSR" in March 2006. The significance of this paper was to unify European member states' CSR initiatives. The report also noted that while CSR was not a substitute for public policy, there were several benefits including:
- more rational use of natural resources (e.g., environmental aspect of ESG)
- poverty reduction (e.g, social aspect of ESG)
- and greater respect for human rights (e.g. social aspect of ESG)
The French were inspired by the United Kingdom's pension fund regulation. In 2001, the French passed a law requiring that employee savings plans specify their rules for ESG. A similar law closely followed that same year. This law requires the Retirement Reserve Fund (which supports the French pension system) disclose how its investment policy guidelines take into account ESG.
In May 2001, French firms became required to report on ESG issues, initiatives, etc. in their annual reports. Required firms are those that are publicly traded or regulated. Please refer to Belsif's website and this link for the actual rule.French legislation.
On July 24, 2009 several French signatories agreed to the "Principles for Socially Responsible Investing"PDF file. This document included several guidelines for Paris financial market participants and continued the work done by Paris Europlace and Forum on Increasing the Contribution of Finance to Sustainable Development, which was co-chaired by French President Nicolas Sarkozy.
The report gave the following recommendations:
- facilitate the inclusion of ESG criteria in investors' decision-making processes
- clarify and increase discussions with companies so that they're encouraged to release qualitative (nonfinancial) information to the public
- and develop accounting standards complementary with the above.
Sources: Belsfi, Novethic, Social Investment Forum, Eurosif, Paris Europlace