Double Materiality Assessment
France

Double materiality assessment in France: Ordonnance n° 2023-1142 transposing CSRD (amending Code de commerce)

France was among the first EU member states to transpose the CSRD, through Ordonnance n° 2023-1142 of 6 December 2023, which amends the Code de commerce. France's early transposition reflects its long history of mandatory non-financial reporting: the Déclaration de Performance Extra-Financière (DPEF) has required sustainability disclosures from large French entities since 2017, building on the even earlier Grenelle II reporting obligations from 2010. The CSRD replaces the DPEF with the more structured ESRS framework, including the double materiality assessment under ESRS 1.20-33. French entities entering the CSRD reporting population benefit from this institutional history but must adapt to a fundamentally different methodology. The DPEF required entities to identify "principal risks" related to social, environmental, and governance matters, but the methodology was largely self-determined. ESRS 1.20-33 prescribes a specific process with severity scoring, stakeholder engagement, and threshold documentation. French entities that treat the ESRS double materiality assessment as an update of their DPEF risk identification will fall short of the new requirements.

Regulatory context: Autorité des marchés financiers (AMF)

The AMF is France's financial markets regulator and enforces sustainability reporting for listed entities. The AMF published its first position on CSRD enforcement priorities in 2024, identifying the double materiality assessment as a "foundational element" that it will examine in its initial reviews. The AMF's position aligns with ESMA's enforcement guidance and emphasises that the AMF expects entities to disclose the assessment process (per ESRS 2 IRO-1), including stakeholder engagement, scoring methodology, and the rationale for materiality conclusions. The Haute Autorité de l'Audit (H2A), established by the 2023 audit reform law, oversees audit quality in France, including sustainability assurance. H2A replaced the Haut Conseil du Commissariat aux Comptes (H3C) and has broader responsibilities covering sustainability assurance oversight. Commissaires aux comptes performing sustainability assurance must register with H2A and meet additional competence requirements. France's Loi sur le devoir de vigilance (Duty of Vigilance Law, 2017) requires large French companies (5,000+ employees in France or 10,000+ worldwide) to establish and implement a vigilance plan covering human rights and environmental risks across their value chain. The due diligence data collected under this law directly feeds into the ESRS double materiality assessment for S2, S3, E1, and E2 topics. The CSDDD (EU Corporate Sustainability Due Diligence Directive) will eventually harmonise these requirements, but for now the French duty of vigilance creates additional data and process infrastructure that supports the CSRD assessment.

Practical guidance for France

French entities should build on their DPEF experience while upgrading methodology to meet ESRS requirements. Start with the entity's existing risk cartography (cartographie des risques) and sustainability reports. Map previously identified risks to ESRS topical standards. Then expand the assessment to cover all ESRS topics, including those not previously addressed in the DPEF. Use EFRAG IG 1 as the methodological framework. For stakeholder engagement (required by ESRS 1.24), French entities can draw on existing structures: the Comité Social et Économique (CSE, works council) for S1 workforce topics, the Mission Handicap for disability-related impacts, and community liaison committees for local environmental impacts. France's tradition of social dialogue provides ready-made channels for stakeholder input. French entities should pay particular attention to the financial materiality dimension, which the DPEF did not emphasise. The financial materiality assessment requires quantification of risks and opportunities: potential revenue impacts, cost increases, asset impairments, and liability provisions. Coordinate with the entity's existing risk management and internal audit functions to ensure the financial materiality assessment draws on the same data and methodologies used for financial reporting.

Audit expectations

Commissaires aux comptes providing limited assurance on sustainability reports must follow the Norme d'exercice professionnel (NEP) on sustainability assurance issued by H2A. The assurance engagement includes evaluating the entity's double materiality assessment process and conclusions. French assurance standards align with ISAE 3000 (Revised) and will transition to ISSA 5000 once adopted. H2A has indicated it will inspect sustainability assurance engagements as part of its regular inspection programme. Given France's large population of entities in scope of Wave 1 and Wave 2 (France has among the highest number of CSRD-reporting entities in the EU), H2A faces a significant inspection workload. Early inspections will likely focus on whether the commissaire aux comptes evaluated the materiality assessment process rather than challenging specific topic-level conclusions.

France-specific considerations

France's corporate population includes a significant number of large groups with operations across francophone Africa, creating specific S2, S3, and E4 materiality considerations for value chain impacts in these regions. Entities with supply chains or operations in countries with weaker environmental and labour protections must assess impact materiality for those locations with particular care. The Loi Climat et Résilience (Climate and Resilience Law, 2021) introduced specific requirements for French entities on climate strategy disclosure, advertising restrictions, and carbon footprint reporting. These overlap with ESRS E1 and create additional regulatory context for the E1 financial materiality assessment. The Stratégie Nationale Bas-Carbone (SNBC) sets France's carbon reduction trajectory and provides a reference framework for assessing transition risk. France's Article 29 of the Loi Énergie-Climat (Energy-Climate Law) requires financial institutions to disclose their climate strategy, including portfolio alignment with temperature targets. French financial institutions already compliant with Article 29 have a foundation for the E1 double materiality assessment that goes beyond what most other EU member states require.

Common inspection findings

The AMF's 2024 review of early CSRD reporters found that entities transitioning from DPEF to ESRS frequently carried over their previous materiality approach without upgrading to the ESRS 1.20-33 methodology.

The AMF identified that several entities disclosed materiality matrices in graphical format without providing the underlying scoring data or threshold definitions required by ESRS 2 IRO-1.

H2A's initial inspection of sustainability assurance engagements found that commissaires aux comptes were not consistently obtaining sufficient evidence to support their conclusions on the materiality assessment process.

The AMF noted that French entities with duty of vigilance obligations were not consistently mapping their vigilance plan risk assessments to the ESRS topical standards, creating parallel but unconnected reporting tracks.

The AMF flagged that financial materiality assessments were underdeveloped compared to impact materiality assessments, reflecting the DPEF's historical emphasis on impact over financial risk.