By Arnaud Teissier, Firm: Capstan

French companies are increasingly expected to engage with wider social and environmental issues. This article highlights three key legislative developments in this direction.

In 2019, companies are expected to engage with social, environmental and community issues, beyond simply developing their economic activity. To some degree, companies must contribute to improving society and to fighting against inequalities. Their purpose goes beyond the sole interest of shareholders.

Below are three concrete examples to illustrate this evolution.

1. The ‘social and solidarity economy’ model

The scope of the Social and Solidarity Economy (SSE) model was extended to commercial companies by a law of 31 July 2014.

SSE is a set of structures that seek to reconcile social utility, solidarity, economic performance and democratic governance. SSE structures are present in all sectors of activity and can take many forms: associations, foundations or social enterprises with commercial status. Their common ambition is to create sustainable and non-relocatable jobs, to develop greater social cohesion and to provide answers to the socio-economic needs of the territories. They are all based on a social project that is expressed through their activity, the people they employ, their customers and beneficiaries or their organisational mode. Social and solidarity economy companies are eligible for an approval giving them the right to tax benefits.

For companies to qualify for the ‘social and solidarity economy’ model, they must meet three criteria:

  • pursue an objective other than the mere profit sharing;
  • have a democratic governance structure; and
  • have a remuneration policy with a reasonable gap between the highest and lowest income.

2. 2019 Pacte law: purpose and mission

The 2019 Pacte (the acronym for ‘action plan for the growth and transformation of companies’) law introduced two innovative measures that enable companies to make strong commitments to broader social engagement.

At the more basic level, companies can now introduce a social ‘purpose’ in addition to their corporate purpose, into their articles of association. For example, Atos has recently declared an additional purpose: to help shape the information space.

At a higher level, are ‘companies with a mission’. These companies will have a wider goal of general interest in their statutes. The inclusion of this type of social or environmental mission in the statutes means that this will be binding on the company.

3. 2019 Pacte law: redistribution of proceeds

Another element of the 2019 Pacte law has attracted less attention. According to it, any holder of a company's shares can undertake, on the sale of these shares, to share all or part of the proceeds with the company’s employees.

Conclusion

As the above demonstrates, there is a real increase in interest in questions of social and environmental engagement. Shareholders should no longer be guided exclusive by their own interests. They must take into account the broader interests of the company, which transcends all stakeholders.