Medef and Afep require companies to link climate to executive compensation

Medef and Afep require companies to link climate to executive compensation

French employers want to do more for Atmosphere. For this, he would like to put Social and environmental responsibility (Corporate Social Responsibility) “at the heart of the board of directors’ functions,” according to Tuesday’s updated version of the corporate governance code for listed companies.

Published by the French Association of Private Enterprises (Afep) and the French Business Movement (Medif), this non-binding fifty-page code now includes a chapter devoted exclusively to “The Board of Directors and the CSR”.

A symbol emphasizing the climate issue

Thus, managers are required to identify “multi-year strategic directions in relation to corporate social responsibility,” according to the new code reported by echo. Within listed companies, senior management is encouraged to propose an “action plan” and “timeframes” for the board of directors to implement these actions. “The results obtained are reviewed annually by the board,” and also define the code, which particularly insists on the importance of the climate issue within CSR.

Another recommendation, this time affecting executive compensation: Afep and Medef encourage directors to define it by incorporating “several criteria related to corporate social responsibility, including at least one related to the company’s climate goals.” “The incorporation of CSR standards into executive compensation is a powerful lever to highlight these concerns,” the two organizations reassured employers, even if in their view this movement is “widely involved” in large corporations. All of the new recommendations are applicable “for general meetings governing fiscal years beginning on or after January 1, 2023.”

After several reports were published between 1995 and 2002, the first “Code of Corporate Governance for Listed Companies” was created in 2003. The last update of the document dates back to January 2020 and recommended putting “gender balance in governing bodies at the center of the board’s concerns”.

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