French small and medium-sized enterprises (SMEs) are ready fight climate change as long as there is no “regulatory tsunami”, the French Federation of SMEs warned ahead of introduction of the EU’s new extra-financial reporting requirements.
The call for help comes in response to the EU institutions’ decision to introduce a new Corporate Sustainability Reporting Directive (CSRD) from 1 January 2024 – which the French government says will be transposed into national law by December.
The Directive would extend the scope of companies’ environmental, social and governance (ESG) reporting obligations to inform investors, banks and insurance companies better. The new rules would apply to SMEs – companies with a 250 staff or less.
For environmental NGOs, the legislation is crucial to furthering the EU’s sustainability efforts across the entire corporate value chain, encouraging green investment and promoting decarbonisation.
But French SMEs are singing from a very different hymn sheet.
“We do not want to be crushed and knocked out” by burdensome regulations, François Asselin, president of the French SME confederation CPME, said Thursday.
Asselin has made it clear that he is not trying to downplay the reality of climate change – it’s just that the new regulations are so onerous that he warns SMEs will be unable to implement them efficiently. He said there is neither enough time nor an appropriate method to enforce these rules.
“We can’t effectively control this regulatory inflow – and this creates distrust between SMEs and policy-makers,” Asselin added.
The argument goes that the CSRD was the tipping point, but regulatory burdens have been increasing for years. The EU’s latest ‘SME Relief Plan’ was ridiculed by the CPME, which criticised its lack of ambition.
“The plan calls for a 25% reduction in regulatory burdens, but how can that work when at the same time we are facing a mountain of regulation?” Asselin asked.
Duty of care and the ban on forced labour are also on their radar, with complaints that due diligence obligations are being placed on SMEs despite needing more resources to thoroughly investigate where the materials they use in their production processes come from.
Ultimately, SMEs have their own role in tackling climate change – and they welcome President Emmanuel Macron’s green strategy, unveiled to the press last Monday.
But this must not come at the cost of extreme regulatory pressure on businesses, which are already struggling to cope with ever-increasing energy costs and supply chain shocks on top of new legal obligations, they say.
Like Macron in Ma, the federation calls for a ‘regulatory pause’ to give businesses more time to adapt to new rules and legislation.
To ensure that regulations are feasible and make sense “on the ground”, they are also in favour of an “SME test” for live legislative trials with a sample of small businesses before a law is passed.
“We talked to the Commission about this, and they thought it was a great idea – but nothing came of it,” Asselin complained.
The CPME also calls for better training as the need for dedicated compliance staff increases, even in smaller companies – and suggests that all existing green regulations should be streamlined.
