The lower house of the French parliament (Assemblee Nationale) has consented to mandatory shareholder voting on the climate strategies of listed companies on 22 July.

A majority of 271 parliamentary representatives voted in favour of the ‘Say on Climate’ amendment to France’s Green Industry Bill proposed by Alexander Holroyd, a member of parliament representing the liberal and centrist Renaissance party.  There were 75 votes against the amendment, and 18 abstentions.

The adoption of the ‘Say on Climate’ rule by the lower house is a key milestone towards its introduction into the French statute book. However, its final acceptance depends on an agreement between the lower and upper house (Senat) due to take place in October. At that stage, it could either be thrown out or modified by the upper house.

In its current form, the amendment requires two votes by investors at company annual general meetings (AGMs) – one on corporate climate strategy every three years, and one each year on their progress on the strategy.

The shareholder votes, however, would be non-binding and thus resemble an opinion poll. Companies would not be legally obliged to implement a proposal, regardless of the level of shareholder support for it.

Michael Herskovich, global head of stewardship at the BNP Paribas Sustainability Centre, expressed moderate approval of the parliamentary vote.

“We don’t believe that Say on Climate is a miracle cure, but we are in favour of a vote on climate strategy every three years,” he said.

An annual vote on progress reports, Herskovich suggested, might not be necessary for companies in every sector nor very meaningful. This is because corporate action on climate change might take more than a single year to bear fruit.

The matter was raised in parliament following a campaign by the French sustainable investment lobby group, Forum pour l’Investissement Responsible (FIR).

Having monitored the AGM season in 2023, it noted that nine companies in France had published climate resolutions so far out of 795 on the Euronext Paris stock exchange. Due to the rarity of such resolutions, FIR believes they should become a predictable and mandatory routine in the corporate calendar.

“This amendment is about setting up a constructive, recurring dialogue between companies and shareholders on climate,” said Gregoire Couste, FIR secretary general.

Many campaigners, such as FIR and the NGO Reclaim Finance, want to increase pressure on companies through shareholder voting, alongside other stewardship activities and legislative instruments.

Corporate inertia, they indicate, is contributing to the likelihood that global heating will rise above 1.5°C and thus overshoot a critical United Nations target. Many believe that the corporate strategies that are published are not trustworthy or too vague.

The introduction of mandatory climate strategy discussions at AGMs would open up opportunities for detailed scrutiny that holds companies more closely to account.

For example, Reclaim Finance wants to be informed not just about current CO2 emissions or emissions targets, but also about current expenditure and short and medium-term investment plans affecting climate change.

If the amendment is passed by the upper house, a decree will be issued specifying the key indicators to be supplied by companies consulting shareholders on climate change.

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