In conversation with Safine Hadri

We are delighted to introduce Safine Hadri, a partner in our Paris office. Safine practices insurance and environmental law, and has extensive expertise in regulatory and compliance matters, contract management, including complex regulatory issues, authorisations and cross-border matters.

She advises a range of players across the insurance sector on their products and services, contractual matters, compliance issues and integrating recent regulatory developments into marketing processes.

Safine also assists industrial clients in their environmental regulatory issues, including government relations and day-to-day business management as well as civil, administrative or criminal litigation.  Additionally, she counsels clients on the application of the developing ESG regulatory framework, including ESG reporting obligations, ESG compliance and corporate due diligence, climate related issues and climate finance.

How does ESG fit into your area of specialism?

The three pillars of "ESG" - Environmental, Social, Governance - are used by businesses to evaluate their societal and sustainability contributions.  They also promote the incorporation of long-term, responsible practices within corporate business strategies, which increase stakeholders’ trust in the business.

ESG can present unique challenges for businesses, particularly around environmental due diligence which has introduced new and extensive regulatory and compliance requirements. Consequently, ESG compliance has become an essential obligation for businesses.  Non-compliance can have a significant impact on a company’s long-term viability, financial performance and reputation.  It's a vicious circle that becomes virtuous once compliance efforts are undertaken. Consequently and naturally, ESG is at the heart of my regulatory, compliance and environment practice. 

Can you share an example of an ESG related matter you have been involved in? 

We recently advised a French parent company and its subsidiaries on their reporting obligations under the Corporate Sustainability Reporting Directive (CSRD).  The CSRD entered into force on 5 January 2023 and was transposed into French law on 6 December 2023.

The CSRD has to be accounted for by our clients for their compliance purposes, but also in M&A transactions and for corporate due diligence, where the target company exceeds reporting thresholds. Gradually, the scope of the CSRD will be extended to most companies as starting in 2025, companies with more than 250 employees and €50m net turnover will need to be CSRD compliant, as will some SMEs in 2026 and beyond.

Our advice on CSRD also assists our clients to comply with the EU Corporate Sustainability Due Diligence Directive (CSDDD), which aims to foster responsible corporate behaviour of companies, across their business and global value chains, by assisting with their due diligence duty.  Both directives call for the consideration of general human rights and environmental criteria throughout the value chain.

Failure to comply with these two directives can lead to sanctions and exclusion from the value chain of business partners.

What are the current trends shaping the ESG industry in your region and how are you helping your clients navigate them?

Three of the dominant trends profiling in my region are greenwashing, mandatory sustainability reporting and corporate due diligence.

Fighting greenwashing

With society becoming increasingly vigilant about the environmental and social impacts of companies' activities, coupled with the search for "socially responsible" investments, ESG criteria makes it possible to objectively analyse a company's extra-financial performance. In this context, communication is extremely important. But it must be fair and honest.

Thus, it is becoming more commonplace for consumers and regulators to fight against the practice of ‘greenwashing’, namely statements, actions or communications that do not clearly and/or fairly reflect the sustainable development profile of an entity, a financial product or a financial service. 

The European Commission has proposed two directives to ban greenwashing: the Greenwashing Directive and the Green Claims Directive.  These legislative proposals aim to eliminate communications that may mislead consumers, investors or other market players.

We are helping companies navigate this new regulatory landscape by providing analysis and advice, which includes reviewing all their communications and statements made regarding their green credentials and activities.

Mandated sustainability reporting

The CSRD, applicable from 1 January 2024, introduced more stringent ESG reporting requirements, including the disclosure of non-financial information on ESG issues for companies operating in the EU market.

It is estimated that the CSRD will apply to almost 50,000 companies incorporated, listed or operating in the EU. The CSRD’s reporting obligations also apply to parent companies located outside the EU with significant operations in the EU and at least one branch or subsidiary in the EU.

The rules are designed to "create a culture of transparency about the impact of companies on people and the environment". We assist companies to understand and implement these new obligations that may have an important impact on their activities, particularly given that corporate sanctions, such as monetary fines and exclusion from public procurement contracts, are provided for in the event of non-compliance. 

Due Diligence re: chains of values

The CSDDD will genuinely strengthen the way companies ESG criteria are considered.  Indeed, companies should take steps to carry out due diligence measures to adverse scenarios related to their value chains and to consider externalities as well as environmental, social and governance risks. The new rules will ensure that companies in scope identify and address adverse human rights and environmental impacts of their actions inside and outside Europe.

It is estimated that the CSDDD will apply to more than 6,000 large EU companies and more than 900 large non-EU companies.

While our mission, in particular, is to audit and help our clients mitigate their ESG risks through wordings (e.g. drafting contract clauses to protect against default by co-contractors and sanctions by regulators), we also help them to build a genuine ESG culture.

On 15 January 2024, the Paris Court of Appeal in France created a new chamber dedicated to emerging litigation linked to corporate due diligence and social responsibility issues, highlighting the ongoing specialisation in this area, and the particular need to educate businesses as well as instilling ESG culture.

Finally, on a personal level, what motivates and drives your commitment to ESG issues?

I am an optimist, and I know that it’s what we do that counts. I am totally committed to ESG issues. These deal with our legacy to our children. We don’t want to pass on a burning planet.