Posted Dec 26 2022 at 12:00Updated Dec 26. 2022 at 01:34 PM
This was one of the few promises put forward to illustrate Emmanuel Macron’s green credo during the last presidential campaign. The majority is determined to fight in the coming months for the establishment of a device for “greening” the variable remuneration of senior executives, while employers seek to avoid any overly restrictive measure.
It all started last March, during the presentation with great fanfare of the new presidential program of the Head of State. “We will carry out a series of measures, such as conditioning executive compensation on compliance with the company’s environmental and social objectives, which is a key element, here too, to change practices and behaviors”, he had launched during his river speech of 4 hours, by making measurement a lever to promote climate transition.
The patronage parade
Sensing the political pressure to increase, employers took up the issue. The brand new Afep-Medef governance code unveiled last week makes explicit reference to this: among the recommendations, the fact of integrating, in the CSR (social and environmental responsibility) criteria used for the variable compensation of executives, a “criterion in link with the company’s climate objectives”. “Quantifiable criteria should be given priority”, specifies the code. “There is the desire to show that the political request has been heard”, recognizes an employer source.
The timing of the announcement is also not innocent. By unveiling it now, Afep and Medef hope that this new code will infuse in the spring at the next general meetings of companies. “There is already a dynamic, we anticipate that the new code will amplify it”, continues the same source. Thus approximately 94% of CAC 40 companies have already introduced an environmental criterion in the calculation of the variable compensation of executives.
Will this allow employers to avoid a more restrictive legislative text? Not sure. “The Afep-Medef code is insufficient. We need to discuss it with the government, but we do not forbid ourselves within the parliamentary majority to take this measure ourselves in the coming months. The sooner the better”, underlines Mathieu Lefèvre, coordinator of the Renaissance group within the finance committee of the Assembly. “This measure is still on the agenda, I very much believe in its usefulness”, adds Pierre Cazeneuve, Renaissance deputy and former member of Emmanuel Macron’s cabinet at the Elysée.
Negotiations in Europe
It remains to be seen what the timetable and content of such a legislative mechanism might be. On the first point, the government is not advancing. “Work is underway at the Treasury Department,” we explain at Bercy. Pierre Cazeneuve thinks that an initiative could be taken within the framework of the 2024 budget, or in the text in preparation on the sharing of value.
But another path is being followed in parallel at European level, this reform being part of the directive on the duty of vigilance of companies put on the table by the Brussels Commission. “Since there are ongoing negotiations at European level, we are not going to legislate in parallel in France. If we ever lose this battle in Europe, we will have to take our responsibilities in France”, explains Pascal Canfin, Renaissance MEP and President of the Environment Committee of the European Parliament.
Business freedom
In any case, the main tracks on which the presidential camp wants to move forward are already apparent. “We want to work on the presidential promise, which is to establish an obligation on the ecological criterion in the calculation of executive compensation,” explains Mathieu Lefèvre. “We know very well that, in a company, what is not reflected in the variable part of the remuneration is considered de facto secondary”, justifies Pascal Canfin on this need for a mandatory criterion.
And above all, part of the majority is pushing for a minimum figure to be established. Today, the environmental criterion represents approximately 10% of the variable compensation of the managers of CAC 40 companies that practice it, but some like Pascal Canfin argue for the slider to be pushed to 20%. What ruffle the employers.
“We must take into account the climate trajectory of sectors, and the financial situation of companies. A mandatory criterion of 20% does not make sense, and does not respect freedom of enterprise, ”underlines the employer source. “The head of state recently explained that it is not the state that sets wages, this is also valid for the bosses,” he adds.