Sustainable Directors' Duties: The European Dilemma of the Hare and the Tortoise

On 24 February 2025, the final text of the EU Omnibus I Directive (CSRD/CS3D) was adopted by the European Council. Even though the most significant change concerns the thresholds or «super» entry thresholds, the issue of sustainable Directors’ Duties is even more relevant today. The fact that the number of companies affected is drastically reduced invites us to consider possible ways of making directors more socially responsible. It seems that the flip side of the EU Omnibus Regulation could paradoxically be less peace of mind, the return of soft law, compliance and its possible loopholes, which are like “leaks” in the often-described impervious “board” screen against liability actions of all kinds thanks to national law tools. 

It is worth noting that while the Double Materiality Principle in sustainability reports is going to be simplified, giving way to sustainable compliance, it remains an innovative double trigger system unique to the EU. It has opened companies’ doors to stakeholders. Admittedly, this is done in the spirit of the Stakeholder Dialogue, but such dialogue is necessary (as confirmed in Chapter VI B G 20 of the OECD Principles of Corporate Governance 2023). There is no doubt that stakeholders will continue to focus on the CSRD’s climate-related plans and on reducing GHG emissions.

Pending the transposition of the Omnibus Directive, one should refer to the CSRD as transposed in certain Member States (by Ordonnance of 6 December 2023 in France) while taking into account the “Stop the Clock” EU Directive of April 14, 2025; regarding due diligence, the French experience may be instructive in many ways, not only because of the contentious “honeymoon” period that followed the French Law Duty of Vigilance of March 27, 2017, but also because France was the first State Member to transpose the CSRD (Ordonnance of 6 December 2023). 

On 18 January 2024, the creation of the Chamber 5-12 of the Paris Court of Appeal, dedicated to emerging litigation involving environmental issues was a real boost for case law, and has resolved procedural difficulties, and has thus reached its cruising speed. The kind of "comeback" of the French Law Duty of Vigilance that is more ambitious than the CS3D but with undeniable territorial limitation is decisive thanks to dynamic case law and judges who are now sensitive to these issues (for example, CA Paris, 5-12, 17 June 2025, La Poste, TJ Paris, 12 mars 2026, Syndicat Petrol-Is and  a. c/ Laboratoires Yves Rocher.) Yves Rocher has become the first company in France to be fined under the French Duty of Vigilance law for acts committed abroad by one of its subsidiaries. This also shows that social issues are just as important as environmental issues, giving full meaning to the acronym ESG.

We cannot overlook the growing pressure from stakeholders. There are of course remaining questions in light of the evolution of the European Model or Sustainable Companies. How should conflicts of interest among stakeholders be managed? Will stakeholder pressure be effective in light of the new regulatory changes? The answers at this stage are still speculative, but one thing is certain: judges will have plenty to consider. Another thing is also certain: the risk of litigation alone is a risk to climate corporate reputation which is a tangible threat to companies and their boards. 

Many questions may arise in the wake of this EU Omnibus I Regulation. For example, what about the future of the EU Green Deal? Are we witnessing the rise of European soft regulation rather than hard regulation and a more gradual sustainability strategy to help European companies to be more competitive? Can flexibility and competitiveness go hand in hand with the fight against climate change? The answer may come from the practice of sustainable compliance, in trust, in reconciling the interests of shareholders and stakeholders.

Finally, we must address the issue of timing. As the main objective of European companies is competitiveness according to the Draghi Report, the machinery of European regulation is caught in its own trap. Indeed, like a large cruise ship, it is slow, and this contrasts with the many innovative EU regulations adopted very quickly (SFDR, Taxonomy Regulation). This normative race against time cannot practically be stopped. It is rare for European directives to be revised before they have even been implemented, as is the case with the CS3D. It is also rare for directives to have been transposed to such a limited extent within the EU (only 19 State Members) as was the case with the CSRD.

Suddenly, time itself becomes a regulatory tool and La Fontaine's fable, The Hare and the Tortoise, first published in 1688, seems to be rich in lessons today. 

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Catherine Malecki is a Professor of Private Law at Rennes 2 University and a member of Institut universitaire de France (IUF). She is also a member of the Laboratoire Interdisciplinaire de Recherche en Innovations Sociétales (LiRIS), Rennes 2 University, France, and External Member of the Institute of Commercial and Corporate Law, Durham Law School, Durham University, UK.

Further reading: Malecki, Catherine. "Sustainable Directors’ Duties: European and French Perspectives in Light of the Omnibus I Simplification Package or the Dilemma of the Hare and the Tortoise" European Company and Financial Law Review, vol. 23, no. 1, 2026, pp. 72-111. https://doi.org/10.1515/ecfr-2026-0007

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