The environmental pillar of ESG criteria encompasses aspects such as waste management, the circular economy, greenhouse gas emissions reduction, environmental risk prevention, and biodiversity preservation. These elements are crucial for assessing a company's environmental impact, as defined by the AMF.

The CSRD Directive requires companies to analyze both the impacts of their activities on society and the environment (material impacts) and the ESG risks affecting their financial performance (material risks). This dual materiality approach compels executives to systematically integrate ESG considerations into their strategic planning.

The three pillars of the ESG framework are environmental, social, and governance. The environmental pillar includes waste management and biodiversity preservation. The social pillar covers working conditions and diversity. The governance pillar concerns board structure and financial transparency.

ESG criteria shape corporate strategy through several mechanisms. Incorporating ESG criteria into executive variable compensation, as at Danone where up to 50% of compensation is linked to these criteria, creates a direct incentive. The Non-Financial Performance Statement (DPEF) requires companies to formalize their ESG approach and measure their progress. Finally, the mission-driven company status (société à mission) allows companies to enshrine social and environmental objectives in their articles of incorporation, overseen by an independent committee.

The loi PACTE of 2019 did indeed amend Article 1833 of the Code civil to stipulate that a company must be managed taking into account social and environmental considerations. This amendment creates a duty of care for directors, who must demonstrate that these considerations have been factored into their strategic decisions.

According to FIR data, 73% of CAC 40 companies now incorporate ESG criteria into executive variable compensation, compared to only 10% a decade ago. This increase demonstrates a growing trend toward aligning executive interests with ESG objectives.

The mission-driven company status (société à mission), established by Article L.210-10 of the Code de commerce, allows companies to enshrine a corporate purpose and social and environmental objectives in their articles of incorporation. These objectives are overseen by an independent mission committee and verified by a third-party organization every two years. For example, Danone adopted this status in June 2020.

The amendment of Article 1833 of the Code civil and the CSRD Directive fall under the legal framework, as they impose obligations on companies. Incorporating ESG criteria into variable compensation and adopting the mission-driven company status (société à mission) are strategic mechanisms implemented by companies to meet these obligations.