Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
Exxon Mobil is intensifying its campaign against a significant European Union corporate sustainability law, directly appealing to President Donald Trump for U.S. political intervention. The oil giant warns that the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) will prompt more businesses to exit Europe, with its CEO, Darren Woods, advocating for the law’s complete revocation rather than the recently proposed amendments.
EU’s Sustainability Directive Under Fire
The CSDDD, adopted last year, mandates that companies address human rights and environmental issues throughout their supply chains. Non-compliance could result in substantial fines, with a baseline penalty set at 5% of a company’s global turnover.
In response to criticisms from businesses and leaders, including those in France and Germany, who argued the law would impair the bloc’s competitiveness, the European Commission suggested changes earlier this year to ease some of the requirements.
However, Exxon CEO Darren Woods stated in an interview with Reuters that these proposed adjustments are insufficient, calling for the directive to be scrapped entirely.
U.S. Political Engagement
Woods confirmed discussions about the regulation with President Trump and other U.S. administration officials focusing on trade and EU policy. The U.S. administration has subsequently raised concerns about the CSDDD during trade negotiations with the European bloc.
This escalating disagreement represents another point of contention in the often-strained relationship between Washington and Brussels, which recently saw discussions of unprecedented sanctions over separate European tech legislation.
Exxon’s European Operations and Financial Concerns
Woods indicated that Exxon has been gradually reducing its presence in Europe, having sold, shut down, or exited nearly 19 operations. He attributes these decisions to what he describes as bureaucratic obstacles impeding business.
The CEO cautioned that the CSDDD would further accelerate this trend, providing additional incentives for businesses to scale back their activities within Europe. He elaborated that the legislation would compel Exxon to apply EU environmental standards to its global operations, and a 5% fine on its worldwide sales, which totaled $339 billion last year, would be “bone-crushing.”
Legislative Support and Ongoing Negotiations
In the U.S., lawmakers are also taking action. Senator Bill Hagerty of Tennessee introduced a bill in March aimed at protecting American companies from being forced to comply with the CSDDD.
Meanwhile, EU member states and legislators are scheduled to begin negotiations next month on the proposed changes to weaken the policy. These efforts to dilute the law have drawn strong criticism from environmental activists, who argue it undermines corporate accountability.
Further Investment Decisions
Adding to its concerns, Exxon recently announced a pause in a €100 million ($118 million) investment in European plastic recycling. This decision was made in response to separate draft EU regulations.
Woods expressed optimism regarding potential progress from U.S. lawmakers in addressing the CSDDD, but conveyed disappointment with the response from EU regulators thus far. He emphasized the need for a resolution “sooner rather than later.”
