This story was originally published on ESG Dive. To receive daily news and insights, subscribe to our free daily ESG Dive newsletter. Dive Brief: The European Parliament voted Tuesday to approve a political agreement altering the scope and requirements of the European Union’s corporate sustainability reporting laws: the Corporate Sustainability Reporting Directive and Corporate Sustainability Due Diligence Directive. The co-legislating body for the European Union agreed to adopt the text of a deal the E ...

Core Viewpoint - Executives from ExxonMobil and QatarEnergy have indicated that they may cease operations in the European Union if the EU does not amend its sustainability law, which could impose fines of 5% of global revenue [1][2][3] Group 1: Company Responses - Exxon CEO Darren Woods expressed that the EU's Corporate Sustainability Due Diligence Directive could lead to "disastrous consequences" if implemented in its current form, as it requires companies to manage human rights and environmental risks across their supply chains [2][5] - QatarEnergy's CEO Saad al-Kaabi reiterated the possibility of halting LNG supplies to Europe if the EU does not revise or revoke the sustainability law, emphasizing that this is a serious threat and not a bluff [3][4] - Both companies highlighted the technical challenges of complying with the EU's requirements, with Woods stating that the legislation's demands are technically unfeasible [5][6] Group 2: Market Context - ExxonMobil and QatarEnergy are significant suppliers of liquefied natural gas (LNG) to Europe, with Exxon expected to contribute approximately 50% of EU imports from American producers in 2024, while Qatar has supplied between 12% and 14% of the bloc's LNG since the onset of the Ukraine conflict in 2022 [7]

Core Viewpoint - ExxonMobil's CEO has criticized the EU's Corporate Sustainability Due Diligence Directive (CSDDD) as detrimental to global business operations in Europe, highlighting its potential to deter multinational companies from engaging in the European market [1][4]. Group 1: Legislative Impact - The CSDDD mandates multinational firms to align their supply chains with the Paris Agreement and implement legally binding climate transition plans, with penalties for non-compliance reaching at least 5% of global revenue [2]. - The CEO described the potential fines as "bone-crushing," indicating that the directive would affect not only European companies but also foreign suppliers selling into the EU market [2]. Group 2: Trade Relations - The legislation could complicate U.S.-EU trade relations, especially as the EU has committed to $750 billion in energy imports from the U.S., with major U.S. suppliers potentially facing significant liabilities under the CSDDD [3]. - The directive highlights the tension between the EU's climate accountability goals and industry concerns regarding cost competitiveness and trade frictions [5]. Group 3: Industry Concerns - ExxonMobil views the CSDDD as indicative of broader regulatory overreach, warning that excessive compliance burdens could lead to deindustrialization and prompt companies to exit European markets [4]. - The ongoing debate around the CSDDD reflects the critical balance between energy security and regulatory frameworks that impact global operators [5].