(Investing) – HOUSTON – is stepping up attacks against a European Union corporate sustainability law and has taken its concerns directly to U.S. President Donald Trump, warning that the regulation will lead to more businesses leaving Europe.
The EU’s corporate sustainability due diligence directive, or CSDDD, was adopted last year and requires companies to fix human rights and environmental issues within their supply chains, or face a baseline fine of 5% of global turnover.
In response to criticism from businesses and leaders of France and Germany that the law would harm the bloc’s competitiveness, the European Commission proposed a set of changes earlier this year to loosen the requirements.
That won’t be enough, Exxon CEO Darren Woods told Reuters in an interview, calling for the law to be revoked entirely.
Woods said he has spoken about the regulation with Trump and other members of the administration who work on trade or examine EU policy and the administration had raised concerns about CSDDD as part of trade negotiations with the bloc.
The simmering dispute is another flashpoint in the fraught relationship between Washington and Brussels, as the former recently considered unprecedented sanctions on EU officials over separate tech legislation.
“We have slowly been pulling out of Europe,” Woods said, noting that the oil producer has sold, shut down or exited nearly 19 operations due to what he said was red tape impeding business.
“This is another piece of legislation that would accelerate that incentive, or warrant businesses to reduce their activity in Europe.”
The European Commission did not immediately respond to a request for comment.
The legislation would force Exxon to apply the environmental laws to its operations around the world, Woods said, adding that a fine of 5% of global sales would be “bone-crushing.”
The top U.S. oil producer’s sales were $339 billion last year.
U.S. lawmakers are also taking steps to help. A bill introduced by Senator Bill Hagerty from Tennessee in March aims to defend American companies from being forced to comply with CSDDD.
EU countries and lawmakers aim to start negotiations on the proposed changes to loosen the policy next month. The move to weaken the law has dismayed environmental activists who say it guts corporate accountability.
On Thursday, Exxon also announced it is pausing the investment of 100 million euros ($118 million) in European plastic recycling because of separate draft EU rules.
Woods said he was hopeful that progress would be made by U.S. lawmakers to address CSDDD, but has been disappointed by the response so far from EU regulators.
“There is some movement, but we need to see resolution sooner rather than later,” he said.
