The penalties proposed in the European Union’s climate and social responsibility legislation would be bone-crushing to any company, ExxonMobil’s chief executive Darren Woods told Bloomberg.
The EU’s planned Corporate Sustainability Due Diligence Directive, which is designed to prevent adverse human rights and environmental impacts across a company’s value chains, has been severely criticized by U.S. officials and industry leaders, including U.S. Energy Secretary Chris Wright.
These rules and the EU’s “crusade” toward net zero are a threat to the U.S.-EU trade deal, Secretary Wright told the Financial Times earlier this month.
“I think those regulations significantly threaten the ability to implement the trade deal that was agreed to,” he added.
Exxon’s Woods said on the Q2 earnings call last month that he hopes the ongoing U.S.-EU dialogue on trade would address the “bone-crushing penalties” in the EU’s climate regulations.
In a more recent interview with Bloomberg, Woods said the EU’s directive is “the worst piece of legislation I’ve seen since I’ve been in this job.”
“We’re concerned about the fact that they’re killing the manufacturing sector and frankly smothering economic growth driven primarily by the desire and effort to kill oil and gas as a way of addressing climate change,” Woods added.
The plan to impose fines of up to 5% of the global revenue of a company found not compliant with the directive “frankly would be bone-crushing to any company,” Woods told Bloomberg.
“We’re concerned that frankly, there are few people who understand the implications of this.”
Many companies outside the EU, including those in the U.S., have signaled they would rather not sell in Europe than pay significant “border taxes”, levies, penalties, or whatever the language will be when the final EU mechanisms will come into effect.
European lawmakers consider amendments to the ESG directive, as the top EU economies, Germany and France, have said the legislation could undermine the already weakened EU competitiveness.
By Michael Kern for Oilprice.com
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