A bone-crushing burden: Darren Woods discusses CSDDD

Darren Woods discusses CSDDD

Our CEO Darren Woods has been speaking out on the need for the repeal of the European Union's (EU) Corporate Sustainability Due Diligence Directive (CSDDD). Here are some key takeaways from his comments.

Darren has been clear about the potential ramifications of CSDDD on a global company like ExxonMobil, telling Bloomberg it is "the worst piece of legislation I've seen since I've been in this job."

The directive, if enacted, mandates companies create legally-binding plans that comply with the Paris Agreement goals across a company's global supply chain. Violations could result in penalties of at least 5% of global revenue, which, as Darren described to Reuters would be "bone-crushing."

Moreover, the directive could impact U.S.-EU trade negotiations in which the EU has pledged to purchase $750 billion worth of U.S. energy.

"The challenge is going to be that the companies who supply that energy will clearly exceed the threshold, and so will be subject to this law," Darren explained to Axios.

To make matters even more challenging, because of the extraterritorial reach of the directive, companies operating outside of the EU would still have to comply with these regulations. That means, for example, that a U.S. energy supplier could face billions of dollars in penalties annually.

"We see this as untenable," Darren said in an interview with the Financial Times. Our ability to continue to operate and do business in Europe with that law hanging over our heads I think is going to make it impossible to continue what we've been doing. It's only going to accelerate our exit from Europe."

The directive points to a larger economic trend in the region. "Europe is slowly suffocating itself," Darren told the Semafor. While ExxonMobil has been a part of Europe's industrial fabric for more than 135 years and currently has thousands of employees in the region, regulations like CSDDD have impacts on our ability to operate in a less-competitive, deindustrialized Europe.

To learn more about CSDDD, click here.