EU Corporate Accountability Law Faces Lobbying Assault from US Groups

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EU Corporate Accountability Law Under Fire: Fossil Fuel Giants Lobby to Weaken Climate Safeguards

Brussels, Belgium – A landmark EU law aimed at holding corporations accountable for human rights and environmental abuses in their operations and supply chains is facing meaningful pressure from powerful industry lobbies, particularly concerning its climate provisions. the Corporate Sustainability Due Diligence Directive (CSDDD), enacted in 2024, mandates large companies operating within the EU to identify and address such harms.

Though, a recent “Omnibus proposal” from the European Commission, heavily influenced by lobbying efforts from European and US companies, including the American Chamber of Commerce to the EU, threatens to substantially dilute key aspects of the CSDDD. Critics argue these changes would make it considerably harder for victims of abuses to seek legal recourse against corporations.Fossil fuel companies, in particular, have aggressively targeted the law’s climate mandates. The CSDDD requires covered companies to implement a “transition plan for climate change mitigation” designed to align with limiting global warming to 1.5 degrees Celsius, a cornerstone of the Paris Agreement. This means companies must not only adopt these plans but actively put them into effect.

Evidence suggests a concerted effort to undermine these climate commitments. ExxonMobil CEO Darren Woods publicly urged President Donald trump to address the CSDDD in trade negotiations with the EU. Furthermore, ExxonMobil has engaged in multiple meetings with senior European Commission officials since early 2025 to discuss the directive and related issues.

Adding to the concern, EU member states have proposed weakening the requirement for companies to “put into effect” climate mitigation plans. Their alternative suggests merely adopting plans that outline “reasonable efforts” to combat global warming.

The article emphasizes the critical role of fossil fuels in driving the climate crisis, noting that burning them accounts for approximately two-thirds of annual global greenhouse gas emissions. The extraction and production of fossil fuels are also directly linked to severe human rights and environmental consequences, including toxic pollution of air and water, and damage to ecosystems.

With the European Parliament now holding the ultimate decision on the directive’s fate, the call is for lawmakers to resist industry lobbying. The emphasis is on safeguarding a robust law that compels companies to take meaningful action against climate change and ensures genuine accountability for human rights and environmental transgressions worldwide.

How might the CSDDD impact the competitive landscape for US companies operating within the EU market?

The Scope of the EU’s Corporate Sustainability due Diligence Directive (CSDDD)

the European Union’s proposed Corporate Sustainability Due Diligence Directive (CSDDD) aims to compel companies operating within the EU market – adn increasingly, those in their supply chains globally – to take responsibility for adverse human rights and environmental impacts. This landmark legislation, currently undergoing final negotiations, represents a meaningful shift towards corporate accountability, demanding greater transparency and proactive risk management. The CSDDD isn’t just about avoiding scandal; it’s about embedding ESG (Environmental, Social, and Governance) principles into core business operations.

Key aspects of the CSDDD include:

Due Diligence Obligations: Companies must identify,prevent,mitigate,and account for risks related to human rights violations and environmental damage.

Supply Chain scrutiny: The directive extends beyond a company’s direct operations to encompass its entire value chain, including suppliers and subsidiaries.

Civil Liability: Victims of abuses linked to corporate activities will have greater avenues for seeking redress and compensation.

Director Liability: Directors could face personal liability for failing to oversee due diligence processes.

US Lobbying Efforts: A Transatlantic Clash

Recent months have witnessed a surge in lobbying activity targeting the CSDDD, with a significant portion originating from US-based business groups and industry associations. These groups, representing sectors like chemicals, oil & gas, and agriculture, argue the directive imposes undue burdens on businesses, creates legal uncertainty, and possibly disadvantages US companies.

The lobbying tactics employed are multifaceted:

1. Direct Engagement with EU Policymakers: american Chamber of Commerce (AmCham) chapters across Europe, alongside specific industry associations like the American chemistry Council, are actively meeting with members of the european Parliament and Council to voice concerns.
2. Funding of Think Tanks: US organizations are channeling funds to European think tanks that produce research questioning the CSDDD’s effectiveness and economic impact. these reports often emphasize the potential for increased compliance costs and reduced competitiveness.
3. Public relations Campaigns: Coordinated PR efforts are underway to shape public opinion and portray the CSDDD as overly bureaucratic and detrimental to innovation.
4. Threats of Retaliatory Measures: While not explicitly stated, some US groups have hinted at potential trade disputes if the CSDDD is finalized in its current form, leveraging concerns about trade wars and economic sanctions.

sectors Under Pressure: Identifying Key targets

Several industries are facing particularly intense scrutiny under the proposed CSDDD,making them focal points for US lobbying efforts.

Fashion & Textiles: The industry’s complex supply chains and documented issues with forced labor in cotton production make it a prime target. US textile manufacturers fear increased due diligence requirements will disrupt sourcing.

Agriculture & Food: Concerns center around deforestation linked to commodity production (soy, palm oil, cocoa) and the potential for stricter regulations on pesticide use.

Automotive: The automotive sector’s reliance on raw materials like cobalt and lithium, frequently enough sourced from regions with human rights risks, is driving lobbying efforts to weaken supply chain provisions.

Technology: The tech industry faces pressure regarding the ethical sourcing of minerals used in electronics and the environmental impact of e-waste. Supply chain transparency is a major concern.

The Role of US Law and Extraterritoriality

A key argument raised by US lobbying groups is the potential conflict between the CSDDD and existing US laws. Specifically, they point to concerns about extraterritoriality – the submission of EU law to US companies operating outside of European borders.

The US legal system generally prioritizes the rights of shareholders and emphasizes maximizing profits, which can clash with the CSDDD’s focus on stakeholder interests and social responsibility. US companies also express concerns about potential duplication of compliance efforts,given existing US regulations like the California Transparency in Supply Chains Act and the Uyghur Forced Labor Prevention Act.

Impact on EU-US Relations & Future of Global supply Chains

The lobbying battle over the CSDDD is straining EU-US relations, raising questions about the future of transatlantic cooperation on sustainable trade and responsible business conduct.

Potential for Trade Friction: If the EU proceeds with the CSDDD despite US opposition, it could lead to retaliatory measures and increased trade tensions.

Fragmentation of Global Standards: A divergence in regulatory approaches could create a fragmented landscape for global supply chains, increasing compliance costs and hindering efforts to promote sustainability.

Rise of Regional Trade Blocs: The dispute could accelerate the trend towards regional trade blocs with differing standards on corporate accountability.

Benefits of the CSDDD (Despite Opposition)

Despite the intense lobbying,the CSDDD offers significant potential benefits:

Improved Human Rights Protection: The directive can help prevent and address human rights abuses in global supply chains.

Environmental Sustainability: by requiring companies to mitigate environmental risks, the CSDDD can contribute to a more sustainable economy.

Enhanced Corporate Reputation: Companies that proactively embrace due diligence can enhance their reputation and build trust with stakeholders.

* Level Playing Field: The CSDDD aims to create a level playing field for businesses by ensuring all companies operating in the EU market are subject to the same standards.

Practical Tips for Companies Navigating the CSDDD

For companies preparing