The European Union’s Due Diligence Directive Must Be Stopped

By Chris Talgo

Most Americans have probably never heard of the European Union’s (EU) recently passed Corporate Sustainability Due Diligence Directive (CSDDD). According to the EU, the “aim” of the CSDDD “is to foster sustainable and responsible corporate behaviour in companies’ operations and across their global value chains. The new rules will ensure that companies in scope identify and address adverse human rights and environmental impacts of their actions inside and outside Europe.”

Although this may sound benevolent, the EU’s CSDDD, which “entered into force” on July 25, 2024, is a direct threat to American sovereignty and energy production.

As my colleagues Justin Haskins and Jack McPherrin note in a recent Heartland Institute Policy Study outlining the CSDDD:

It is not hyperbolic to say the CSDDD is one of the most economically restrictive and nakedly authoritarian laws in the history of western democratic civilization. The directive attempts to globally institutionalize sweeping ESG objectives by mandating practices for large companies doing business in the European Union, regardless of whether those companies are headquartered in the EU. Even worse, the CSDDD forces those companies to impose the same standards on many of the businesses operating within their global supply chains— fundamentally transforming all social and economic activity around the world. It is one of the gravest threats to freedom that Americans face today.

Under the CSDDD, all U.S. businesses, from multinational corporations to small family farms, would have to adhere to the EU’s environmental regulations that prioritize the mass adoption of expensive and unreliable so-called green energy while restricting the production of abundant, affordable, and reliable fossil fuel energy.

In essence, the CSDDD “is a transition plan for climate change mitigation aligned with the 2050 climate neutrality objective of the Paris Agreement as well as intermediate targets under the European Climate Law,” says the EU.

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RELATED: EU Proposed Carbon Market: Disaster for Consumers, Zero Effect on Climate

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As evidence increasingly shows, the EU’s early adoption of an electric grid primarily fueled by intermittent wind and solar has not been a smooth process. For many years, European countries like Germany have struggled with chronic energy shortages.

A few months ago, the fragility of Europe’s green grid was put on full display when two solar facilities in southwest Spain experienced a sudden and severe drop in power output, which triggered a “complete collapse of the system,” according to Spanish Prime Minister Pedro Sánchez.

The EU’s climate alarmist policies, which heavily regulate the use of pesticides and fertilizers, have also wreaked havoc across the continent’s agricultural sector. For the past few years, thousands of frustrated farmers in places like the Netherlands have protested these heavy-handed, top-down rules from out-of-touch elites in Brussels.

Across the pond, Americans were given a sneak peek of Europe’s green agenda during the Biden years.

The results speak for themselves. As The New York Post reported, energy prices soared more than 30 percent under President Biden — 13 times faster than the previous seven years. A study by The Heartland Institute in 2024 determined that the average family paid a whopping $2,548 more in energy costs due to the Biden-Harris administration’s climate policies.

Fortunately, President Trump recognizes the folly of climate alarmism.

Throughout his 2024 campaign, Trump reiterated the need for American energy dominance. So far, the Trump administration has sought to expedite the permitting process for energy extraction on federal lands, which would unlock treasure troves of natural gas and oil.

Trump is also playing hardball with the European Union as he seeks to foster fairer trading relations with the EU.

ExxonMobil CEO Darren Woods explained on Fox News’ Special Report recently that the EU’s CSDDD represents a non-tariff trade barrier that Trump is intent on eliminating as his team negotiates with EU officials.

Woods also recommended that Congress draft legislation that deems the EU’s CSDDD irrelevant to U.S. businesses. I highly suspect that Trump would sign such a bill with gusto.

Ironically, the good news is that the EU’s byzantine legislative process moves at a glacial pace. As the EU states, “Member States will have to transpose the Directive into national law and communicate the relevant texts to the Commission by 26 July 2027. One year later, the rules will start to apply to the first group of companies, following a staggered approach (with full application on 26 July 2029).”

There is still ample time to stop the slow-moving CSDDD train before it picks up too much speed.

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Chris Talgo (ctalgo@heartland.org) is editorial director at The Heartland Institute.