European ESG regulations may require American companies to comply (2023)
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The Washington Examiner ran an op-ed on November 9 by Paul Fitzpatrick, the president of the 1792 Exchange and an ESG opponent, who argued that American businesses may have to comply with new ESG rules from the European Union:
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Right now, ESG is baked into the new European Corporate Sustainability Reporting Directive and the International Sustainability Standards Board proposals. The CSRD will begin affecting multinational corporations in fiscal year 2024 and can deny American companies access to the important European market. Even companies that don’t operate in Europe will eventually be forced to comply if they are downstream suppliers for the vendors of larger companies. To add insult to injury, a United States House committee is investigating the Biden administration’s SEC for quietly working with its European Union counterparts to make European regulations as impactful as possible. In the process, the SEC is, as several U.S. lawmakers observed, “willfully circumventing the U.S. regulatory process by actively coordinating with foreign governments to dictate climate and economic policy to U.S. companies.” At the same time, the SEC has proposed its crushing Climate Disclosure Rule. … Europeans, in particular, are bearing the brunt of [ESG] every single day. The EU and individual nations’ overreach has increased costs for food, made energy more expensive and less reliable, manipulated transportation, choked the economy, increased reliance on Russia and China, and changed the political landscape across Europe.[1] |
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Bloomberg News, which is generally supportive of ESG, also says American multinational companies are likely to face additional regulatory hurdles in 2024:
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Companies based outside Europe are reviewing securities they’ve listed in the bloc, as the implications of an overlooked clause in new ESG reporting rules sink in. International companies that have issued stocks and bonds in the EU may need to comply with Europe’s Corporate Sustainability Reporting Directive (CSRD) as soon as January, according to lawyers advising corporate clients affected by the new rules. That’s four years earlier than many had expected, and may drive a number of non-EU companies to cancel their EU securities, the lawyers said. … There are more than 1,000 CSRD reporting requirements covering a range of environmental, social and governance factors. Lawmakers in the US and the EU have argued that elements of the requirement, which also involve corporate value chains, are too onerous. But CSRD disclosures remain on track to go into effect next year, after a last-ditch effort by some EU lawmakers to derail the process fell flat.[1] |
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See also
- Environmental, social, and corporate governance (ESG)
- Economy and Society: Ballotpedia's ESG newsletter
External links
Footnotes
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