Exxon Mobil is actively campaigning against a significant European Union corporate sustainability law, escalating its concerns by directly engaging with U.S. President Donald Trump and his administration. The energy giant warns that the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) will prompt an exodus of businesses from Europe, potentially impacting transatlantic trade relations.
The CSDDD, adopted last year, mandates that companies identify and address human rights and environmental risks within their supply chains. Non-compliance carries substantial penalties, including a baseline fine equivalent to 5% of a company’s global turnover. In response to pressure from various business sectors and political leaders in member states like France and Germany, who have voiced concerns about the law’s potential to undermine the bloc’s competitiveness, the European Commission recently proposed modifications aimed at easing its requirements.
However, Exxon’s CEO, Darren Woods, has characterized these proposed changes as insufficient, advocating for the complete revocation of the directive. Woods disclosed that he has discussed the regulation with President Trump and other administration officials involved in trade policy, noting that the U.S. administration has indeed raised concerns regarding the CSDDD as part of ongoing trade negotiations with the EU. This dispute represents another point of friction in the complex relationship between Washington and Brussels, particularly following recent U.S. consideration of sanctions related to separate EU technology legislation.
Woods elaborated on Exxon’s strategic shift, stating that the company has been “slowly pulling out of Europe,” citing the divestment, closure, or exit from approximately 19 operations. He attributed this trend to what he described as burdensome regulatory environments. The CSDDD, he argued, would further incentivize businesses to curtail their operations within the European Union. The European Commission has not yet issued an immediate comment on this matter.
The directive’s requirement for Exxon to extend its environmental law compliance globally, coupled with the potential 5% global sales fine, is seen by the company as a “bone-crushing” financial risk. Exxon Mobil’s global sales reached $339 billion last year, underscoring the significant financial implications of such a penalty.
In parallel efforts, U.S. lawmakers are also taking action. Senator Bill Hagerty of Tennessee introduced legislation in March designed to shield American companies from mandates to comply with the CSDDD. Meanwhile, EU member states and legislators are scheduled to commence negotiations on the proposed amendments to the directive next month. This push to dilute the law has drawn criticism from environmental advocates, who contend it weakens corporate accountability mechanisms.
Adding to its concerns regarding EU regulations, Exxon announced on Thursday a pause on a 100 million euro ($118 million) investment in European plastic recycling initiatives, citing separate draft EU rules. While Woods expressed hope for progress on the CSDDD through U.S. legislative channels, he has conveyed disappointment with the response received thus far from EU regulators.
David Thompson earned his MBA from the Wharton School and spent five years managing multi-million-dollar portfolios at a leading asset management firm. He now applies that hands-on investment expertise to his writing, offering practical strategies on portfolio diversification, risk management, and long-term wealth building.