On May 18, 2023, Novethic published an article titled “CSRD, Duty of Vigilance… U.S. Companies Ramp Up Pressure Against European Regulation,” highlighting the intensified efforts by American companies to influence European sustainability regulations. As the delegated act for the Corporate Sustainability Reporting Directive (CSRD) approaches its expected publication by the end of June, economic lobbies have increased pressure on the European executive. Unofficial reports suggest that the European Commission may consider revising the mandatory nature of the reporting requirements under this pressure.
The CSRD aims to strengthen ESG reporting obligations for companies operating in Europe, including subsidiaries of U.S. firms. This directive is part of the European Green Deal, which seeks to make Europe the first carbon-neutral continent by 2050. However, many American companies argue that these requirements are overly stringent and could harm their competitiveness in the European market.
At the same time, the European directive on corporate due diligence, adopted in trilogue last December, is also facing strong criticism. Several European countries, including Germany and Italy, are currently blocking the text, while economic lobbies are exerting intense pressure to prevent its adoption. This directive requires companies to monitor and prevent human rights violations and environmental harm in their supply chains. Opponents fear these obligations could lead to additional costs and legal complications for companies operating internationally.
The growing tensions between U.S. companies and European regulators over ESG regulations could have significant repercussions on financial markets. Investors should closely monitor the evolution of these directives, as their implementation or modification could impact the performance of affected companies. Diversifying investment portfolios and prioritizing companies that demonstrate adaptability to sustainability regulations is recommended to minimize risks associated with these regulatory developments.
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