TotalEnergies, Siemens urge EU to abolish climate law, letter shows
News Summary
TotalEnergies and Siemens CEOs, representing 46 European companies, have urged French President Emmanuel Macron and German Chancellor Friedrich Merz to abolish one of the EU's flagship corporate sustainability laws, a letter seen by Reuters shows. They argue that scrapping the rules would send a "clear and symbolic signal" to European and international companies that governments and the Commission are genuinely committed to restoring Europe's competitiveness. This call to abolish the rules goes further than current plans being negotiated by EU lawmakers and countries to scale them back and exempt more companies. The EU's corporate sustainability due diligence directive, adopted last year, requires companies to address human rights and environmental issues within their supply chains or face fines of up to 5% of global turnover, and has become one of the most politically contested parts of Europe's green agenda.
Background
The EU's Corporate Sustainability Due Diligence Directive (CSDDD) was adopted last year, aiming to ensure companies operating in the bloc scrutinize their global supply chains to identify and address potential human rights and environmental abuses. Non-compliant companies could face fines of up to 5% of their global turnover. However, the directive has been highly contested since its introduction, with pushback from key member states like Germany and France, as well as non-EU nations like the United States and Qatar. While the EU is currently negotiating changes to simplify the rules and exempt more companies, TotalEnergies and Siemens' call goes further, advocating for a complete abolition of the law.
In-Depth AI Insights
What are the underlying strategic motives for these companies' aggressive call to abolish the CSDDD, rather than merely seeking simplification? This suggests that companies likely perceive the CSDDD not just as a compliance burden, but as a fundamental threat to their profitability and global competitiveness. The demand for outright abolition could be a strategic "high-ball" negotiation tactic, aiming to set a bargaining floor that ensures significant dilution of the rules even if complete abolition fails. It may also represent a broader challenge to the direction of the EU's green agenda, pushing for a fundamental shift in regulatory philosophy rather than just incremental adjustments. How might this strong corporate pushback impact the future trajectory of EU environmental and ESG regulations, particularly given the current political climate? With Donald Trump's re-election in 2024, there's a global trend towards deregulation and prioritizing economic growth over strict environmental mandates. This lobbying effort by major European industrial and energy players could embolden EU member states (like France and Germany, who already pushed back) to significantly dilute or even dismantle parts of the green agenda, especially if economic headwinds persist. If competitiveness concerns dominate, it could create a "race to the bottom" on environmental standards globally. What are the potential investment implications for European companies and global investors if the EU significantly rolls back or abolishes key climate laws? In the short term, reduced compliance costs and potentially improved profitability for affected companies, particularly those in heavy industry or with complex supply chains, could boost their valuations. Long term, companies might face increased reputational risk if they fail to meet evolving global ESG expectations, even with relaxed EU rules. There's also the potential for fragmentation of global standards (EU vs. US vs. Asia) and increased environmental liability risks if less stringent oversight leads to more incidents.