US Business Groups Send Letter Slamming ‘Egregious’ EU ESG Rule

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(Bloomberg) — The biggest business associations in the US sent a letter to White House cabinet members, including Commerce Secretary Howard Lutnick, asking them to block the European Union from moving ahead with plans to have a hotly contested ESG rule apply to American companies.

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The letter, which also is addressed to US Treasury Secretary Scott Bessent, Energy Secretary Chris Wright, White House National Economic Council Director Kevin Hassett and Jamieson Greer, the US trade representative, targets the EU’s efforts to move ahead with the Corporate Sustainability Due Diligence Directive.

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Despite EU efforts to simplify CSDDD, current legislation, “which had been intended to rein in some of the law’s egregious mandates, fails to address” the question of extraterritoriality, the US business groups said in the letter dated Oct. 29.

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“If CSDDD proceeds with extraterritorial subjugation intact, American businesses could be forced to respond to protect their interests,” the US Chamber of Commerce, the National Association of Manufacturers and the American Council for Capital Formation wrote. The letter also was signed by the International Franchise Association and the Small Business and Entrepreneurship Council.

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It’s the latest salvo from US businesses, alarmed at the requirements that would come with CSDDD. The directive, which was passed last year, requires companies to have viable climate transition plans and opens them to legal liability if their value chains are subject to environmental or human rights violations. CSDDD also is controversial inside Europe, where business lobbies have fought to water it down.

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If the EU doesn’t drop extraterritoriality, American companies “would face difficult decisions about their EU investments and their exposure to the law’s mandated penalties for perceived lack of compliance,” according to the letter from the US business associations. That would stymie supply chains and slow economic growth, worsening transatlantic commerce and relations, the organizations said.

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EU lawmakers have yet to settle on a final version of CSDDD, with a vote due to take place in the EU Parliament on Nov. 13. After that, negotiations with EU member states will begin.

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“We hope the administration will continue to engage with Brussels and EU member-state governments to underscore that the current proposals to revise the CSDDD address neither concerns raised by the US business community nor the US government, and that the United States will take measures to protect American companies,” the trade groups said in the letter.

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The White House didn’t immediately respond to a request for comment.

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The business associations said its organizations and members “recognize the well-meaning intent of due diligence and efforts to drive operational improvements.” However, implementation costs would be huge, and the US legal framework would be subjugated to the EU’s, they said.

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—With assistance from Skylar Woodhouse.

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