Regulations can be a funny thing. They set legal boundaries for companies, create penalties for operating outside those boundaries and spur innovation. But sometimes, not all goes as planned. EU’s CSRD has seen plenty of that already, but yesterday related rhetoric took a hard turn. According to Reuters:
“ExxonMobil and QatarEnergy, on Monday warned they could stop doing business with the European Union if it does not significantly loosen a sustainability law that could impose fines of 5% of their global revenue.
Exxon CEO Darren Woods told Reuters on the sidelines of the ADIPEC meeting in Abu Dhabi that the EU’s Corporate Sustainability Due Diligence Directive would have ‘disastrous consequences’ if adopted in its current form…
‘If we can’t be a successful company in Europe, and more importantly, if they start to try to take their harmful legislation and enforce that all around the world where we do business, it becomes impossible to stay there,’ Woods said.
Qatar’s Energy Minister Saad al-Kaabi, who is also QatarEnergy’s CEO, told Reuters at the same conference that the gas giant has contingency plans in place if it decides to halt European shipments – a threat Kaabi has repeatedly warned is not a bluff.”
I reviewed Exxon’s 2024 10-K and Exxon doesn’t report earnings by geography other than the U.S. “Non-U.S.” earnings includes more than just the EU. Even so, the numbers (see page 32 of the 10-K linked above) give a potential general indication of the financial importance of the EU – 69% of the company’s earnings come from non-U.S. operations. And that may not even include U.S. shipments of crude or LNG. Talk about materiality…
It seems implausible that Exxon would follow through with the threat, but it’s surprising that the company would raise the specter of doing so. Clearly they feel strongly about CSRD’s requirements – and this may get noticed by EU policymakers.
Members can read more about CSRD here.
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Photo credit: Robert – stock.adobe.com
