The European Union has quietly enacted a sweeping new law that will radically change business activities around the world, and by extension, the societies they operate in. The law, formally titled the Corporate Sustainability Due Diligence Directive (CSDDD), will not only apply to companies that are based in the European Union, but also to businesses headquartered in other countries that provide products and services in the EU.
In May 2022, the European Union (EU) finalized a sweeping new law that will radically transform business activities worldwide and have far-reaching implications for societies. The Corporate Sustainability Due Diligence Directive (CSDDD) applies not only to EU-based companies but also to global businesses providing goods and services within the EU.
This law mandates that large corporations adopt stringent left-wing environmental and social justice rules, commonly referred to as "due diligence" in Europe and environmental, social, and governance (ESG) metrics in the United States. These requirements include reducing biodiversity loss, limiting water and land consumption, curbing "disinformation," guaranteeing union rights, and implementing climate transition plans that phase out fossil fuels.
Moreover, large companies must adhere to numerous U.N. resolutions, EU regulations, and international agreements. Companies covered under the CSDDD include EU-based businesses with over 1,000 employees and a net worldwide turnover exceeding $489 million. Non-EU companies, such as those headquartered in the United States, are also subject to this mandate if their net turnover within the EU reaches $489 million.
Non-compliance with EU requirements could result in massive fines of up to 5% of a company's net worldwide turnover. Companies may also face lawsuits by individuals or activist groups for damages caused by undesirable practices.
Many of America's largest corporations will be forced to comply with these new EU requirements, which will be phased in over several years, beginning in 2027. Giant companies like Amazon, Apple, Google, Ford, Cargill, McDonald's, and many others have substantial operations in the EU that subject them to the CSDDD's mandates.
However, the most significant impact lies in the law's requirement that covered companies impose the EU's ESG metrics on businesses throughout their supply chains, regardless of size or location. An Idaho potato farmer selling to McDonald's for French fries production must adhere to EU ESG guidelines, as would U.S. warehouses and transportation companies involved in storing and distributing McDonald's products. Similar obligations extend to beef ranchers, chicken farmers, kitchen supply businesses, and energy companies serving McDonald's.
The EU's expansive supply chain law has the potential to impact almost every medium and large-sized business in America, directly or indirectly. The EU retains the authority to modify the rules at any time, potentially introducing even more extreme demands. Failure to comply could result in crippling fines or lawsuits.
The CSDDD constitutes a direct affront to American sovereignty. The EU has no legitimate authority to reshape U.S. businesses and culture, dictating labor regulations, land use practices for farmers and ranchers, or vehicle emissions standards. Yet, that is precisely what the EU is attempting to impose.
Alarmingly, the Biden administration remains passive in response to the CSDDD, and most members of Congress seem oblivious to its existence. This inaction is deeply concerning given the law's far-reaching consequences for the United States.
Unless lawmakers act swiftly to protect American businesses and consumers, the EU's reckless power grab will inevitably take effect. The time for resistance is now, as we cannot afford to squander this struggle for freedom and economic prosperity.
