European Commission President Ursula von der Leyen (AP News)
Some of America’s largest companies are caught between a rock and a hard place, facing European regulations that seek to impose a climate and social justice agenda, which in many cases could also compel the companies to violate U.S. laws.
Underscoring this issue, 16 state attorneys general, led by Florida Attorney General James Uthmeier, sent a letter on Oct. 6 to Alphabet, Microsoft, Meta, and Unilever, warning them that compliance with the European Union’s corporate sustainability directives, which include environmental, social, and governance (ESG) and diversity, equity and inclusion (DEI) regulations, in addition to climate-related reporting, would violate U.S. law.
“These directives seek to undermine the contrary policies of the Trump administration and require compliance with the misguided policies of the Biden administration. But such compliance is unlawful in the United States,” the attorneys general state in the letter.
Jason Isaac, CEO of the American Energy Institute, said Uthmeier “is sending a clear message to Silicon Valley and Brussels alike: American companies must follow American laws.”
“The European Union’s ESG and DEI mandates … have no place in our legal system and threaten to undermine U.S. sovereignty, energy production, and economic competitiveness,” Isaac said in a statement emailed to The Epoch Times.
Increasingly, Europe is imposing standards for corporate climate-related and social justice policy for companies across the globe, regardless of where they are domiciled.
According to a statement by the European Commission, the goal of the sustainability directives is “to foster sustainable and responsible corporate behavior in companies’ operations and across their global value chains.”
“The new rules will ensure that companies in scope identify and address adverse human rights and environmental impacts of their actions inside and outside Europe,” the European Commission states.
Despite recent efforts by the Trump administration to roll back many climate and DEI regulations imposed by the Biden administration, American companies are being compelled to keep many such policies in place to comply with European laws.
Accounting firm PwC estimates that approximately 50,000 companies from around the world will have to comply with the EU’s Corporate Sustainability Reporting Directive.
U.S. companies cannot comply with both American and EU laws, Will Hild, executive director of Consumers’ Research, told The Epoch Times. He said the sustainability directives are acting as a trade barrier for American companies that operate in Europe.
“This is why it’s important for the Trump administration to prioritize this issue in trade negotiations,” Hild said. “The alternative would be to effectively cede governance and regulation of American corporates to the EU, allowing them to inflict the same destructive policies on us that are crashing their economies.”
On Sept. 23, attorneys general from 22 states, also led by Uthmeier, sent a letter to President Donald Trump urging him in trade negotiations to oppose the EU’s corporate sustainability directives.
“These EU requirements are nothing more than a backdoor attempt to force the radical green agenda on American companies,” Uthmeier said in a statement. “Without intervention, this will divert resources away from investment, job creation, and wage growth, while putting bureaucrats in Brussels in charge of U.S. business decisions.”
Under the Biden administration, the Securities and Exchange Commission (SEC) imposed “green accounting” requirements on listed companies, mandating regular audited reports of their greenhouse gas emissions as well as emissions from suppliers. This mandate was challenged in court, and the Trump administration declined to defend the policy in March, indicating it is effectively dead.
However, similar climate reporting mandates have been imposed in Europe, forcing companies that operate there to comply regardless of the SEC’s action.
The attorneys general argue that the EU’s Corporate Sustainability Reporting Directive (CSRD) disclosure requirements will not only impose enormous reporting costs on U.S. companies, but will also expose them to lawsuits.
“It is easy to imagine how the attorneys general in states like New York and California could use companies’ CSRD disclosures as ammunition for green-washing lawsuits here at home,” the September letter states.
