Key Takeaways:
- The European Union’s new ESG law—the Corporate Sustainability Due Diligence Directive (CSDDD)—is designed to transform business practices across the entire world, including in the United States.
- The CSDDD mandates that large businesses impose ESG standards on companies operating within their “chain of activities,” regardless of whether those “chain” businesses have operations within the European Union.
- Some of the policy goals addressed in the CSDDD include unions and collective bargaining standards, health care and disease prevention, children’s education, a full transition to a “green energy” economy, requirements for company climate transition plans, reductions in water and land use, social justice provisions, and bans on disinformation related to climate change and energy.
- Businesses that fail to meet the CSDDD’s requirements will face financial penalties of “not less than 5%” of net worldwide turnover (generally equivalent to revenue).
- In addition to these financial sanctions, activist groups and individuals are also authorized by the CSDDD to sue companies for alleged “damages.”
- If covered companies’ business partners do not adhere to the CSDDD’s mandates, covered companies must end these business relationships, face penalties, or cease operating in the European Union.
- The CSDDD could cause a massive wealth transfer to developing countries, as the law explicitly states that large companies should provide “targeted and proportional support” for small and medium-sized business partners that have difficulty complying with the EU’s ESG standards.
- If the CSDDD goes unanswered, America will effectively become a vassal state of the European Union and be fundamentally transformed through corporate coercion.
Justin Haskins
Justin Haskins is the director of the Socialism Research Center and editorial director at The Heartland Institute.
Jack McPherrin
Jack McPherrin is a Research Fellow within The Heartland Institute’s Emerging Issues Center, and also serves as Heartland’s Research Editor.
