ExxonMobil Threatens to Quit Europe over EU Law

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)

Summary

Exxon Mobil Corporation (Spring, Texas) has joined a growing number of companies calling on the EU to alter its Corporate Sustainability Due Diligence Directive, which demands that companies operating in the EU identify and address adverse human rights and environmental impacts of their actions inside and outside Europe.

The High Price of Sustainability

Exxon Mobil Corporation (Spring, Texas) has warned that it will be forced to stop doing business in the European Union (EU) if it does not make changes to one of its most contentious sustainability laws.

The company is referring to the Corporate Sustainability Due Diligence Directive (CSDDD), adopted by the EU in July 2024. It requires companies doing business in the EU to identify and address human rights and environmental risks across their supply chains, including outside of Europe. Failing to do so means a company could be fined 5% of its total global revenues and face exclusion from public tenders. Final changes to the directive are still being hotly contested with a final draft due by the end of the year.  

ExxonMobil's Position

"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," Darren Woods, ExxonMobil chief executive officer, told Reuters at the recent Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC). "What's astounding to me is the overreach not only requires us to do that for the business that we're doing in Europe, but it would require me to do that for all my business around the world, irrespective of whether it touches Europe or not. In its current form, Woods said the directive will have "disastrous consequences". 

Potential Impact

Industrial Info is tracking 47 European projects worth more than US$770 million by ExxonMobil and its subsidiaries across a number of sectors, including refining, terminals and chemicals. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can click here for the reports. 

Growing Resistance

ExxonMobil is not alone in calling on the European Commission (EC) to make changes, but so far there has been little agreement. Most recently, the European Parliament rejected a series of compromises in a neck-and-neck vote as there is division among those that believe the compromises are too much and those that believe that they don't go far enough. Last month, a letter signed by the heads of 46 major European companies including Siemens AG (Munich, Germany) and TotalEnergies SE (Courbevoie, France) was sent to French President Emmanuel Macron and German Chancellor Friedrich Merz, among others, calling for the repeal of the CSDDD. They argued that scrapping the directive in its current form would be a "clear and symbolic signal to European and international companies that the governments and the Commission are really engaged to restore competitiveness in Europe".

Pressure from Abroad

Last month the U.S. and Qatar teamed up to call on the EU to change the CSDDD. A joint letter stated that in its current form it "poses a significant risk to the affordability and reliability of critical energy supplies for households and businesses across Europe and an existential threat to the future growth, competitiveness, and resilience of the EU's industrial economy." It pointed specifically to "its unintended consequences for LNG export competitiveness and the availability of reliable, affordable energy for EU consumers". 

Key Takeaways

• ExxonMobil threatens to quit Europe if the Corporate Sustainability Due Diligence Directive (CSDDD) isn't radically changed
• A growing number of major companies in companies have called for the CSDDD to be scrapped or significantly altered
• Mounting pressure on the EU from the U.S., Qatar and others

About Industrial Info Resources

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).