EU plans changes to sustainability law as US, Qatar increase pressure

The European Parliament agreed on Wednesday to consider further changes to the EU’s corporate sustainability rules, as the U.S. and Qatar stepped up pressure
on Brussels to weaken the law.

The U.S. and Qatar had urged the European Union to scale back the law and warned on Wednesday that the rules risked disrupting liquefied natural gas trade with Europe.

In a vote that had been scheduled before the U.S. and Qatar’s intervention, the European Parliament agreed to negotiate further changes to the law. The EU aims to approve the final changes by year-end.

The bloc was already considering changes to exempt more companies from the due diligence law, which requires firms operating in the EU to fix human rights and environmental issues in their supply chains, or face fines of 5% of global turnover.

But companies including ExxonMobil have demanded the EU go further and fully withdraw the policy, arguing it would lead to businesses leaving Europe.

Qatar warns EU law poses risk to critical energy supplies

The rules “pose 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,” Qatar’s energy minister Saad al-Kaabi and U.S. Energy Secretary Chris Wright said in an open letter to EU countries’ leaders.

Qatar and US urge EU to reconsider sustainability rules for LNG trade

A European Commission spokesperson said it was discussing Washington’s concerns in ongoing U.S.-EU trade talks, and had agreed to ensure the corporate sustainability due diligence directive (CSDDD) does not hamper U.S.-EU trade.

“We have not committed to change the CSDDD or grant U.S. companies more favourable treatment under this regulation or any EU regulation,” the spokesperson added.

The EU is split over the CSDDD, which is a key plank of Europe’s efforts to transition to a cleaner economy, and an attempt to use the EU’s position as a major marketplace to encourage trading partners to do the same.

The leaders of Germany and France have proposed scrapping the law entirely, saying it hurts European businesses’ competitiveness, while Spain has urged Brussels to keep the rules intact to support European priorities on sustainability and human rights.

The European Parliament had provisionally agreed on changes to the law – but that plan was shelved on Wednesday, when an unlikely coalition of EU lawmakers agreed to reopen the rules to make further changes. Far-right lawmakers demanded further
weakening while Green lawmakers want to strengthen the law.

The letter from the U.S. and Qatar asked the EU to either repeal the law, or make changes including to remove its application to non-EU companies and the penalties for non-compliance.

Al-Kaabi told Reuters last week that Qatar would not be able to do business in the EU, including supplying Europe with LNG, unless more changes are made.

The EU is also ramping up U.S. imports of LNG to replace Russian supplies. The U.S. was the EU’s top LNG supplier last year, providing 45% of its total supply.