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InMay, officials in the European Union finalized 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.
Under the law, large businesses will be forced to adopt left-wing environmental and social justice rules. In America, we refer to these as environmental, social, and governance (ESG) metrics, but in Europe, they are commonly called “due diligence.”
The law will not only force businesses to adopt Europe’s ESG rules within their own operations but also throughout much of their supply chains, regardless of where the companies in the supply chain are located. That means countless businesses within the United States will be affected by this law.
The European Union wants to regulate American businesses and the Biden administration isn’t doing anything about it. (REUTERS/Yves Herman//File Photo)
The CSDDD mandates that large businesses reduce and reverse biodiversity loss, limit water and land consumption, prohibit certain kinds of “disinformation,” guarantee rights for labor unions, and adopt climate transition plans that phase out fossil fuels, among numerous other requirements.
Large companies will also be forced under the law to adhere to numerous U.N. resolutions, EU regulations and international agreements.
Companies covered under the CSDDD include EU-based businesses with more than 1,000 employees and a net worldwide turnover of more than $489 million. (Net turnover is similar to revenue.)
Non-EU companies, such as those headquartered in the United States, are covered under the mandate if they have a net turnover of $489 million in the European Union.
VideoFailure to meet the EU requirements could result in massive fines equal to as much as 5% of a company’s net worldwide turnover. Companies who violate the law could also be sued by individuals or activist groups for alleged damages caused by their undesirable practices.
Many of America’s largest corporations will be forced to comply with the new EU requirements, which will be phased in over several years, beginning in 2027. For example, Amazon, Apple, Google, Ford, Cargill, McDonald’s, and many other U.S. businesses currently have large operations in the European Union that would subject them to the CSDDD’s requirements.
Most importantly, however, is that the law will force these covered companies to impose the EU’s ESG metrics on many of the upstream and downstream businesses in their “chain of activities,” regardless of how big they are or where they are based.
The new EU regulations would control the businesses of major corporations like McDonald’s – and even the businesses that supply them. (iStock)
For example, a farmer in Idaho who sells potatoes to McDonald’s to make French fries will also be required to adhere to various parts of the European Union’s ESG scheme, as will the American warehouse and transportation companies used to store and distribute McDonald’s products and the technology firms hired by McDonald’s to improve its business practices.
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The same is true for the beef ranchers and chicken farmers who sell meat to McDonald’s, the kitchen supply businesses that provide McDonald’s with its ovens and stoves, and the energy companies that keep McDonald’s lights on.
The new EU supply chain law is so expansive, nearly every medium and large-sized business in America will likely be impacted by its leftist mandates, directly or indirectly. It’s also important to remember that the rules could be changed by EU officials in the future at any time, opening the door to even more radical requirements.
Make no mistake about it, the CSDDD is a direct assault on America’s sovereignty. The European Union has no right to transform U.S. businesses and American culture. It has no right to tell Americans which labor rules it must comply with, how much land U.S. farmers and ranchers should use, or what kinds of cars we can drive. And yet, that is exactly what the European Union is doing.
Unsurprisingly, the Biden administration is doing nothing to stop the CSDDD, and it seems at present that most members of Congress are completely unaware that it exists. That’s disturbing, to say the least, considering the scope of the EU law and the huge negative impacts it will inevitably have on the United States.
If lawmakers don’t stand up for American businesses and consumers soon, there will be no stopping the European Union’s reckless power grab from going into effect. Time is running out, and we simply cannot afford to lose this fight for freedom and prosperity.
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Justin Haskins is the director of the Socialism Research Center at The Heartland Institute and a New York Times bestselling author.
