While Americans were paying attention to the election, the European Union was in the process of passing a new law called the Corporate Sustainability Due Diligence Directive, whose impacts will reach far beyond Europe's borders.
Indeed, “this will affect every American,” says Justin Haskins, a writer and editor-in-chief of the Heartland Institute. Allie Beth Stuckey.
“Essentially, it creates an ESG social credit score for companies. … These ESG scores are designed to transform the way companies operate, the types of products and services they can sell, and in turn, transform the society around them,” Haskins explains.
So what does a company’s social credit score depend on?
– YouTubeLearn more
Apparently, a variety of metrics are used to determine a company's credit score, including “climate change,” “biodiversity,” “land and water use,” “social justice,” “LGBTQ” principles, and diversity in general.
“How diverse is your board of directors? How diverse is your management team? These are the kinds of things that get included in an ESG score,” Haskins says.
While the US does not have social credit scoring legislation (most ESG initiatives take place in the private sector), the European CSDDD will still have a significant impact on US companies.
The law applies not only to “large companies based in the European Union” but also to “non-European companies that derive a certain amount of revenue within the European Union, such as Apple or McDonald's,” Haskins explained.
Moreover, those highly profitable non-EU companies that fall under the jurisdiction of the CSDDD will be forced to comply with its policies. Outside The same is true for the EU.
“It's not enough to change policy in the EU, you have to change policy in the US, you have to change policy everywhere you do business. It's the law and failure to comply will result in a fine of 5% of worldwide revenue. So, if you do the math, a company like Apple could be fined $19 billion for a single violation,” Haskins said, predicting that “no one is going to violate this law because they can't afford to.”
Furthermore, the Act states: [companies under the CSDDD] We will work together up and down the supply chain, regardless of where your companies are located or how much business they do in the EU.”
Haskins gives the example of Ford, a US company with operations in the EU and sufficient revenue to fall under the jurisdiction of the CSDDD.
therefore,” [Ford does] “Companies in the US are also doing ESG scoring,” he says, “so if you're a rubber manufacturer in Ohio that doesn't do business in Europe but makes rubber for Ford, you'll also have to comply with EU rules, which Ford will impose through their contractual insurance.”
Naturally, Ford will comply, because if it refuses, “Ford will be fined 5% of its total worldwide revenues.”
“When you think about the impact of this, it's enormous,” Haskins lamented. [law]We can change hiring practices, business practices, the types of products people buy and sell, and our commitment to social justice goals, and so we can change entire countries.”
“What's your end goal?” Ally asks.
To hear Haskins' answers, watch the episode above.
Want to know more about Allie Beth Stuckey?
If you would like to enjoy more of Allie's illuminating, in-depth coverage of culture, news, and theology from a Christian, conservative perspective, Subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution, and live the American Dream.
