The European Union has been working on passing a new law while Americans have been studying the election. The Corporate Sustainability Due Diligence Directive is the name of it, and it will cover a lot more than just Europe.
When asked about this, author and editing head of the Heartland Institute Justin Haskins says, “It’s going to affect every single American.”
“What it does is basically give companies ESG social credit scores. These ESG scores are meant to change how companies work, what goods and services they can sell, and then, in turn, how societies around them are changed,” Haskins says.
And what does a company’s credit score mean?
It looks like a company’s credit score is based on a number of factors, such as “climate change,” “biodiversity,” “land and water use,” “social justice,” “LGBTQ” issues, and diversity in general.
“What kind of people are on your board of directors? What kind of people are on your management team?” She says, “These are the kinds of things that are in these ESG numbers.”
The US doesn’t have a rule for social credit score because most ESG projects are run by private companies. However, Europe’s CSDDD will still have a huge effect on American businesses.
“The law applies to big companies based in the European Union, as well as non-EU companies that make more than a certain amount of money in the European Union, like Apple or McDonald’s,” says Haskins.
The CSDDD will also make these high-earning non-EU companies follow its rules when they are not in the EU.
“Changing their policies in the EU isn’t enough; they need to change them in the US too. The law says that they have to change it everywhere they do business. If they don’t, they can be fined 5% of their total worldwide revenue. For Apple, that’s $19 billion for just one violation,” according to Haskins. He also says that “no one will break this law because they can’t afford to.”
