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Though it was revised in December, the European Union’s Corporate Sustainability Due Diligence Directive still poses an “enormous threat … to the American economy,” according to a new report from the Hudson Institute.

What’s going on: The revised CSDDD—an EU directive requiring U.S. companies doing more than 1.5 billion euros in annual European sales to “identify and address adverse human rights and environmental impacts of their actions inside and outside Europe”—would impose one-time compliance costs on the U.S. economy ranging from $637 billion to $1.09 trillion, according to the report written by Harold Furchtgott-Roth.

• These numbers are far higher than the $2.26 billion in costs estimated by the EU.
• They also don’t include recurring annual charges to companies, which will range from about $6.25 billion to more than $450 billion a year, according to the paper.

Extended reach: In addition to the large costs the CSDDD will impose, the directive’s potential reach will extend far beyond the companies that must comply with it.

• Not only would it affect U.S. companies doing business in Europe, it would also hit international firms with U.S. operations, as well as smaller U.S. firms in the supply chain for those companies.

The impact on Americans: This EU mandate would also jeopardize a significant number of U.S. jobs and result in higher prices for consumer goods, the report found.

• “The nationwide range of employment at risk is estimated between 680,000 and 865,000 employees.”

The impact on manufacturing: U.S. manufacturers would collectively incur between $211 billion and $267 billion in one-time, CSDDD-related setup costs, Furchtgott-Roth finds.

• In addition, manufacturers could face between $2 billion and $110.9 billion in recurring costs each year.  

States most affected: The states with the most industry revenue at risk from CSDDD are California, Texas, New York, Illinois, Pennsylvania and Ohio.

• California could face up to $102 billion in one-time costs, followed by Texas (up to $78.1 billion), New York (as much as $68.3 billion), Illinois (up to $34 billion), Pennsylvania (as much as $32.3 billion) and Ohio (up to $29.6 billion).
• In addition, companies in 44 states plus the District of Columbia will face maximum annual recurring costs for CSDDD compliance that exceed $1 billion.

Congressional disapproval: “The EU’s CSRD and CS3D are an attack on American sovereignty and energy independence,” said Rep. Troy Nehls (R-TX) on social media yesterday. 

• “These ESG mandates force Texas oil and gas companies to comply with burdensome requirements tied to treaties that we never ratified. EU’s ESG mandates threaten thousands of Texas jobs in drilling, refining and clean energy, and President Trump is right to take action to protect American companies from this foreign overreach.”

Further reading: For more information about the NAM’s efforts on CSDDD, go here.