Energy company Exxon Mobil (XOM) is increasing pressure on the European Union over its new corporate sustainability law by taking the issue directly to President Donald Trump. The law, known as the Corporate Sustainability Due Diligence Directive (CSDDD), was adopted last year and requires companies to address human rights and environmental issues in their supply chains or face fines equal to at least 5% of their global revenue. Business groups and leaders in France and Germany have already argued that the rules will hurt Europe’s competitiveness.
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This led the European Commission to propose easing some requirements earlier this year. However, Exxon CEO Darren Woods told Reuters that those changes don’t go far enough and that the law should be scrapped altogether. Woods explained that he has spoken with Trump and other U.S. officials who deal with trade policy, and that the administration brought up the CSDDD during talks with the EU. He warned that Exxon would be forced to apply the stricter standards to operations worldwide, with fines so large that they could be “bone-crushing.”
For reference, Exxon reported $339 billion in sales last year, which means that penalties could reach enormous levels. Woods also noted that Exxon has already been reducing its presence in Europe by shutting down or selling 19 operations due to what he described as too much red tape. He said that the new law would only push businesses to scale back further. Interestingly, Woods said he is hopeful that U.S. lawmakers will act quickly, but was disappointed at what he sees as a lack of urgency from EU regulators.
Is XOM Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on XOM stock based on 12 Buys, seven Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average XOM price target of $125.72 per share implies 10.4% upside potential.
