The head of Wall Street’s top regulatory body, the US Securities and Exchange Commission (SEC), has expressed strong reservations about recent European laws requiring companies to disclose their environmental, social, and governance (ESG) impacts, reports Reuters.
In a speech on Wednesday at an event in Paris organized by the Organization for Economic Cooperation and
Development (OECD), SEC Chairman Paul Atkins highlighted concerns that the regulations could create additional costs for investors, particularly American ones.
Atkins criticized the Corporate Sustainability Due Diligence Directive and the EU’s Corporate Sustainability Reporting Directive, two key pieces of European legislation aimed at increasing corporate transparency on ESG matters. According to Atkins, the laws could impose significant burdens on U.S. companies, which may, in turn, affect American investors and consumers.
“I have significant concerns with the prescriptive nature of these laws and their burdens on U.S. companies, the costs of which are potentially passed on to American investors and customers,” he said.
While acknowledging recent amendments that have softened the regulations, Atkins insisted that further revisions were necessary. He called on European authorities to focus more on reducing reporting obligations for businesses rather than pushing initiatives that he believes are disconnected from the economic success of companies and the interests of shareholders.
Last year, the European Union adopted the Corporate Sustainability Due Diligence Directive, which mandates that larger companies examine their supply chains for forced labor and environmental harm. Companies must address any violations they find. However, the law was revised to gain support from certain EU member states.
In addition, the European Commission proposed a more relaxed set of environmental and corporate sustainability standards earlier this year. The Corporate Sustainability Reporting Directive now requires companies to disclose their environmental and social impacts to investors and consumers, but critics argue that the standards remain too broad.
Atkins urged European regulators to prioritize policies that align with economic growth and free enterprise, rather than pursuing goals that may not directly contribute to the success of businesses or the interests of their shareholders.
