EU plans changes to sustainability law as US, Qatar increase pressure

By Tala Ramadan, Ahmed Elimam and Kate Abnett

(Reuters) -The European Parliament agreed on Wednesday to consider further changes to the EU's corporate sustainability rules, as the U.S. and Qatar stepped up pressure on Brussels to weaken the law.

The U.S. and Qatar had urged the European Union to scale back the law and warned on Wednesday that the rules risked disrupting liquefied natural gas trade with Europe.

In a vote that had been scheduled before the U.S. and Qatar's intervention, the European Parliament agreed to negotiate further changes to the law. The EU aims to approve the final changes by year-end.

The bloc was already considering changes to exempt more companies from the due diligence law, which requires firms operating in the EU to fix human rights and environmental issues in their supply chains, or face fines of 5% of global turnover.

But companies including ExxonMobil have demanded the EU go further and fully withdraw the policy, arguing it would lead to businesses leaving Europe. 

The rules "pose a significant risk to the affordability and reliability of critical energy supplies for households and businesses across Europe and an existential threat to the future growth, competitiveness, and resilience of the EU's industrial economy," Qatar's energy minister Saad al-Kaabi and U.S. Energy Secretary Chris Wright said in a joint open letter to EU countries' leaders.

The European Commission did not immediately reply to a request for comment.

QATAR WARNS EU LAW WILL HURT LNG SUPPLIES

The EU is split over the corporate sustainability due diligence directive (CSDDD), which is a key plank of Europe's efforts to transition to a cleaner economy, and an attempt to use the EU's position as a major marketplace to encourage trading partners to do the same.

The leaders of Germany and France have called on the bloc to scrap the law entirely, saying it hurts European businesses' competitiveness, while Spain has urged Brussels to keep the rules intact to support European priorities on sustainability and human rights.

The European Parliament had provisionally agreed on changes to the law - but that plan was shelved on Wednesday, when an unlikely coalition of EU lawmakers agreed to reopen the rules to make further changes. Far-right lawmakers demanded further weakening while Green lawmakers want to strengthen the law.

The letter from the U.S. and Qatar asked the EU to either repeal the law entirely, or make changes including to remove the law's application to non-EU companies, the penalties for non-compliance, and its requirement for companies to have plans in place to comply with climate change goals.

Al-Kaabi told Reuters last week that Qatar would not be able to do business in the EU, including supplying Europe with LNG as it races to replace Russian energy, unless more changes are made to the due diligence law.

The EU is also ramping up U.S. imports of LNG to replace Russian supplies. The U.S. was the EU's top LNG supplier last year, providing 45% of its total supply. 

(Reporting by Tala Ramadan, Ahmed Elimam and Kate Abnett; Editing by Mark Potter and Emelia Sithole-Matarise)