ExxonMobil has warned that it may shut down its operations in the European Union if the EU does not significantly relax new sustainability legislation, which calls for fines of up to 5% of global turnover for non-compliant companies.

The company’s chief executive, Darren Woods (center photo), told Reuters on the sidelines of the ADIPEC conference in Abu Dhabi that the legislation makes it “impossible” for the company to continue doing business in Europe if it remains as is.

The controversial legislation, known as Corporate Sustainability Due Diligence (CSDDD), requires companies operating in the EU to identify and correct human rights abuses and environmental problems in their supply chains.

The aim is to enhance transparency and make companies accountable to member states and victims, even when violations take place outside Europe.

Woods described the EU as an “over-regulated economy that is de-industrialising”, arguing that the new framework “stifles economic growth” and will lead companies to leave Europe. At the same time, he noted that although European lawmakers appear to be listening to industry objections, they have not made any substantive changes and the language of the law has become more vague, increasing the risk of legal exposure for companies.

The EU plans to approve final changes to the law by the end of the year, while negotiations continue. Other major energy producers, including the United States and Qatar, are also voicing opposition, with Doha threatening to cut off liquefied natural gas (LNG) supplies to Europe if the framework is not amended. Qatar currently accounts for 12%-14% of European LNG imports, following the Russian invasion of Ukraine.