WASHINGTON: The head of Wall Street’s top regulator has voiced strong concerns over recent European Union laws on environmental, social and governance (ESG) reporting, warning that the rules could raise costs for U.S. firms and ultimately burden American investors.
Speaking at an OECD event in Paris, Paul Atkins, chair of the U.S. Securities and Exchange Commission (SEC), said Europe’s prescriptive approach to corporate sustainability risks undermining free enterprise.
“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,” Atkins said in prepared remarks.
Europe’s ESG framework under scrutiny
Atkins’ remarks targeted two EU measures:
- The Corporate Sustainability Due Diligence Directive, which requires large companies to check supply chains for forced labor and environmental harm, though it was watered down last year to secure member state support.
- The Corporate Sustainability Reporting Directive, under which companies must disclose ESG impacts to investors and consumers. The European Commission proposed looser standards in February to reduce compliance costs.
While noting recent efforts to ease some requirements, Atkins argued more must be done, urging EU authorities to prioritize reducing reporting burdens “rather than pursuing ends that are unrelated to the economic success of companies or their shareholders.”
A widening policy gap
The comments highlight a widening regulatory divide between the U.S. and Europe on corporate ESG oversight since President Donald Trump took office, with Washington taking a more skeptical stance toward mandatory sustainability reporting.
The clash underscores a broader debate in global finance: whether ESG disclosures enhance transparency for investors or impose unnecessary costs that risk eroding competitiveness.
