The European Union just passed a directive requiring ESG mandates for European businesses.

ESG, of course, stands for environmental, social and governance standards. Or in the fine print — definite corporate action concerning climate change; social justice; and diversity, equity and inclusion.

Basically, it’s applied Marxism without all the goofy theories — tyranny with nuance, we could call it.

The EU Council approved what it called the “corporate sustainability due diligence directive” on Friday.

Under the new rules, companies “will have to take measures to prevent, identify and mitigate any adverse impact on human rights or the environment,” the council said on its website.

“Penalties and civil liability for violating those obligations will also be applicable,” it said.

Just adopted: the corporate sustainability due diligence directive ✅

Companies will need to identify and mitigate any adverse impact on human rights and the environment, with respect to:
📌their own operations
📌those of their subsidiaries
📌those carried out by their partners

— EU Council (@EUCouncil) May 24, 2024

Too bad for Europe’s big businesses, you might say.

No.

Too bad for Europe’s small businesses. And for big and small businesses outside of Europe, including the United States.

Companies doing a certain amount of business in the EU will automatically come under the directive.

And there’s more.

Your trash-hauling business in Peoria, Illinois, might be affected by the leftist bent of the European Union. Maybe your Denver accounting firm or Kansas City meat wholesaling company.

Because tucked into the corporate sustainability due diligence directive are rules for businesses upstream in the supply chain.

In recent decades, the focus has intensified on what is known as supply chain management. Put simply, my supplier, or my supplier’s supplier, or even a supplier beyond that, may directly affect my business.

For instance, Walmart stocks Crest toothpaste.

Procter & Gamble manufactures Crest, so P&G is Walmart’s first-tier supplier.

P&G buys chemicals, abrasives and packaging for Crest from various manufacturers. Those would be considered Walmart’s second-tier suppliers and P&G’s first-tier suppliers.

Usually, supply chain management concepts go no further back than the third tier, and they have companies like Walmart and others monitoring prices, quality and availability of products often three tiers back in the supply chain.

Crest toothpaste is a simple product, but supply chain scrutiny can increase if our final product is something like a bulldozer or a jetliner.

So what does that have to do with the European Union and, say, our fictitious trash-hauling business in Peoria?

Plenty. Because not only does the EU’s new directive apply to companies doing business in Europe, but those companies also must see that their suppliers comply as well.

Do you see where this is going?

The directive will apply beginning in 2027 in Europe to companies with 5,000 employees that do $1.63 billion in business, according to Forbes.

The next year, minimums will be 3,000 employees and $977 million, and in 2029, it will apply to companies with 1,000 employees doing $488 million worth of business.

So suppose a manufacturing company in Peoria meets those values in its European market.

Not only will the company have to bow to the new directive, but it will have to demonstrate that its suppliers do, too.

So if your local Peoria waste disposal company hauls the waste of that manufacturer, guess who will be mandating how you do your business?

Right. The European Union.

So what might this mean for you, this ESG stuff?

The Heartland Institute has offered multiple primers on ESG, concepts that would bring smiles to the faces of Karl Marx, Vladimir Lenin and Alexandria Ocasio-Cortez.

Institute researcher Jack McPherrin wrote that ESG is promoted by the oligarchy in which wealth has been concentrated in recent decades, the usual suspects including the United Nations, the World Economic Forum, the International Monetary Fund, Black Rock, State Street, big banks and regulators.

Besides harming the economy by thwarting hydrocarbon energy and agricultural operations, ESG crushes national sovereignty and bypasses democratic institutions, according to McPherrin.

It also “reduces individual liberty’ and “supplants free-market captalism with a top-down, centrally planned economic model under the control of a handful of monopolistic corporations and international bodies,” he wrote.

ESG wastes resources and “could directly endanger U.S. national security,” McPherrin said.

How’s that for standards of operation for your trash business?

The globalists cannot abide the idea of people making their own decisions, and they are serious about directly applying their debased ideas. Where they can’t do it directly, they’ll do it indirectly, through things like supply chains.

Years ago, the Nixon administration used to raise the question about optics outside of Washington with the question, “How will this play in Peoria?”

For our fictitious Peoria trash company — and everyone else — ESG will not play well.

Contributor, Commentary