Gulf Cooperation Council states have expressed concern over European Union corporate sustainability legislation, warning that continued implementation could prompt Gulf companies to withdraw from European markets and affect energy supplies, SPA reported on December 5.

The EU Corporate Sustainability Due Diligence Directive (CSDDD) is seen in Gulf capitals as a far‑reaching, quasi‑extraterritorial regime that could complicate energy exports, increase compliance costs, and open the door to legal challenges against state‑linked companies. The CSDDD obliges large companies operating in the EU to identify, prevent, and mitigate adverse human‑rights and environmental impacts in their own operations, subsidiaries and value chains, backed by fines and civil liability. It also requires major firms to adopt climate transition plans aligned with EU climate‑neutrality targets, effectively pushing suppliers towards decarbonisation benchmarks set in Europe.

The six GCC members—Saudi Arabia, the UAE, Kuwait, Qatar, Bahrain and Oman—said they were alarmed by the Corporate Sustainability Due Diligence Directive and Corporate Sustainability Reporting Directive, which are currently subject to amendments raised by the European Parliament for trilateral negotiations.

The legislation would require large European and international companies to adopt the EU's sustainability framework, comply with human rights and environmental regulations, submit climate change plans beyond international climate agreements, and report on sustainability impacts. Companies failing to comply face fines.

Despite amendments proposed by the European Parliament to soften some provisions and eliminate others, the GCC said the changes do not meet their expectations and remain a source of potential harm to Gulf companies operating in the European market.

The bloc warned that the new regulatory environment imposed by the legislation could negatively affect the competitiveness and business continuity of Gulf companies.

The GCC said it continues to participate actively in UN organisations related to human rights, environment and climate change, and has aligned its legislation with these principles while respecting national sovereignty. Member states have joined the Paris Agreement and UN Framework Convention on Climate Change, adopted national environmental protection legislation and participated in universal periodic reviews on human rights.

Despite efforts to meet international and EU obligations, including ensuring reliable energy supplies to Europe, the GCC said continued negotiations on the legislation among European institutions could negatively impact those supplies.

Gulf companies that would fall under the legislation "operate according to best global practices" and will assess risks and impacts from the directive's adoption, the statement said. This assessment "does not exclude withdrawal from the European market and the search for alternative markets."