A new European directive setting strict ESG reporting standards for large firms operating in the EU creates challenges that make “absolutely no sense” for companies like QatarEnergy, according to its CEO.
“My message to Europe and to the EU Commission is: are you telling us that you don’t want our LNG into the EU?” QatarEnergy CEO Saad Al-Kaabi, who is also minister of state for energy affairs, told the Doha Forum.
“I am sure not going to supply the EU with LNG to support their energy requirements and then be penalised with our total revenue worldwide,” Al-Kaabi said on Saturday, in reference to the EU’s Corporate Sustainability Due Diligence Directive.
The directive, which came into force in July, outlines steps that large companies must take to identify and address adverse human rights impacts, such as child labour, as well as climate issues and other factors.
It mandates detailed corporate transition plans and opens businesses to lawsuits if there are violations in their value chains.
The directive will ultimately harm European companies first, Al-Kaabi said.
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While Qatar supports the desire to uphold human rights and labor rights as well as to reduce environmental impacts, “the issue is how you go about it,” said Al-Kaabi.
Any large non-EU company that operates within the bloc and makes more than 450 million euros ($637.33 million) within or from the EU is subject to the directive.
“For us at QatarEnergy, and with all the expansions we are undertaking, I can assure you we can not meet net zero as a company,” Al-Kaabi said.
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Firms would also have to employ people just to scrutinize every part utilised that’s supplied by every contractor along their supply chain to ensure they meet the required practices and standards, he said.
“We are also asked to be responsible for emissions tier 1, 2 and 3, and be liable for a penalty of up to 5% of our total generated revenue worldwide. This makes absolutely no sense.”
The liquefied natural gas giant is setting itself up to control about a quarter of all LNG by the end of the decade. About 20 countries, from India to Italy, have inked long-term deals to buy seaborne gas from state-owned QatarEnergy, with more customers likely to emerge.
Investment entities and sovereign wealth funds like US$510 billion ($684.32 billion) state-backed Qatar Investment Authority will worry about whether the companies they own or plan to own could be liable to penalties such as those set down by the EU, Al-Kaabi said.
Ultimately, they could pull out of the EU “to protect their funds and look at investing in other countries”, he added.
