US Threatens Action Over EU Sustainability Rules
The US government has formally objected to the EU’s Corporate Sustainability Due Diligence and Reporting Directives, threatening action to shield American businesses from burdensome extraterritorial obligations.
The United States is formally challenging the European Union's ambitious new sustainability regulations, creating significant uncertainty for multinational companies. In a formal letter, the US Mission to the EU stated that the Corporate Sustainability Due Diligence Directive (CSDDD) and Corporate Sustainability Reporting Directive (CSRD) impose costly and burdensome extraterritorial obligations that will harm US businesses. The US objects to the EU’s “double materiality” standard and warned of a potential “wave of civil litigation” against US firms in member-state courts. Underscoring the seriousness of the dispute, a bill has been introduced in the US House of Representatives that would require the US Trade Representative to launch a Section 301 investigation into the EU rules as potentially unreasonable or discriminatory trade practices. The US government has threatened to take “any actions necessary” to shield its companies. Major-firm clients with transatlantic operations must now navigate a complex and potentially confrontational regulatory environment. Counsel should monitor for an EU response and the potential for a formal US trade investigation while continuing to assess their clients' exposure to the EU directives.