The U.S. Government has urged the European Union to further address concerns over the impact of the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) on U.S. businesses. 

In a comment letter, the U.S. Mission to the EU said the EU’s Omnibus simplification package did not fully resolve U.S. concerns and warned that the U.S. would take necessary action against what it considers unreasonable burdens on U.S. commerce. 

Key concerns include the extraterritorial reach, costly supply-chain due diligence requirements, and the EU’s double materiality approach. 

The U.S. has called for: 

• Significant limits on CSRD and CSDDD requirements for U.S. companies. 

• Restrictions on enforcement actions against U.S. businesses. 

• Limiting CSDDD application to EU subsidiaries or EU business partners of U.S. companies. 

• Exempting U.S. businesses from penalties based on revenue generated outside the EU. 

• Recognizing the U.S. as a “negligible risk” jurisdiction. 

• Introducing a “presumed compliance” provision for companies operating in jurisdictions with strong regulatory frameworks. 

• Preventing the reintroduction of mandatory net-zero climate transition plans. 

The development signals continued transatlantic tension over the scope and extraterritorial impact of EU sustainability regulations, even after the Omnibus package significantly reduced reporting and due diligence requirements. 

Key Takeaway 

U.S. companies doing business in the EU may continue to face evolving sustainability compliance expectations, while negotiations between the U.S. and EU could shape the future scope and enforcement of CSRD and CSDDD.