US Asks EU To Narrow Scope Of Corporate Sustainability Rules

The US government has asked the European Union to limit the application of its corporate sustainability and due diligence rules to American companies, arguing that the regulations could create additional costs for US businesses and their suppliers.

In a submission to the European Commission, Washington sought changes to the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) and Corporate Sustainability Reporting Directive (CSRD). The proposals include excluding non-EU companies from the direct scope of CSDDD, limiting penalties and restricting audits and information requests to direct suppliers. The US also wants due diligence obligations to apply mainly to activities linked to the European market. It has asked the EU to treat the US as a low-risk jurisdiction for compliance purposes.

The request could affect fashion and other industries with complex supply chains involving cotton producers, textile mills, chemical manufacturers and other upstream suppliers.

The European Commission confirmed that it received the US submission and said it would review the proposals. It also said discussions between the US and EU on trade and regulatory issues were continuing.

The requests come after the EU revised CSDDD and CSRD under its Omnibus I package, reducing the number of companies covered by the rules and lowering reporting requirements. The revised CSDDD is scheduled to apply from July 2029.