U.S. Warns It Will Take Necessary Steps Over EU Sustainability Rules

The United States has told the European Union it is prepared to take any actions necessary to protect American companies from what it calls unreasonable burdens under the bloc’s sustainability reporting and due diligence rules.

In a comment letter from the U.S. Mission to the European Union, Washington said the EU’s recent Omnibus package of simplifications “failed to fully address U.S. concerns.” The letter warned that absent a solution, the United States would act to address unreasonable burdens on U.S. commerce.

The rules in question are the Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD). The CSDDD requires companies to identify, assess, prevent, mitigate and remedy adverse impacts on people and the environment—such as child labour, pollution and deforestation—across their supply chains. The CSRD sets detailed sustainability reporting requirements. Large EU companies began applying the CSRD in 2024, while large non-EU companies with significant EU operations face the rules from 2029.

Under the Omnibus process, the EU raised the CSDDD threshold to companies with more than 5,000 employees and €1.5 billion in revenue, removed mandatory climate transition plan obligations, reduced the number of mandatory reporting datapoints under the CSRD, and narrowed the number of non-EU companies in scope.

U.S. officials remain concerned about the extraterritorial reach of the rules, the cost of supply-chain due diligence obligations, and the EU’s “double materiality” approach, which requires companies to report both financial risks and their wider impacts on society and the environment. This differs from the financial materiality standard used in the United States.

U.S. Ambassador to the European Union Andrew Puzder said: “Extraterritorial provisions harm American businesses and workers, but it is not just the U.S. that will suffer. Unless the EU changes course, these directives will burden EU and non-EU businesses of all sizes—and European consumers are the ones who will ultimately foot the bill.”

The U.S. position follows a 2025 U.S.-EU Framework Agreement on Reciprocal, Fair, and Balanced Trade, in which the EU committed to ensure the directives would not create undue restrictions on transatlantic trade.