US Government Pushes Back Against EU Sustainability Directives

The US government is pushing back against the European Union's (EU) sustainability directives, arguing that they impose "duplicative and potentially conflicting" duties on businesses seeking to engage with the European market.

The directives in question are the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Due Diligence and Governance Directive (CSDDD). The CSRD requires companies to report on their environmental and social impact, while the CSDDD aims to hold companies accountable for their supply chains and human rights record.

According to the US government, the EU's recent concessions on these directives do not go far enough to address fundamental transatlantic trade concerns. The US is calling for exemptions from these directives, arguing that they would create unnecessary burdens on businesses.

## EU Sustainability Directives: A Pushback from the US

The US government's pushback centers on the reporting obligations and civil liability regimes imposed by the EU's sustainability directives. American officials argue that these requirements risk imposing duplicative and conflicting duties on businesses seeking to engage with the European market.

The US government is also concerned that implementing the EU's sustainability directives would create "duplicative and potentially conflicting obligations" that would violate the basic promises of the Turnberry Agreement. The Turnberry Agreement is a 2025 US-EU trade framework agreement that aims to improve market access for US businesses and increase US-EU trade options.

## The Turnberry Agreement: A Framework for Transatlantic Trade

The Turnberry Agreement notes that the EU should ensure that the directives "reduce administrative burden on businesses, including small- and medium-sized enterprises, and to propose changes to the requirement for a harmonized civil liability regime for due diligence failures and to climate-transition-related obligations."

However, the US government argues that last year's Omnibus reforms have failed to address concerns. The US is now calling for the EU and Member States to limit the application of the directives to the relevant subsidiaries of US businesses or EU-based partners of US businesses.

| Directive | Scope | Revenue Requirement | | --- | --- | --- | | CSRD | All businesses with 1,000 employees or more | €450m | | CSDDD | Companies with at least 5,000 employees and €1.5bn in revenues | - |

The US government is also requesting that penalties on US businesses or an EU subsidiary of a US business be prohibited if the financial punishment is based on revenue derived from activities outside the EU.

The EU's sustainability directives have undergone significant changes in recent years. In 2025, EU lawmakers reached a majority agreement on altering the scope of the bloc's flagship sustainability reporting and corporate due diligence laws, dramatically reducing the number of businesses likely to be impacted.

The scope of both Directives was reduced significantly, as part of the EU's plans to reduce reporting obligations by 25% for large private firms and 35% for SMEs. The directives apply to large non-EU companies that operate in the EU, and reporting requirements will commence from 2029.

The US government's pushback against the EU's sustainability directives highlights the ongoing tensions between the two sides on issues related to transatlantic trade and regulatory cooperation. The outcome of this pushback will have significant implications for businesses and consumers on both sides of the Atlantic.