In a document posted by the U.S. Mission to the European Union and disseminated on August 14, 2026 via social media by Ambassador Andrew Puzder, the U.S. Government[1] voiced concerns on the “burden” that recent EU ESG legislation creates for U.S. companies, namely the EU’s Corporate Sustainability Due Diligence Directive (CS3D, available here) and Corporate Sustainability Reporting Directive (CSRD, available here).

The U.S. Government’s comments have been published here, coinciding with the European Commission’s (EC) preparation of guidelines for the CS3D’s implementation. They were also shared in advance of the first anniversary of the 21 August 2025 U.S.-EU Joint Statement (the Turnberry Agreement, available here), in which the EU committed to undertake efforts so that the CS3D and the CSRD do not pose undue restrictions on bilateral trade.

The U.S. Government’s demands

In its comments, the U.S. Government reiterates its concerns about the extraterritorial effect of the CS3D and CSRD. It considers these directives to be unnecessarily burdensome to U.S. companies in so far as EU impact-based materiality and double materiality standards diverge from the U.S. single financial materiality standard.

The U.S. specifically demands:

  1. That the definition of “stakeholders” be narrowed to those that could be reasonably be affected – current definition covers those whose interests “are or could be” directly affected
  2. That CS3D and CSRD due diligence requirements and enforcement be limited for U.S. businesses (i.e., only to EU subsidiaries of U.S. companies and goods produced in the EU) – in scope companies currently face global obligations and enforcement
  3. That no penalty be based on revenue from activities outside the EU and that third-party verification bodies be independent, accredited, and sufficiently experienced – penalties are currently calculated on the worldwide turnover, as is the case for other areas of EU law such as competition policy, and there is currently no oversight requirement on third-party verification bodies
  4. That there be no private right of action without prior regulatory enforcement – civil claims are currently possible without prior regulatory action
  5. That mandatory net-zero climate transition plan requirements not be reintroduced through the EU’s guidance process – the mandatory transition plan obligation (Art. 22) was removed as part of the EU Directive simplifying the corporate sustainability reporting and due diligence requirements (the Omnibus, available here)

Due to its “high-quality corporate governance regulations,” the U.S. argues that extending CS3D obligations to U.S. companies would create “duplicative and potentially conflicting obligations,”, and that the CS3D’s scope should be restricted to EU-domiciled companies. The U.S. Government also prefers that companies that do not directly supply an in-scope EU buyer should be out of scope (e.g., for audit and information requests), rejecting the upstream CS3D obligations in the U.S. Finally, it wants the EU to create a presumed compliance disposition for companies operating in high-quality regulatory jurisdictions such as the U.S.  

Context

The U.S. Government makes these comments in parallel to the EC’s preparation of guidelines for the implementation of the CS3D, and the recent consultation launched to that end. Contrary to the Omnibus, which EU Member States are currently implementing, the guidelines will not change the CS3D’s substance. Nevertheless, they will play an important role in guiding authorities as they enforce the CS3D. They thus represent a key opportunity for the U.S. to secure beneficial outcomes for affected businesses. Compliance planning for affected businesses should, however, proceed on the basis of the law and thresholds as they stand post-Omnibus.

At a wider level, the U.S. Government’s comments may be understood in the Turnberry Agreement’s current context. As the EU’s main tariff-related commitments have now been implemented, focus may move towards more regulatory aspects of this trans-Atlantic framework, such as the EU’s commitment to reduce the administrative burden faced by U.S. companies under the CS3D and the CSRD. These efforts are likely to increase in the lead up to the November 2026 mid-term elections, particularly in light of sustained pressure from congressional committee leadership, state officials, and business associations advocating for EU regulatory simplification.

[1] Notably, although the document provides comments/concerns of the “U.S. Government,” it does not identify a specific U.S. agency as the author.