U.S. Government Comments on the Forthcoming CSDDD Guidelines

The transatlantic debate over the European Union’s corporate sustainability framework has entered a new phase. Following the substantial amendments introduced through the EU’s recent simplification agenda, in August 2026 the Government of the United States has submitted detailed comments on the forthcoming implementation guidance for Directive (EU) 2024/1760 (the Corporate Sustainability Due Diligence Directive – CSDDD). The European Commission has also conducted a consultation on the future CSDDD guidelines, which are intended to provide practical guidance to companies and Member State authorities on the application of the Directive. The consultation closed on 14 August 2026, with adoption of the guidelines planned for the first quarter of 2027.

The submission is formally concerned with the implementation of the CSDDD. Yet, from a legal perspective, its significance extends beyond the technical interpretation of the CSDDD. The United States challenges, in particular, the territorial reach of EU sustainability regulation, the interaction between EU and third-country regulatory regimes, the design of administrative enforcement and the relationship between public supervision and private litigation.

The comments also expressly address Directive (EU) 2022/2464 (the Corporate Sustainability Reporting Directive – CSRD), on the ground that the two instruments are closely connected, particularly as regards reporting obligations.

The intervention follows the commitments undertaken by the European Union in the 2025 U.S.-EU framework on reciprocal, fair and balanced trade. The EU committed to undertaking efforts to ensure that the CSDDD and CSRD would not impose undue restrictions on transatlantic trade and to addressing U.S. concerns regarding the application of CSDDD requirements to companies established outside the EU but subject to allegedly equivalent domestic regulation.

The U.S. Government considers that the subsequent reforms have not fully addressed those concerns. As noted on this blog (here, here and here), the amendments introduced through the EU’s sustainability simplification agenda significantly changed both CSDDD and CSRD, including by narrowing their scope and modifying important elements of the CSDDD’s due diligence, climate and liability architecture.

Against this background, the U.S. comments deserve attention not merely as a further episode in the transatlantic regulatory debate, but also as an intervention into several questions with a distinctly private international law dimension.

1. Scope

How far may the CSDDD reach beyond the EU?

The first and most fundamental concern raised by the United States concerns the personal and territorial scope of the CSDDD.

The U.S. Government argues that companies established in the United States may still fall within the scope of the Directive even where they have no physical presence, employees, assets or operations in the EU and where the relevant activities do not directly target the European market.

The example given in the submission is revealing. A U.S. company may supply an EU-headquartered undertaking while producing goods exclusively in the United States for U.S. consumers. According to the U.S. Government, the mere position of such an undertaking within a global value chain should not be sufficient to subject its activities to extensive EU due diligence and reporting requirements.

The United States consequently calls for a significant narrowing of the Directive’s application to U.S. businesses. Among other things, it proposes limiting the CSDDD to activities of EU subsidiaries of U.S. companies and to EU business partners, as well as limiting due diligence requirements to goods produced in, or services supplied from, the EU.

This argument is closely connected with the territorial principle. The submission maintains that the CSDDD may reach companies whose activities have no sufficiently direct territorial connection with the EU and argues that this challenges the traditional understanding of the objective territorial principle in international law.

The question is familiar in private international law, although it arises here in a regulatory rather than purely adjudicatory context: what degree of connection with the forum is sufficient to justify the application of a State’s rules to conduct occurring abroad? This issue also has a procedural dimension. As noted on this blog by Ralf Michaels and Antonia Sommerfeld, the extraterritorial scope of the CSDDD raises a corresponding question of jurisdiction, particularly as regards actions against companies domiciled outside the EU.

The answer cannot simply be derived from the location of the company. A regulatory framework may legitimately take account of conduct occurring outside the territory where that conduct forms part of an economic activity sufficiently connected with the regulating market. At the same time, the existence of a global supply-chain relationship does not necessarily resolve the territorial question.

The CSDDD therefore raises an important distinction between regulating an undertaking because of its connection with the EU market and regulating activities occurring entirely outside the EU merely because they form part of a value chain connected with an EU undertaking.

The U.S. submission presses this distinction particularly strongly.

Regulatory equivalence and international comity

The United States further argues that U.S. companies are already subject to extensive corporate-governance and supply-chain regulation. Applying the CSDDD in addition to those rules could, according to the submission, create duplicative or potentially conflicting obligations.

On this basis, the United States proposes that the European Union recognise countries with sufficiently robust regulatory systems as presenting negligible risk and establish a form of “presumed compliance” for companies operating under equivalent regimes.

This proposal is legally interesting because it moves the debate from territoriality to regulatory equivalence.

Rather than asking exclusively whether the European Union has the regulatory competence to regulate a particular company, the question becomes whether the EU should exercise that competence where another regulatory system already governs substantially the same conduct.

The concept of international comity invoked by the United States is therefore not merely a political consideration. It raises the broader issue of how overlapping regulatory ‘jurisdictions’ should accommodate each other in an increasingly integrated global economy.

The proposal also illustrates a potential tension within the CSDDD’s risk-based approach. If due diligence is intended to be proportionate to the likelihood and severity of adverse impacts, the existence of a sophisticated regulatory regime in a third country may be relevant to the assessment of risk. Whether it should lead to a general presumption of compliance, however, is a different question.

The U.S. comments accordingly invite the Commission to clarify the extent to which third-country regulation may be taken into account when assessing CSDDD obligations.

2. Compliance Obligations

Risk, evidence and the responsibility of EU entities

The second part of the submission concerns the operation of the due diligence obligations themselves.

The United States asks that implementation of the CSDDD preserve its expressly risk-based character. Actions taken under the Directive, it argues, should be evidence-based, rely on credible sources and involve consultation with the affected company.

This request is particularly relevant to the practical operation of Articles 5 and 7 onwards. The CSDDD does not establish an entirely mechanical obligation to investigate every part of a global value chain. Its architecture is based on the identification, prioritisation, prevention, mitigation and remediation of adverse impacts through a risk-based process.

The U.S. Government therefore objects to measures that could turn due diligence into an indiscriminate information-gathering exercise extending throughout global supply chains.

The submission also proposes that responsibility for due diligence and related enforcement should rest with the EU subsidiary or EU-based undertaking rather than with the parent company established in a third country.

The rationale is the avoidance of duplicative compliance structures. Yet the proposal also has a broader implication.

At issue is the distinction between the entity through which an economic activity is connected with the EU and the entity ultimately controlling that activity from a third country.

Assigning responsibility to the EU entity may provide a clearer territorial nexus. Conversely, the economic and organisational reality of multinational groups may make it difficult to isolate compliance responsibilities strictly at subsidiary level.

The question is particularly relevant where a supervisory authority in one Member State seeks information concerning a parent company established outside the EU or where the relevant adverse impact originates elsewhere in the corporate group or supply chain.

3. Enforcement

Fines, audits and third-party verification

The third section of the submission addresses enforcement.

One of the United States’ principal concerns relates to the calculation of financial penalties. The submission argues that fines should be based exclusively on revenue generated from activities within the EU and objects to the use of worldwide turnover as a reference point.

This criticism again has an extraterritorial dimension. The concern is not necessarily that the EU should be unable to sanction a company established in a third country, but that the economic basis for the sanction should not encompass activities having no connection with the EU.

The distinction is significant. A penalty imposed because a company has breached an EU obligation is one thing; determining the magnitude of that penalty by reference to the company’s worldwide economic activity raises a further question concerning the territorial reach of the regulatory response.

The submission also calls for a restrictive approach to audits, site visits and stakeholder engagement. Such measures, according to the United States, should be undertaken on a risk basis and where authoritative findings demonstrate a credible and documented risk that cannot adequately be assessed through less burdensome means.

Particular concern is expressed regarding upstream suppliers that do not directly supply an EU buyer. The United States argues that such actors should not automatically become subject to on-site audits merely because they occupy a position somewhere within a wider global supply chain.

The concern is again one of proportionality, but also of jurisdictional reach.

The U.S. Government additionally raises concerns regarding third-party verification under the CSDDD.

The submission argues that insufficient oversight could produce inconsistent or inaccurate assessments and refers to concerns that companies may face commercial consequences based on unreliable verification reports.

The proposed solution is greater regulatory oversight, including independence, accreditation and appropriate sectoral expertise for third-party verifiers.

This point illustrates a broader feature of the CSDDD: compliance may increasingly depend not only on public authorities and courts, but also on private actors generating information that can influence contractual relationships, market access and potentially subsequent litigation.

4. Litigation

The most significant part of the U.S. submission from a private-law perspective is its section on litigation.

The United States argues that Article 29 may expose companies operating in Europe to substantial civil litigation once the CSDDD becomes operational. The concern is that claims brought independently before national courts could generate divergent interpretations across Member States, potentially producing an uncertain and inconsistent legal environment.

The proposed solution is clear: the EU should adopt a regulator-led approach under which civil claims would be allowed only after the competent supervisory authority has assessed compliance and concluded that the company has failed to comply with the relevant CSDDD obligations.

The proposal therefore concerns more than the availability of a private remedy. It concerns the sequence between public and private enforcement.

Public and private enforcement under the CSDDD

This point requires attention in light of the current structure of the Directive.

The CSDDD establishes supervisory authorities responsible for monitoring compliance and provides for administrative enforcement. At the same time, Article 29 addresses civil liability.

The relationship between the two mechanisms is particularly important following the amendments introduced during the EU’s simplification process. The original harmonised liability regime was substantially altered, leaving a greater role for national law in determining the conditions of civil liability.

The implications of this shift for private enforcement have already been noted on this blog by Rob Rooman, particularly the risk of an enforcement gap arising from the increased reliance on national liability rules and the applicable law.

Nevertheless, the Directive expressly preserves the distinction between supervisory decisions and civil liability. Article 25(9) provides that decisions adopted by supervisory authorities are without prejudice to civil liability under Article 29.

This formulation matters.

If a supervisory decision is “without prejudice” to civil liability, the Directive does not appear to establish a general rule under which a finding by a supervisory authority is a necessary precondition to a civil action.

The U.S. proposal would introduce precisely such a condition.

Under the model suggested in the submission, a claimant would first have to obtain, or await, a determination by the competent supervisory authority that the company failed to comply with its CSDDD obligations. Only then could the civil claim proceed.

The result would be a hierarchical relationship between the two forms of enforcement:

supervisory enforcement → finding of non-compliance → civil litigation.

This is materially different from a system in which administrative and civil mechanisms coexist and can potentially operate independently.

Why does this matter? The difference is not merely procedural.

A civil court and a supervisory authority may perform different functions. The supervisory authority assesses regulatory compliance and may impose administrative consequences. A civil court determines whether the requirements for liability under the applicable law are satisfied and, where appropriate, whether compensation is due.

The existence of a regulatory breach may therefore be relevant to a civil action without necessarily exhausting the questions that a civil court must determine.

Conversely, the absence of a supervisory finding does not necessarily imply that no private-law claim exists.

This distinction becomes particularly important after the changes to the harmonised liability regime. If national law determines significant elements of civil liability, the procedural relationship between administrative findings and civil claims may vary across Member States.

The U.S. proposal would seek to reduce that diversity by establishing a common sequencing rule.

As a question of procedural autonomy, this immediately raises a further issue.

To what extent could such a requirement be introduced through implementation guidance?

The CSDDD’s implementation guidance may clarify how obligations should be understood and applied, but guidance cannot ordinarily rewrite the Directive’s substantive architecture. If the Directive itself does not make a prior supervisory finding a condition for civil liability, the introduction of such a requirement through guidance would raise obvious questions concerning the limits of delegated interpretation.

The issue may ultimately depend on the precise legal basis and formulation of any measure adopted at EU or national level.

The U.S. request is therefore particularly significant because it appears to seek not merely interpretative clarification, but a reallocation of institutional responsibility between regulators and courts.

Territorial limits on civil claims

The U.S. Government adds a second request: where civil litigation is permitted, claimants should be required to demonstrate direct links to harm occurring in, or materially affecting, the EU.

This would introduce a further territorial filter.

The question is particularly delicate in global supply-chain disputes. Consider a hypothetical case involving an EU-based undertaking, a supplier established in the United States, workers located in a third country and alleged environmental or human-rights harm occurring entirely outside the EU.

Which element of that situation should determine the territorial connection of the civil claim?

The location of the defendant? The domicile of the claimant? The location of the adverse impact? The connection of the business relationship with the EU market?

The CSDDD operates precisely in an environment in which these connecting factors may diverge.

The U.S. proposal therefore implicitly raises questions that private international law is accustomed to addressing: jurisdiction, applicable law and the recognition and enforcement of judgments. Although the submission does not systematically develop those questions, its proposed territorial limitation on civil claims points directly towards them.

The request to avoid new procedural avenues

Finally, the United States asks Member States not to create new procedural avenues for CSDDD litigation.

This request is particularly interesting in the context of national implementation.

The Directive leaves important questions of civil liability and procedure to Member States. Differences in procedural mechanisms may therefore influence the practical availability and attractiveness of CSDDD-related claims.

From the perspective of cross-border litigation, this could generate forum-related considerations. Claimants may seek countries offering more effective mechanisms for collective or individual redress, while defendants may face proceedings in Member States with different procedural traditions.

The U.S. submission consequently identifies a problem that goes beyond the substantive content of the CSDDD: the possibility that national procedural diversity may become an important factor in the practical enforcement of a formally harmonised EU regulatory framework.

5. Net Zero

The final section concerns climate transition requirements.

The United States welcomes the deletion of the CSDDD provision concerning climate change transition plans and asks the EU not to recreate equivalent mandatory obligations through implementation guidance.

The submission also cautions against Member States reintroducing requirements through the transposition process by relying on OECD guidelines or other standards not expressly incorporated into the Directive.

The legal point is relatively straightforward but important: implementation guidance may clarify the operation of existing obligations, but it should not become an indirect mechanism for restoring substantive requirements that the EU legislature has deliberately removed.

The same consideration applies to national transposition. The U.S. request is noteworthy here because it appears to seek not only limits on EU guidance, but also constraints on the regulatory choices available to Member States when implementing the Directive. Whether Member States retain room to adopt additional requirements within the limits of EU law is, however, a separate legal question.

Final Remark

Taken as a whole, the U.S. submission can be read as identifying four connected problems.

The first is territoriality: when may EU law regulate activities carried out by companies and suppliers established outside the EU?

The second is regulatory overlap: how should EU requirements interact with potentially equivalent rules adopted by third countries?

The third is public enforcement: how should supervisory authorities exercise their powers where the relevant company, parent, supplier or evidence is located outside the EU?

The fourth, and perhaps most significant for private international law, is private enforcement: how should civil courts deal with disputes in which the regulatory obligation is rooted in EU law but the parties, conduct and damage are distributed across several countries?

The U.S. proposal concerning Article 29 brings these questions together.

A regulator-led model would make administrative supervision the principal gateway to private litigation. It could increase consistency and predictability, but it would also potentially reduce the autonomy of civil courts and make the availability of private remedies dependent upon the activity of a public authority.

An alternative model, closer to the current architecture of the Directive, allows public and private enforcement to coexist. This may increase the possibility of parallel or divergent proceedings, but it also preserves the possibility that civil courts independently determine questions of liability under the applicable law.

Neither model is neutral from a private international law perspective.

The first places greater emphasis on administrative coordination and regulatory territoriality. The second leaves greater room for cross-border litigation, national procedural diversity and potentially divergent judicial interpretations.

The U.S. Government’s comments are therefore noteworthy not simply because they challenge the extraterritorial application of the CSDDD to American companies. They raise a more structural question about the future architecture of transnational sustainability regulation: where global value chains cross multiple countries, should enforcement primarily follow the regulator, the market or the harm?

The answer will shape not only the relationship between the EU and third-country companies, but also the role of national courts in enforcing EU sustainability standards across borders.