The European Union’s aggressive ESG regulatory expansion, particularly the Corporate Sustainability Due Diligence Directive (CSDDD), is raising alarms in the United States. Critics argue that the EU is overstepping its bounds by imposing environmental and human rights standards that could apply extraterritorially—even to American companies without a direct footprint in Europe. 

The CSDDD, part of the EU Green Deal, requires companies with over €450 million in European market revenue to perform extensive due diligence on their global supply chains. This includes ensuring compliance with environmental, labor, and governance standards that may conflict with existing U.S. laws. Small- and medium-sized American businesses are particularly vulnerable, as they risk being excluded from supply chains if they cannot meet EU sustainability criteria. 

While the directive includes climate goals—such as a 55% emissions reduction by 2030 and net-zero by 2050—critics say these policies infringe on U.S. sovereignty and corporate governance. Opponents also point to potential legal risks, with U.S. companies possibly facing lawsuits in European courts despite limited involvement in the EU. 

In response, U.S. lawmakers have introduced the PROTECT USA Act of 2025, which seeks to block American firms from complying with foreign ESG mandates without presidential waivers. Additional executive actions could revoke European regulatory exemptions under U.S. accounting and financial disclosure laws. 

Though the EU parliament recently paused full implementation of the CSDDD, concerns remain. Observers warn that even revised rules still challenge U.S. regulatory autonomy and could affect American competitiveness. 

As ESG and carbon neutral strategy efforts evolve globally, tensions between regulatory ambition and international sovereignty are growing. The U.S. may need to balance cooperation with decisive action to protect domestic interests amid Europe’s expanding ESG agenda. 

Source: 

https://www.city-journal.org/article/eu-green-deal-parliament-environmental-labor-mandates