This article is also available in Italian / Questo articolo è disponibile anche in italiano
European companies don’t like the directives on corporate sustainability (CSRD and CSDDD), almost as much as they are disliked by Donald Trump, who has an open disdain for anything remotely linked to sustainability. And so, on Wednesday, 12th of February, it emerged that Howard Lutnick, Trump’s pick for future Secretary of Commerce, told during a US Senate hearing in no uncertain terms that the Corporate Sustainability Due Diligence Directive (CSDDD) places “significant burdens” on American companies. He went on to reveal that the Trump administration is exploring the use of “commercial tools” to push back against the EU’s ESG regulations.
This marks yet another chapter in the tariff offensive against Europe — one already announced and set in motion by the United States. It also further diminishes any remaining hopes of salvaging the directives passed just months ago, which the European Commission had already been considering softening.
Why the US refuses to comply with European laws
The CSDDD, which the incoming head of the US Commerce Department has firmly opposed, was never likely to sit well with American multinationals — or many others, for that matter. Part of the European Green Deal and strongly supported by environmentalists and the green economy world, the regulation requires that companies must ensure — under penalty of legal action and sanctions of up to 5% of a company’s turnover — that the entire value chain, including subcontractors, complies with the environmental, social, and governance criteria indicated by the EU, and implement plans to transition to carbon neutrality.
Put simply, if a US company wants to sell in Europe, it must ensure that its supply chain is free from child labour, worker exploitation, environmental damage, and gender discrimination, even at the smallest or most marginal levels. The CSRD, the Corporate Sustainability Reporting Directive adds further requirements for businesses operating in Europe, imposing strict sustainability reporting obligations on those with revenues exceeding 150 million dollars or with subsidiaries and branches. The aim is clear: to encourage companies operating in the European wealthy market to become progressively more respectful of green and sustainability criteria. If they want to sell to us. Americans, however, want to sell us their products and services but do not want to comply with our laws.
Answering questions from Republican senators on the Senate Committee on Commerce, Science and Transportation, 63-year-old Howard Lutnick described the CSDDD as a “serious concern for American industry and the American economy.” He went on to say that they would “consider using all available trade tools at our disposal, where appropriate” to counter it. Precisely what these measures might entail remains unclear, but he promised to take “whatever action is necessary” to “prevent overly burdensome regulations that negatively impact US companies”.
It is worth noting that also the Biden administration didn’t like Europe’s green directives. On Monday, the American Chamber of Commerce to the European Union (AmCham) called for key parts of the regulatory framework to be delayed or suspended.
The main issues of the Omnibus Package
US pressure against stricter ESG regulations, introduced only in the summer of 2024, is being matched by opposition within Europe itself. Centre-right and right-wing parties, along with Germany and France, have called for the rules to be scaled back, and with the “no” of various industry associations, arguing they are too complex and costly. These concerns are not entirely without merit. However, there is a clear distinction between simplification and outright dismantling of the directives.
On the 12th of February, European Commissioner for Simplification Valdis Dombrovskis remembered that a debate is underway, with the Commission assessing “how many levels up and down the value chain should actually be monitored and regulated.” As we know, the so-called Omnibus Package is set to be unveiled in Brussels on the 26th of February. This package will introduce revisions to the CSDDD, the CSRD, and the Taxonomy Regulation, which defines the economic activities classified as “sustainable”.
It goes without saying that this latest battle will closely be linked to the trade war the United States has launched against the rest of the world, including Europe. It will soon become clear whether Europe will retreat in the face of this anti-green offensive or, as Maria Luís Albuquerque, the EU Commissioner for Financial Services, once put it, there is room for change, “adjusting the pace” while still “upholding the core principle.” These decisions will also reveal whether the European bloc has the backbone to hold its ground and assert itself with dignity on the international stage.
Cover: Envato image