Last week, the European Parliament voted to significantly scale back the European Union’s corporate sustainability laws. Final terms will be negotiated with the European Council and member states in the coming months.
Why it matters: For U.S. multinationals, fewer companies may be covered under the rules—if approved—but expectations from investors, ESG groups, and other stakeholders may remain.
CHRO Global’s Take: The newly proposed thresholds would narrow the scope so that only very large companies are covered, reflecting EU efforts to address concerns raised by U.S. and European businesses. For U.S.-headquartered members with operations, employees, or revenue in Europe, the following Q&A outlines what these changes may mean for your organization:
Q: Are U.S. companies automatically covered by CSRD or CSDDD?
A: No, coverage largely depends on EU turnover. The CSRD is currently triggered at €150 million in EU turnover; Parliament proposes raising this to €450 million. For the CSDDD, Parliament proposes increasing the threshold to €1.5 billion. Employee count is generally not the primary trigger.
Q: We have employees in Europe—does that bring us into scope?
A: Not by itself. However, once your EU turnover exceeds the threshold, CSRD may apply to EU subsidiaries with 250+ employees or €40 million+ in turnover, satisfying the “EU presence” requirement.
Q: Do the higher thresholds make it more or less likely that we’re covered?
A: Less likely. Many mid-size—and even some large—U.S. companies would fall out of scope if the new thresholds are adopted. However, political negotiations will continue into 2026.
Q: If we fall below the thresholds, what concerns remain?
A: Expectations from customers, investors, and the public persist. EU-based customers frequently require CSRD-aligned workforce and supply chain data from their U.S. partners. Investors increasingly expect standardized ESG reporting regardless of legal requirements.
Q: If we are in scope, what does HR actually need to do?
A: HR teams will play a central role in meeting new European reporting and due-diligence expectations, particularly around workforce data and risk management.
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CSRD: HR will help produce workforce disclosures on pay, diversity, turnover, training, working time, and social policies.
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CSDDD: HR and ER teams will support risk assessments, supplier due diligence, corrective action plans, and grievance-handling processes. Close coordination with sustainability, legal, procurement, communications, investor relations, and finance/audit will be essential.
Q: Where is the U.S. on this issue?
A: The U.S. response is creating conflicting pressures for companies operating globally. A coalition of sixteen Republican state Attorneys General have warned companies not to comply with the CSRD or the CSDDD, arguing that the directives impose ESG and DEI mandates inconsistent with U.S. law.
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They specifically target DEI and supplier-diversity programs and threaten state-level enforcement if companies align too closely with EU standards.
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Meanwhile, the Trump Administration has warned EU governments that the CSDDD must be repealed or significantly weakened or face trade and energy consequences—leaving U.S. companies navigating conflicting political expectations.
Q: What should we do before the obligations go into effect in 2028?
A: Employers should use the extra time to strengthen their internal foundations and prepare for future compliance. Pushing CSRD’s next wave and CSDDD’s first obligations to 2028 gives employers breathing room—but it is not permanent. U.S. companies should focus on strengthening ESG data governance, improving cross-functional coordination, and prioritizing material issues that affect performance, risk, and credibility.
