EU-US Trade Deal Risks EU Corporate Accountability
- The landmark corporate Sustainability Due Diligence Directive (CSDDD) is at risk of being weakened due to concessions made in a new trade framework between the European Union and...
- The European Union's Corporate Sustainability Due Diligence Directive (CSDDD), which entered into force in July 2024, represents a significant step towards corporate accountability.
- A framework agreement released on August 21, 2025, outlines a trade deal between the EU and the US.
EU Corporate Accountability Law Faces Threat from US Trade Deal
Table of Contents
The landmark corporate Sustainability Due Diligence Directive (CSDDD) is at risk of being weakened due to concessions made in a new trade framework between the European Union and the United States.
Background: The Corporate Sustainability Due Diligence Directive
The European Union’s Corporate Sustainability Due Diligence Directive (CSDDD), which entered into force in July 2024, represents a significant step towards corporate accountability. It requires large companies operating within the EU to actively mitigate adverse impacts on climate and human rights throughout their entire supply chains.
the EU-US Trade Deal and its Impact
A framework agreement released on August 21, 2025, outlines a trade deal between the EU and the US. Crucially, the agreement includes language committing the EU to ensure the CSDDD “does not pose undue restrictions on transatlantic trade.” Negotiations to implement the agreement are underway.
This commitment has raised concerns that the EU is prepared to dilute the CSDDD to appease US interests. The framework specifically mentions the EU will propose changes to the law’s “climate-related transition obligations.”
US Lobbying Efforts to Weaken the Directive
US companies have actively lobbied against the CSDDD, particularly during trade negotiations. Fossil fuel companies have been especially vocal in their criticism of the directive’s climate provisions, fearing their impact on business operations.
Following the release of the trade framework,the American Petroleum Institute,a leading oil and gas industry lobby group,expressed gratitude to the Trump administration for “standing up against the EU’s CSDDD.” They emphasized the need to protect US interests from “burdensome regulations” as negotiations continue.
Internal EU Efforts to Dilute the Law
Even before the trade deal framework, EU member states were already attempting to weaken the CSDDD through an “Omnibus proposal.” This proposal undermines key aspects of the directive, including its climate requirements. A formal proposal to dilute thes requirements was submitted by EU member states.
Adding to the concerns, the EU agreed to procure US fossil fuel and nuclear energy products worth $750 billion through 2028 as part of the trade deal, a move that directly contradicts the EU’s stated climate goals.
The Path Forward: Protecting Corporate Accountability
The EU Parliament is poised to vote on the planned revisions to the CSDDD. It is critical that EU lawmakers resist pressure from the US government and the fossil fuel industry to weaken this vital legislation.
the CSDDD is essential for upholding the rights of EU citizens to a healthy environment and ensuring that victims of corporate abuses have access to redress. Compromising the directive would undermine these fundamental principles.