CSDDD: US Senator says no

Senator Hagerty's "PROTECT USA" Act aims to block US companies from complying with EU sustainability regulations, highlighting growing transatlantic regulatory tensions… but don’t national laws stop at borders?

Key points: U.S. Senator Bill Hagerty proposes the "PROTECT USA" Act to block U.S. companies from complying with the EU's Corporate Sustainability Due Diligence Directive (CSDDD). CSDDD requires companies to address impacts on people and the planet in their supply chains. The proposed U.S. legislation would prohibit compliance with CSDDD for companies in several sectors.

Why this matters: This development highlights growing transatlantic regulatory tensions and could create compliance challenges for companies operating in both the EU and U.S. markets.

What might happen next: We may see increased diplomatic discussions between the EU and U.S. on regulatory alignment. Companies might face conflicting legal requirements depending on their operational jurisdictions.

What you should be doing: Monitor developments in both EU and U.S. sustainability regulations. Assess your supply chain for potential sustainability risks, regardless of regulatory requirements. Engage with national industry associations to voice concerns about regulatory conflicts.

Senator Hagerty quote:

“American companies should be governed by U.S. laws, not unaccountable lawmakers in foreign capitals. The European Union’s ideologically motivated regulatory overreach is an affront to U.S. sovereignty. I will use every tool at my disposal to block it.”

Senate Banking Committee letter expressing concerns about the potential impact of the EU’s CSDDD regulation on U.S. companies

The bottom line: Laws stop at borders: As our good friend, the Lewis Silkin LLP lawyer, Vince Toman has often observed: the UK parliament can pass a law banning Parisians from drinking wine on bistro terraces… but the UK can’t enforce the law and Parisians would not follow it.