Transatlantic Tensions Complicate Environment for Global Employers

The U.S. is increasingly inserting its policy views into the global marketplace, adding to the cacophony of governments regulating the same public policy issues, such as DEI and sustainability. Divergent policy approaches, most recently between the U.S. and EU governments, are leading to cross-regulation and leaving global companies stuck in the middle.

EU laws regulate non-EU companies: EU's corporate sustainability reporting directive (CSRD) and corporate sustainability due diligence directive (CSDDD) require non-EU companies to disclose information about their environmental and social impact and identify and address issues.  

Counterstrike on EU sustainability regulations: Senator Bill Hagerty (R-TN) introduced the PROTECT USA Act, which attempts to relieve U.S. companies of compliance with the CSDDD and other foreign sustainability due diligence regulations. 

• While the U.S. Congress has no legal authority in Europe, this legislation highlights ongoing tensions stemming from regulatory overreach by both the EU and U.S. and could impact how U.S. companies navigate these international sustainability requirements. 

Trump Administration doubles  down on European company DEI, then retrenches: Fueling the fire, several foreign companies that contract with the U.S. government reported receiving letters demanding compliance with Executive Order 14173, which requires contractors to certify, within five days of receiving the letter, that they do not have DEI programs that violate U.S. anti-discrimination laws.

French, Belgian, and Spanish authorities have expressed strong opposition to these demands, emphasizing their commitment to maintaining their own anti-discrimination and inclusion values. 

• On Wednesday, the State Department clarified that the letter applies only to companies “controlled by a U.S. employer,” and have American employees. 

• Nevertheless, the move demonstrates a desire to expand U.S. policy views abroad.  

What’s next: With global interest in key employment areas, such as artificial intelligence, data privacy, and labor rights, similar conflicts are likely to persist, increasing geopolitical tensions and creating significant uncertainties for our global companies. 

• To learn more, please join us at our Global DEI webinar on April 17.