The European Union has raised the main coverage threshold for American companies under its Corporate Sustainability Due Diligence Directive from €450 million to €1.5 billion in annual EU revenue, according to an analysis published by Americans for Tax Reform. The rollback follows Brussels' acknowledgment that the directive's compliance demands undermine European competitiveness, but the organization warns that U.S. businesses remain exposed to extraterritorial regulatory reach despite the narrower scope.
The 2026 amendments sharply narrowed the directive's scope: for EU companies, thresholds jumped from 1,000 to 5,000 employees and from €450 million to €1.5 billion in annual worldwide revenue, while American companies face the €1.5 billion EU revenue threshold with no employee requirement. Maximum fines for the most serious violations dropped from 5% to 3% of worldwide net revenue—meaning a company with $100 billion in annual revenue faces a ceiling of $3 billion. Brussels also scrapped the mandatory Paris-aligned climate transition plan and eliminated EU-wide civil liability rules, leaving liability to national law. The Omnibus I amendments took effect March 18, 2026, with member states required to implement CS3D by July 26, 2028, and company compliance beginning July 26, 2029—effectively granting the largest firms a two-year reprieve from the original 2024 schedule.
The report notes that the European Commission is explicit that effects aren't limited to Europe and can require U.S. factories with overseas suppliers to assess relevant human rights and environmental risks across those operations, gather information, and take preventive or corrective action. The 2026 amendments cite Mario Draghi's finding that the due diligence framework is "a major source of regulatory burden," according to the analysis. Even a small American parts supplier with no direct sales to Europe could find itself fielding compliance requests from a larger manufacturer, the report warns. The U.S. Chamber of Commerce, Business Roundtable, National Association of Manufacturers, and American Petroleum Institute warned Congress in December 2024 that CS3D encroaches on American regulatory authority.
Americans for Tax Reform explains that the reforms reduce the burden without limiting the directive to activities within Europe, and due diligence isn't generally confined to direct suppliers. Compliance involves continuing work: the Commission lists complaints and notification procedures, monitoring, and public communication alongside identifying and addressing risks. Companies need staff and systems to collect supplier information, assess it, document decisions, and respond when problems arise—resources that have competing uses, including investment and hiring. That's why American business opposition extends beyond the number of companies covered, the report argues. Raising the revenue threshold doesn't deliver the territorial limitation the Chamber called for in its October 2025 analysis.
On September 16, 2026, the House Energy and Commerce Committee advanced H.R. 9385, the PROTECT USA Act of 2026, by 25 votes to 20. The committee's bill would generally prohibit covered U.S. entities from complying with foreign sustainability due diligence regulations and limit recognition of related foreign judgments, though committee approval doesn't itself exempt American businesses from CS3D. In the August 2025 U.S.-EU trade framework, the EU agreed to undertake efforts to prevent CS3D from imposing undue restrictions on transatlantic trade and to address U.S. concerns about requirements imposed on non-EU companies operating under comparable high-quality regulations. The report concludes that Congress and the administration should use the time before compliance begins to secure real limits on CS3D's reach into U.S. operations, noting that Brussels has already admitted excessive compliance burdens can undermine its own businesses.