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What the EU’s Updated Sustainability Rules Mean for U.S. Companies
The European Union has reached a provisional political agreement to revise its sustainability reporting and supply-chain due-diligence framework. The agreement, completed under the Omnibus I package, significantly narrows the scope of both the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). The revised thresholds remove obligations for many companies, particularly those headquartered outside the EU with smaller regional footprints.
However, the strategic direction remains unchanged. Large U.S. multinationals with material operations, revenue, or supply-chain exposure in the EU will continue to face substantial reporting, due-diligence, and legal liability requirements. The EU is signaling a long-term expectation that sustainability, human rights, and environmental risk management form an integrated component of corporate governance and enterprise risk programs.
For U.S. companies, the reduced scope is not an exemption from responsibility. It is an opportunity to mature risk capabilities, unify global sustainability reporting, and strengthen supply-chain due diligence before enforcement and investor scrutiny intensify.
The EU’s AI Code of Practice: Compliance, Operating Implications, and the Role of Integrated Risk Management
The EU AI Act entered into force on 1 August 2024 and will be fully applicable on 2 August 2026, with key provisions already active. Prohibitions and AI literacy duties have applied since 2 February 2025. Obligations for providers of general purpose AI, including transparency and copyright requirements, began on 2 August 2025. A voluntary General Purpose AI Code of Practice published on 10 July 2025 operationalizes how model providers can demonstrate compliance until harmonized standards arrive. The European Commission also issued guidelines clarifying scope and a mandatory template for the public summary of training content. Enforcement by the Commission for general purpose obligations begins in 2026, and models placed on the market before 2 August 2025 have until 2 August 2027 to comply. Maximum fines can reach 35 million euros or 7 percent of worldwide turnover for certain violations.