Principal Megan Morgan (Baltimore) recently spoke with Lexology, where she discussed how U.S. companies can navigate evolving European Union (EU) environmental, social, and governance (ESG) requirements amid increasing political scrutiny in the U.S.

In “How can US companies respond to the EU’s ESG rules?”, Megan discussed how recent changes to the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) may continue to affect U.S. companies and their supply chains.

Megan emphasized that limiting the formal reach of CSDDD may not prevent compliance obligations from flowing through supply chains. “While the EU has limited the initial applicability of CSDDD to large entities, those larger entities could request information or pass down obligations to smaller, out-of-scope entities in their supply chain, which would create extra work and increased costs for the smaller, out-of-scope entities.”

Megan added that companies operating across jurisdictions must navigate conflicting regulatory expectations, stating that “managing those conflicts is fact- and context-specific, and may involve a mix of careful corporate structuring and localization with appeals for formal or informal governmental relief (i.e., licenses or guidance) from one or both regulatory authorities.”

Beveridge & Diamond helps clients navigate the intersection of ESG, international environmental law, and evolving regulatory requirements. As governments around the world continue to develop and refine sustainability, due diligence, and supply-chain obligations, our team advises on the legal, regulatory, and operational considerations that affect global business operations. We guide clients in managing risk, addressing cross-border compliance challenges, and engaging with regulators as ESG frameworks continue to evolve.