In a pointed critique from across the Atlantic, Paul Atkins, Chair of the U.S. Securities and Exchange Commission (SEC), raised fresh concerns this week over two major European ESG disclosure laws, signaling growing unease from American regulators about the global spread of sustainability mandates. Speaking at an OECD event in Paris, Atkins warned that the European Union's new rules risk imposing unnecessary costs on U.S. firms and their shareholders.

A Clash of Regulatory Philosophies

Atkins argued that the European Union’s approach has become too prescriptive, saying that compliance burdens tied to ESG due diligence and reporting could ultimately harm American investors. “I have significant concerns with the prescriptive nature of these laws and their burdens on U.S. companies, the costs of which are potentially passed on to American investors and customers,” he said in prepared remarks shared at the OECD’s roundtable on global financial markets.

His comments reflect the wider shift in U.S. regulatory attitudes that began during the Trump administration and continue under current leadership, where skepticism toward mandatory ESG disclosures remains strong. Unlike the EU’s efforts to integrate sustainability into corporate reporting, the SEC has signaled a preference for lighter, market-driven interventions.

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The Laws Under Fire

At the heart of the SEC’s concerns are two key EU legislative efforts. First is the Corporate Sustainability Due Diligence Directive (CSDDD), which came into force last year and requires large companies to identify and address environmental or human rights abuses in their supply chains. This includes investigating the use of forced labor or environmental degradation caused by suppliers.

Second is the Corporate Sustainability Reporting Directive (CSRD), which mandates that companies disclose comprehensive data on their environmental and social impacts to meet the growing expectations of investors and consumers. The EU has recently proposed adjustments to ease certain requirements, but U.S. regulators like Atkins argue that the reforms do not go far enough.

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A Call for Free Market Priorities

While Atkins acknowledged these recent changes as a step in the right direction, he urged European lawmakers to continue revising the rules to focus more on economic outcomes and shareholder value. He stated that EU policymakers should “cut firms’ reporting obligations rather than pursuing ends that are unrelated to the economic success of companies.”

The remarks highlight a fundamental divide between Europe’s vision of stakeholder capitalism and the more traditional U.S. view that prioritizes shareholder returns and free enterprise. With global supply chains becoming more regulated and cross-border disclosures more common, this transatlantic divergence could create increasing friction for multinational companies navigating both markets.

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